Texas grapples with AI data center surge straining power grid and prompting new regulatory rules

Texas is emerging as a major hub for artificial‑intelligence computing, but the rapid expansion of data centers is creating unprecedented electricity demand. The Texas Tribune reports there are at least 248 planned data‑center projects in addition to 335 existing facilities, with projected power needs of about 439 GW—roughly five times the state's all‑time peak demand. The surge is concentrated in rural areas, raising concerns about grid reliability, water use for cooling, and the cost burden on ordinary consumers. Governor Greg Abbott has shifted from promoting the AI boom to calling for tighter regulation, urging the end of sales‑tax exemptions and other incentives that cost the state more than $1 billion annually. Local officials in San Marcos and College Station have already moved to block or reject new facilities.

Regulators are also testing new rules for colocating large AI loads with existing generation. The Public Utility Commission of Texas, backed by ERCOT, is reviewing a proposal by Crusoe and Ensign Infrastructure to add a 260 MW AI data center behind the 265.5‑MW Goodnight 1 wind farm. The commission recommends that the new load be required to curtail within 30 minutes (or 10 minutes if capable) during grid emergencies, mirroring conditions imposed on an earlier AI load. This dispute highlights how Texas is balancing the AI sector’s growth with the need to preserve grid stability.