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Data Center Boom Threatens Texas Power Grid

It’s not even summer yet, and the Texas power grid is already straining under demands because of high temperatures. One consistent worry is that the increasing number of data centers in the state may make it even harder for the electrical infrastructure to hold up once Texans start turning their air conditioning on full blast.

Data centers are large warehouses full of computer servers that keep the digital world running, everything from finance to social media. Texas has been aggressively luring data centers to be built in the state for most of a decade, drawn by the prestige of having tech companies like IBM and Amazon. Currently, Texas has 278 of them, with more being built.

The centers are also massive power drains. Data centers consume about 1,000 kilowatt-hours per square meter (ten times that of the average American home), and Texas has over 22 million square feet of data center space. Computing power is increasingly eating up a percentage of every state’s electricity generation.

Which is why many states are starting to rethink having these centers at all. Lawmakers in Connecticut, South Carolina, Georgia, and Virginia are questioning whether the tax breaks offered to data center builders are worth the expense. The centers do not generally translate into local jobs the way similar-sized facilities in industries like manufacturing do. Typically, high-paying positions at the centers go to relocating employees, with locals only able to secure janitorial and other maintenance work. Texas offers an exemption on sales tax for data center equipment over $200 million so long as the company promises to provide at least 20 above-average wages. That means that the state is trading at least $16.5 million for those jobs.

Meanwhile, the voracious appetite of the data centers is demanding more and more energy, especially as the AI boom adds to the need for power. According to the Electricity Reliability Council of Texas, data centers use 4 percent of the Texas grid, a number that will at least double by 2030.

Right now, it is the maintenance season for the Texas energy industry, which explains some of the strained grid when temperatures are barely around 90 degrees. However, there are some specific problems on the horizon. Many of these data centers not only want power, but they also demand renewable energy for both tax credits and prestige. Texas generates a large amount of renewable energy, but solar and wind still have poor storage capacity. That leaves the windmills and panels bespoke to these giant centers when in use and the industry having to rely on generators when it’s cloudy or calm.For another, Texas remains on its own power grid that can’t draw on other states when demand is high. Instead, we have a system where ERCOT appeals to the public to voluntarily reduce their usage during crunches, something that has mixed results. ERCOT can’t order a data center to shut down to prioritize residential and emergency power users, but they can offer to pay them to stop operating for awhile. It’s one more cost added to what data centers are draining from the state.

Jef Rouner
Jef Rouner
Jef Rouner is an award-winning freelance journalist, the author of The Rook Circle, and a member of The Black Math Experiment. He lives in Houston where he spends most of his time investigating corruption and strange happenings. Jef has written for Houston Press, Free Press Houston, and Houston Chronicle.

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