How Data Centers Are Driving Demand Growth in ERCOT

The data center boom is no longer a coastal story. It's a Texas-sized transformation.

With their immense appetite for electricity, data centers have moved to the center of energy conversations, and Texas is quickly becoming the industry’s favorite home base. Fueled by abundant natural gas, competitive power markets, and a uniquely deregulated grid, the Lone Star State now hosts the second-largest concentration of data centers in the U.S. As of September 2024, Texas had 279 data centers, over half of which are located in the Dallas-Fort Worth area.

But what does this mean for the ERCOT grid? And what opportunities and obstacles lie ahead for energy suppliers and brokers?

Skyrocketing Energy Demand in ERCOT

According to the latest forecast from the Electric Reliability Council of Texas (ERCOT), the state is bracing for a seismic shift in load growth. Between now and 2030, ERCOT expects demand to increase by 43 GW, with large-load customers, namely data centers and hydrogen/industrial users, driving most of that growth.

By 2030, ERCOT projects:

• 148 GW in large-load contracts
  
  
• 153 GW in summer peak demand

That’s the equivalent of building 30 new nuclear power plants to keep up with electricity needs. AI is one of the primary culprits. A single artificial intelligence query through platforms like ChatGPT can consume 10 to 30 times more energy than a traditional web search.

Major tech players are taking notice too.

• Apple plans to build a 250,000-square-foot AI server farm in Houston.
  
  
• Google already has data centers in Midlothian and Red Oak.
  
  
• Microsoft is developing an AI-ready facility in Austin.
  
  
• Meta is constructing an $800 million data center in Temple.
  
  
• Oracle has secured space in Abilene as part of its Stargate initiative.

The Strain on Texas’ Power Grid

All of this growth comes at a cost.

ERCOT has received 136 GW worth of grid connection requests from large power users, up dramatically from 99 GW in March 2025 and just 41 GW the year prior. Incredibly, 37 GW was added to the queue in a single month. For context, that’s more power than the entire Houston area consumes.

Some individual data center projects are now requesting 1 GW of capacity each which is enough to power a small city.

While data centers promise economic growth and technological advancement, they also raise serious questions about reliability. Large facilities can consume 100 MW or more per year, the same as 350,000+ electric vehicles or even rivaling the output of medium-sized power plants. This risk is a strained grid, higher volatility, and more frequent blackouts during extreme conditions if this new demand isn’t balanced with supply.

State-Led Solutions and Strategic Investments 

Texas isn’t sitting idle, though.

In response to this mounting pressure, state leaders have doubled down on initiatives to expand energy generation and improve infrastructure:

• Texas Energy Fund: Offers up to $10 billion in low-interest loans to support new natural gas power plant development.
  
  
• Texas Nuclear Fund: Backed by $5 billion to accelerate deployment of advanced nuclear reactors by 2035.
  
  
• High-Capacity Transmission Lines: The PUCT has approved 765-kV lines that can carry more than twice the voltage of the current infrastructure, connecting more generation to high-growth areas like West Texas.

These steps show a long-term commitment to boosting grid resilience and diversifying the state’s energy mix, especially with nuclear power gaining new support.

The Role of Private Partnerships

Private companies are also forging innovative partnerships to secure cleaner, more reliable power:

• Dow + X-energy: Four 80-MWe reactors planned at Dow’s Seadrift site.
  
  
• Oklo + Diamondback Energy: Supplying Permian Basin operations with 50-MWe microreactors.
  
  
• Last Energy: Deploying 30 microreactors across ERCOT territory, totaling 600 MW in added capacity.
  
  
• Google, TPG Climate, and Intersect Power: $20 billion initiative to create “powered land” combining renewables, storage, and backup generation for hyperscale data centers.
  
  
• Stargate (OpenAI, SoftBank, Oracle): $500 billion investment in AI-related infrastructure, with 10 data centers already under construction in Texas and 10 more planned.

What This Means for Retail Energy Providers (REPs)

This level of growth is both a challenge and an opportunity.

Data centers are reshaping the energy landscape in ERCOT, driving long-term demand that will impact everything from infrastructure planning to pricing models. For retail energy providers, this means:

• Navigating uncertainty around the timing and location of new projects
  
  
• Scaling up renewable offerings and demand response solutions
  
  
• Investing in infrastructure and smart grid technologies
  
  
• Creating customized pricing to meet high-load customer needs

Those who can adapt quickly and offer reliable, scalable solutions will have a major role to play in powering the digital age.

Data Center Demand Nationwide

This isn’t just a Texas story. According to McKinsey, U.S. data center electricity demand is expected to grow from 25 GW in 2024 to more than 80 GW by 2030, a CAGR of 23%. That translates to 400 terawatt-hours of additional consumption, requiring 50–60 GW of new data center infrastructure in just six years.

Texas may be leading the charge, but the ripple effects are national. As AI adoption grows, so will the need for smarter, more resilient energy strategies across the country.

Data Centers are Changing Everything in the Energy Industry

ERCOT is standing at the crossroads of digital transformation and energy resilience. Data centers are reshaping the load curve, pushing the limits of what the grid can handle, but they also represent a major opportunity for energy innovation, investment, and leadership.

For energy brokers, REPs, and infrastructure stakeholders, it’s clear that adaptation isn’t optional. It’s the path forward.