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As Texas emerges as a national hub for data centers, the state’s electrical grid and water resources face new demands to power the digital economy.Austin Today
Texas lawmakers held a hearing to discuss the state’s rapidly growing data center industry, which is set to make Texas the country’s largest hub for data centers in the next two years. Energy experts and data center companies provided details on the state’s grid capacity, water usage, and tax incentives that are attracting major tech companies like Google, Amazon, and Meta to build new facilities in Texas.
Why it matters
The expansion of data centers in Texas is a significant economic development, but it also raises concerns about the state’s energy grid and water resources. Lawmakers are working to ensure the grid can handle the increased demand and that data centers are using water responsibly.
The details
During the hearing, ERCOT CEO Pablo Vegas said Texas has over 400 planned data centers that will need to be evaluated to determine if the state’s transmission capacity can support them all. Companies like Vistra and Skybox Data Centers discussed how new data centers will reuse water for cooling in a closed-loop system, minimizing their impact on local water resources. Texas offers tax exemptions for data centers that meet certain investment and job creation thresholds, which has already attracted over 100 qualifying centers to the state.
In the next two years, Texas is set to surpass all other states as the country’s largest hub for data centers.By 2028, Texas is expected to support nearly 30% of the nation’s data center demand.On April 10, 2026, the Texas House State Affairs Committee held a hearing to discuss the future of data centers in the state.
The players
Pablo Vegas
CEO of ERCOT, the Electric Reliability Council of Texas, which manages the state’s power grid.
Stacey Dore
Executive Vice President for Public Affairs at Vistra, an energy company that spoke about the grid’s ability to support data center growth.
Haynes Strader
Chief Development Officer at Skybox Data Centers, who discussed the water-efficient cooling systems used in new data centers.
Ken King
Chairman of the Texas House State Affairs Committee, which held the hearing on the state’s data center industry.
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What they’re saying
“It will allow us to look at the system at the same time and identify the transmission that’s available to all of these projects that are proposing to connect over the next 5 years and what we can do is we can allocate out the capacity that is going to be available in each of those subsequent years.”
— Pablo Vegas, CEO of ERCOT
“Electric demand growth from data centers will allow or existing grid to be utilized to its optimal capacity while spreading fixed cost across a larger number of customers and directing many of those costs to the customers who can best afford them.”
— Stacey Dore, Vistra Executive Vice President for Public Affairs
“On a typical building from 150 to 300 thousand square feet of building footprint we are charging that system one time with somewhere around 25 thousand to 30 thousand gallons of water one time that’s as about as much as a residential pool…and so when you look at another 30 acre parcel any other use office retail restaurants hotels any of that is going to dramatically exceed our water use.”
— Haynes Strader, Skybox Data Centers Chief Development Officer
What’s next
The Texas House State Affairs Committee plans to hold additional meetings to further discuss the future of data centers in the state, though a specific date has not yet been set.
The takeaway
Texas is positioning itself to become the nation’s premier data center hub, attracting major tech companies with its favorable business climate and energy infrastructure. However, the rapid growth of this industry raises concerns about the state’s grid capacity and water resources that lawmakers are working to address through oversight and regulation.