Texas is no stranger to power grid anxiety. Between the heat that's only getting hotter, an aging fleet of power plants, and the challenges of integrating renewable energy, the system is fragile.
Now, a boom in energy-hungry computer data centers is adding a new element of risk this summer.
“How many are coming? That’s still TBD, but we know that they are explosively growing,” ERCOT CEO Pablo Vegas told lawmakers in one of two hearings this month at the state capitol.
Vegas said many of those centers mine cryptocurrency. But more and more of them are being built to support artificial intelligence systems. They are drawn to the state thanks to low energy costs, minimal regulation and a booming economy. But they use a lot of energy.
“If you do a Google search and just look up, ‘What is ERCOT?’ If you did that with a regular Google system versus an AI Google search, the amount of energy that it takes to run the AI search is between 10 and 30 times the power requirement than to do a traditional Google search,” Vegas said.
Many estimates you find online appear to be on the lower end of that spectrum. But it’s clear that Texas, in particular, could find that growing energy demand challenging.
Ever since a deadly blackout in 2021, state officials have worked to strengthen the power grid. They’ve started programs to subsidize new power plants and improve transmission lines.
But, those things take years to build. Data centers — some that use as much energy as small cities — can be built in just a matter of months. That is a serious challenge for grid operators, says Doug Lewin, who publishes the Texas Energy and Power Newsletter.
“How do we build enough infrastructure to accommodate a new city popping up in six months, with effectively no notice?” he asks.
The answer: maybe you don’t.
'The most worrisome thing'
State officials have long declared Texas “open for business.” Reveling in each victory as they lured things like Tesla’s new gigafactory and Samsung's new microchip plant to the state.
But now, some wonder whether data centers are worth it.
Cryptomines and data centers “produce very few jobs compared to the incredible demands they place on our grid,” Lt. Governor Dan Patrick posted on X, formerly known as Twitter, after the hearings. “Texans will ultimately pay the price.”
State lawmakers, likewise, peppered this month’s hearings with questions about whether the state could put the brakes on data center growth, or compel the companies to pay for their increased energy transmission needs.
“That’s sort of wild to think about,” Lewin said. “That’s a huge, huge break from the way things have been done.”
Assuming that cryptomines and data centers are here to stay, grid operators say they would like new rules to allow them to better monitor the facilities' energy use and potentially control it.
Despite recent legislation compelling cryptomines to register with ERCOT, Vegas told members of the House State Affairs Committee that about half of companies still have not.
“On legislation [...] what would be more helpful for ERCOT is to have more visibility to what these large loads are doing,” he said. “And so a good place to start could be making sure we can track and even potentially control the [energy] loads of cryptos.”
At a recent ERCOT board of directors meeting, Dan Woodfin, the group's vice president of system operations, said the inability to forecast energy use by cryptomines and similar big power consumers was "the most worrisome thing" going into this summer.
ERCOT puts the chance of rolling blackouts at around 12% in August.
Demand is outpacing supply
In the electricity business, what Vegas proposes — reducing energy use by certain users at certain times — is often called a “demand side” solution to grid challenges.
The idea is that you can strengthen the grid more cheaply and quickly by lowering energy consumption rather than increasing supply.
“We cannot build the grid fast enough to keep up with demand… Even before we had every damned crypto and data center ... move to Texas,” Alison Silverstein, a consultant and former state and federal energy official, told KUT.
Texas currently consumes more energy than any other state. Silverstein has long advocated for increasing energy efficiency standards in the state to help bolster the energy system.
A recent study from the American Council for an Energy Efficient Economy says improving efficiency standards in Texas would be a more economical way of reducing high energy demand in the summer and winter to strengthen the grid.
Silverstein says it would not only mean people need less power to cool their homes, run their appliances and do business, it would also go a long way toward keeping the lights on.
But lawmakers and regulators have traditionally balked at improving efficiency in Texas, a state known for producing energy not conserving it.
Silverstein says that may be changing, as the challenges of rapidly increasing energy demand become clearer to those in charge of the Texas power system.
At one recent hearing ERCOT’s Vegas referred to efficiency and demand response as an essential tool in keeping the Texas grid stable.
Silverstein says the question is whether that rhetoric will turn into state policy.
"That’s when we’ll know that they really mean it in terms of demand-side solutions, and it's not just hand waving,” she says.
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