The Texas Data Center Market Has 448 data centers, operated by 127 providers, according to Baxtel.com which tracks data centers and their development. Baxtel reports the Texas data center market uses 9,402 megawatts of electricity which is equivalent to approximately 7.8 million homes, assuming continuous full-capacity generation and average U.S. household electricity use. And more data centers are being built for Texas.
By 2030, data centers are projected to proliferate an estimated tenfold across Texas. ERCOT projects that by 2031, the grid will need to double its 2024 capacity 2024—from 85 gigawatts to up to 218 GW, in mainly due to the growth of data centers.
A data center is a specialized facility that houses computers, servers, and networking equipment used to store, process, and transmit large amounts of digital information. Think of it as the “engine room” of the internet — where the websites visited, the videos streamed, the emails sent, and the apps used are all running from.
But data centers are also used for crypto mining, cloud storage and artificial intelligence.
There are multiple reasons why Texas is becoming a data center hotspot. Texas has plenty of large, flat, inexpensive parcels of land which are ideal for sprawling data center campuses. Rural and semi-rural areas (Abilene, Lockhart, Red Oak, Laredo) offer room to expand without the high costs of the coastal metro areas. Texas’ deregulated power market can offer lower rates, especially for high-volume industrial users. The state has a culture of being business-friendly with few zoning restrictions compared to other states. Local government will likely provide tax breaks and incentives for development deals. Texas also has the infrastructure for major internet backbone connections, making it easier to move data quickly nationwide.
Therefore, it makes sense that Texas is seeing rapid growth in data centers.
The San Antonio data center market has 56 data centers, and currently 13 data centers under construction in the San Antonio area. In Austin 13 sites are under construction. Dallas has 39 and West Texas 22 data centers are under construction.
The most significant mega data project under construction is in Abilene where the Stargate campus is being developed. When completed, it will be about 60 acres larger than New York City’s Central Park. Construction of the campus’ first two of ten buildings are expected to finish this summer.
The Stargate Project is a $500 billion investment announced by President Donald Trump in January. It’s a joint venture by OpenAI, Oracle, and SoftBank. Stargate Texas is the first but at least 19 more will follow across that nation.
There are many more being planned. For example, "Data City, Texas" near Laredo is a massive, 50,000-acre data center hub being planned by Energy Abundance Development Corp. It’s slated to begin construction in 2026. Initially, the data centers will run on natural gas produced in Texas, but the company plans to transition to 100 percent green hydrogen sourced from its hydrogen salt dome storage facility in the future.
In Caldwell County, a gargantuan 2 GW data center “megasite” is planned for 2028, located on 1,500 acres near Lockhart. It's not yet under construction.
In the San Marcos area, two large projects are planned—one by CloudBurst/Energy Transfer aiming for 2026 completion, and another by Highlander SM One LLC on 200 acres. Both are currently in early planning stages.
There is a boom in Texas in massive AI data centers as the state seeks to position itself as the hub for the infrastructure that is projected to transform civilization. But as much of the attention has been focused on the energy demands the water consumption of AI is frequently overlooked—which is counterintuitive in drought vulnerable Texas.
However, despite all the advantages that Texas offers to build data centers, Texas lacks water—and data centers need a lot of water to cool their processing servers and to generate electricity—unless it comes from wind or solar.
A new policy brief from the Houston Advanced Research Center (HARC) and UH Energy warns that the cooling systems needed to keep these massive facilities running can require millions of gallons of water each day, depending on the technology used. The average, midsized data center uses 300,000 gallons of water a day, roughly the use of a thousand homes. Larger data centers could use 4.5 million gallons a day, depending on their type of water-cooling system. While some modern centers employ air-cooling or hybrid systems to reduce demand, many still rely heavily on water-intensive evaporative cooling, particularly in hot, dry regions of the state.
The report notes that site selection for new data centers often overlooks long-term water availability. With much of Texas already facing recurring drought cycles, experts say this could create conflicts between industrial and municipal needs, especially in fast-growing areas.
“Energy demand gets most of the attention, but water is the hidden constraint,” the brief cautions. “In some regions, large data centers could compete directly with residents, agriculture, and industry for scarce supplies.”
HARC’s analysis calls for stronger planning and regulatory oversight, including requirements for developers to disclose projected water use, invest in water-recycling systems, and consider locations where reclaimed or non-potable water is available. Without such measures, the report warns, the digital economy’s expansion could deepen Texas’s water stress and leave communities vulnerable in future droughts.
As the state courts billions of dollars in new tech investment, the authors argue that balancing economic growth with responsible resource management will be key. “Water is not limitless,” the report states. “Ignoring its role in data center planning is a risk Texas cannot afford.”
