Texas is quickly becoming a national hub for data center development. This growth presents major economic opportunities, such as job creation and technological advancement. However, it also raises questions about potential impact on the state’s electric grid and natural resources. Since data centers are resource intensive and projected to scale in the coming years, there is a need for an integrated policy framework that lays the foundation for a sustainable digital economy in Texas.
ERCOT’s recent projections show steep increases in electricity demand in the next few years, much of it driven by the rise of data centers. HARC, in partnership with the University of Houston Energy, has written a two-part Policy Brief titled Powering Texas’ Digital Economy: Data Centers and the Future of the Grid, which explores how data centers are evolving across Texas and what this means for the grid’s future:
Part 1 introduces why data centers are booming in Texas, the types of facilities being built, and how they operate.
Part 2 delivers critical analysis of how the rapid growth of data centers could reshape energy demand, water use, and land development in Texas. Drawing on in-depth modeling by the University of Houston Energy, the report outlines three core challenges: rising electricity load, strained natural resources, and lagging policy frameworks.
The second installment offers actionable policy solutions to ensure that Texas can support digital infrastructure growth without compromising grid reliability or our natural resources. From demand response requirements and onsite generation incentives to efficient technology standards and coordinated regional planning, the recommendations provide a roadmap for decisionmakers seeking to align economic development with long-term sustainability.
Without thoughtful planning and strategic policies, the fast expansion of data centers could overload Texas’ energy infrastructure and threaten progress toward a resilient, sustainable grid.
Together, Parts 1 and 2 present a complete framework for designing smart, sustainable data center policy in Texas.
Read the full two-part series:
