According to Bloomberg, Texas is experiencing significant growth in data centers, which is putting a strain on the state's energy resources. The state, known for its business-friendly environment, has seen a surge in land values and property taxes due to this growth. Texas offers vast tracts of land and a broad supply of cheap energy sources, including wind and solar. However, the boom in data centers is consuming a substantial amount of these resources.

To meet the increasing energy demands, the Electric Reliability Council of Texas (Ercot) estimates that by 2030, the state's grid will need to support 152 gigawatts of demand on peak days, nearly double its current capacity. Data centers and crypto miners, which have flocked to Texas, account for a significant portion of this projected demand. Additionally, population growth, hydrogen production plans, and the push by oil and gas companies to electrify their operations are contributing to the rising energy needs.

State Senator Nathan Johnson, a Democrat representing parts of the Dallas-Fort Worth area, expressed concerns about the power consumption of data centers, especially as AI computing becomes more prevalent. He noted that Texas has never dealt with electrical growth on this scale and speed. Data centers requiring more than 75 megawatts of power, enough to electrify a large factory or about 15,000 homes, need special approval from Ercot under rules established in 2022. Unlike Bitcoin miners, data center operators cannot shut down their operations when demand and prices spike, posing a challenge to grid reliability.

Krishnan, whose company sells software and automation controls to power companies, believes Texas wants to solve the issue to attract data center investments. However, he has not seen a coordinated plan to address the challenge. The demand for data center construction has squeezed other developers out of the market, with utility operators noting that requests from data center developers require grid capacity that could power entire midsize cities. Matt Mitchell, a spokesperson for Austin Energy, highlighted that the loads are beyond anything previously seen.

Governor Abbott has indicated that the state's power supply options are not exhausted. Data centers could explore alternative energy sources, such as small modular nuclear reactors, but these won't be viable on an industrial scale until well into the next decade. In the short term, gas power remains a likely solution, although new gas plants take three to four years to complete, and new transmission lines can take up to six years. Data centers, on the other hand, can be built in just a year, which poses a challenge for grid planning. Some data center developers are now looking to other regions, such as the Midwest and Reno, Nevada, for their projects.