The new law, Senate Bill 6, applies to electricity customers using at least 75 megawatts, or the amount of a medium-sized power plant. The wide-ranging state legislation seeks to govern the growing number of data centers being planned and built out across the state, with Texas now set to surpass Virginia\u2014the jurisdiction with the most data centers in the world\u2014in new data center construction.\u00a0<\/p>\n
Assurances on Water Use\u00a0<\/p>\n
While the standard for older data centers was to cool their banks of computer servers with millions of gallons of water every day, much of which evaporated, those are the facilities of yesterday, a handful of developers told the committee.\u00a0<\/p>\n
A building at one of Skybox\u2019s data center sites draws up to 30,000 gallons of water once to charge the closed-loop system, Strader said, noting that his home\u2019s pool in Dallas uses a little less than that.\u00a0<\/p>\n
Michael McNamara, is CEO and co-founder of Lancium, a data center company based in Shenandoah, Texas, outside of Houston, and developer of <\/p>\n
\u2019s Stargate Campus in Abilene, slated to be one of the largest data center projects in the world.\u00a0<\/p>\n
He said that the city offered the project in construction 500 gallons of water a minute. Three of its eight buildings are up and running and more than 8,500 people are working at the facility. The site, which when completed is slated to be 10 square miles, consumed only 20 gallons a minute last month, McNamara said\u2014less than 5 percent of the allocation from the city.\u00a0<\/p>\n
\u201cWe have a water shortage, but it\u2019s a water shortage driven by shortages of engineering and money,\u201d he said. \u201cWe can fix all of those.\u201d\u00a0<\/p>\n
The data center developer hired an engineering firm to study the Panhandle\u2019s water supply and is planning to share the results soon. At Lancium\u2019s Childress, Texas, facility, the company plans to give back 1 million gallons of water a day to the Red River Water Authority, from which it pulls 11,000 gallons a day for its Childress data center.\u00a0<\/p>\n
McNamara said the company will access water through aquifers that farmers and authorities haven\u2019t had the cash to acquire. \u201cWe have the budget and we\u2019ll just give the water back,\u201d he said.<\/p>\n
The Texas Water Development Board reports that the share of the state in a drought has reached its largest extent since September 2023. While 85 percent of the state is in drought, extreme and exceptional drought is impacting almost a quarter of the state, according to the water board.\u00a0<\/p>\n
In Corpus Christi, years of severe drought coupled with increased water demands from the city\u2019s petrochemical industries have nearly bankrupted<\/a> the coastal area\u2019s reservoirs. Without significant rainfall, the city is months away from disaster that, under worst-case scenarios, could lead to an industrial shutdown and partial evacuations.<\/p>\n While some new facilities continue to use evaporative cooling, said Dan Diorio, vice president of state policy with the Data Center Coalition, a trade group that represents major tech companies, it\u2019s often in tandem with other cooling technologies.\u00a0<\/p>\n Skybox has not used an evaporative cooling system since 2016, Strader said. Of the 800 megawatts of large data centers operational in Texas, only about 20 percent use evaporative cooling, Strader said.\u00a0<\/p>\n In water-stressed areas, the data center industry often uses less water than other manufacturers, Diorio said. In Arizona, for example, data centers use less water than the semiconductor industry, beverage production, sand and gravel mining and golf courses.\u00a0<\/p>\n Water cooling is only considered at Google data center facilities if local water sources are healthy and resilient, said Liz Schwab, who leads advocacy and market development for Google data centers. In locations facing threats of scarcity or depletion, Google searches for alternatives like air cooling or using reclaimed water, Schwab said.\u00a0<\/p>\n The Interconnection Queue<\/p>\n More pressing even than water consumption for data center developers is grid interconnection under S.B. 6. They have become increasingly impatient with the state\u2019s reworking of the large load interconnection queue, as Texas transitions to studying data centers\u2019 transmission needs in batches<\/a> rather than individually.\u00a0<\/p>\n Electric Reliability Council of Texas CEO Pablo Vegas said the grid operator has seen significant challenges<\/a> in the old ways of connecting large loads to the electric grid, especially given the increased volume and pace of requests.\u00a0<\/p>\n The system in place before S.B. 6 had been built for a large load queue totalling 40 to 50 projects a year. But last year, ERCOT received 225 new interconnection requests and the waitlist for large facilities to get online has grown to 410,000 megawatts, ERCOT CEO Pablo Vegas said. \u201cThat\u2019s a huge, huge, change since the last time we talked about the growth of data centers,\u201d he said.\u00a0<\/p>\n Under its previous planning process, by the time one data center finished its planning studies, the results would often have to be reconsidered almost immediately, as more projects joined the interconnection queue and changed the local transmission needs and reliability.\u00a0<\/p>\n This story is funded by readers like you.<\/p>\n Our nonprofit newsroom provides award-winning climate coverage free of charge and advertising. We rely on donations from readers like you to keep going. Please donate now to support our work.<\/p>\n Donate Now<\/a> <\/p>\n The consensus from early conversations with corporate stakeholders, including Google, Meta, CenterPoint, Amazon and OpenAI\u2014all looking for grid capacity in Texas\u2014was that the uncertainty in the current process creates undue risk for developers with existing interconnection requests. The proposed batch method aims to ameliorate that.\u00a0<\/p>\n While the requests have continued to come in over the last year and a half, in the last six weeks, a big chunk of new projects came into the queue, Vegas said. The jump exceeded 130,000 megawatts, Vegas said, and around 87 percent are data centers. The smaller share are more traditional industrial developments.\u00a0<\/p>\n As the interconnection process works now, ERCOT does not reserve transmission capacity for any customers. It led to multiple projects trampling each other as different building timelines overlapped, Vegas said, and altered the necessary transmission assets. But given the scale and magnitude of the queue and the projects\u2019 large investments and fast construction times, that standard doesn\u2019t work anymore for economic development, Vegas said.<\/p>\n It put developers who were investing billions of dollars in Texas into an untenable situation, Vegas said. \u201cThey could get approval, get funding and financing, start to develop and then see the requirements changing in the middle of that cycle,\u201d Vegas said. \u201cSo we recognized that we need to change that process.\u201d\u00a0<\/p>\n ERCOT and PUC leaders hope that the batch study will alleviate the uncertainty that has developed across some of the state\u2019s priciest developments.<\/p>\n The developers with millions, if not billions, of dollars tied up in projects stuck in the interconnection queue are worried about how much longer their timelines to get online will be stalled.<\/p>\n Lancium\u2019s McNamara said there\u2019s increasing concern that selection for the first batch will be unfair\u2014potentially excluding projects that have and would continue to demonstrate significant financial commitments.\u00a0<\/p>\n ERCOT leaders are ordering that admission criteria for the first batch<\/a> be announced by its staff by June, with PUC consideration as early as July. Then ERCOT would deploy batch studies every year for projects to be considered.\u00a0<\/p>\n The grid operator is looking for pathways to offer data centers interconnection that would include them in the first batch study. One scenario being considered is whether the project is developing its own power generation,<\/a> or if the data center can pull back from the grid when demand is high.\u00a0<\/p>\n
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