Texas data centre demand could raise ERCOT peak by 125%
A panel at Datacloud USA heard that an audit of interconnection requests estimates 205GW of credible data centre demand, which would represent a 125%
An initial study by Texas grid operator ERCOT estimates that credible data centre demand could add around 205 gigawatts to the system. This potential load, detailed at a Datacloud USA keynote panel, would represent a 125% increase over ERCOT's current peak demand of approximately 91 gigawatts.
Meghan Griffiths, a lawyer who chaired the panel, said the "batch zero" study is now subject to a state-ordered audit. Texas Governor Greg Abbott ordered the comprehensive verification on August 3, directing the Public Utility Commission of Texas (PUCT) and ERCOT to scrutinise data centre projects before approving more. Non-compliant projects will be denied a grid connection.
ERCOT has since paused notifications related to the batch zero classification. PUCT officials later confirmed the audit's scope has narrowed to between 250 and 300 projects representing roughly 200GW of demand, rather than the full interconnection queue.
Political and Regulatory Pressure
State Senator Paul Bettencourt, also a panellist, described 2026 as the "frothiest political year" of his career due to rising local opposition. Concerns focus on power use, water consumption, and land. He said Texas hosts 335 data centres supporting about 100,000 direct and 400,000 indirect jobs, generating an estimated $65 billion in annual economic activity. However, he argued the industry has failed to communicate its resource footprint effectively to the public.
Bettencourt highlighted the growing cost of a state sales tax exemption for data centres. Introduced around 2013 to 2015 at an estimated annual cost of $14.7 million, he said it now costs an estimated $3.3 billion to $3.4 billion a year. He suggested electricity-related subsidies are likely to be scaled back or removed in the next legislative session. A law signed in 2025, Senate Bill 6, already requires large loads of 75 megawatts or more to disclose usage and comply with curtailment during grid stress.
Industry Perspectives on Growth
Alex Hernandez, founder of PowerBridge, argued West Texas will become the world's largest data centre market. He cited Pennsylvania's growth, where data centre capacity rose from zero in 2020 to around 7.5 gigawatts today following development near the Susquehanna nuclear plant. Hernandez, who sold his previous venture to Amazon Web Services in 2024, believes Texas will follow a faster and larger trajectory. His company's model involves building more power generation than its campuses consume, with surplus exported via transmission lines.
Santiago Suinaga of Stream Data Centers said his firm remains "very bullish" on Texas regardless of the audit's outcome. He argued legitimate developers will benefit once speculative projects are removed from the interconnection queue. Suinaga added the industry had operated with a low profile for years and now needs to control the narrative around its impact.
ERCOT's Operational Response
Venkat Tirupati, ERCOT's chief technology officer, said the grid operator is embedding artificial intelligence across its operations. This includes efforts to accelerate interconnection study processes. He noted more than 800 of ERCOT's roughly 1,000 employees are now active users of AI tools internally.
