ERCOT officials say large interconnection requests in September of 2024 showed the average load was fifty-six gigawatts and that number has now quadrupled anticipating a demand for 205 gigawatts as businesses open more artificial intelligence data centers. These data centers require a lot of power and water and are open 24-7, 365 a day a year. Meanwhile, ERCOT and the Public Utilities Commission are tasked with planning transmission and ensuring they can serve both existing and incoming customers.
“The right way to do this is to have the data centers make significant downpayments to justify the planning, the expansion of transmission to pay for access to the market rather than leaving the consumers on the hook for this.” University of Houston Economy Professor Ed Hirs said.
Hirs says the industrial industry such as petrochemical company’s needs are not yet met and have built their own additional energy resources for back up to compensate. He says ERCOT has improved over the summary adding wind farms, solar farms, as well as batteries but that is not enough to meet the energy demands during freezing weather conditions.
“When you look at companies that want to come and consume more power than cities in a single location, it is hard to forecast and plan for that in the future.” Kristi Hobbs, ERCOT’s Vice President, said.
Economist Hirs also points to past Texas grid management failures in 2011, 2021 and most recently 2024- Hurricane Beryl and Derecho storms where CenterPoint admitted they were not prepared. He says it will be a challenge for Texas energy officials to balance the high demand and all of Texas energy customers’ needs.
“ERCOT is looking to grant incoming large energy users a quicker interconnection if they are willing to commit to reducing their power use from the grid during certain grid or transmission conditions and they will request the data center companies to cooperate in designated energy shut offs.” Hobbs said.
The economist said it is likely everyone will see higher electric bills.
“CenterPoint has let everybody know to maintain the integrity of the power network they have said the rates will need to go up pointing to rising prices in steel and labor. They do not make a huge amount of money they are entitled to make some money but not a huge profit.” Hirs said.
As the data centers are headed to Texas for expansion, The Texas Utility Commission, ERCOT and CenterPoint will need to find a balance that allows Texas to bring in revenue while accommodating and meeting the power needs for all Texans statewide.