Texas Tackles AI Power Demand With New Data Center Grid Rules

Texas regulators approved a new process Thursday for reviewing grid-connection requests from large power users, such as data centers, as artificial intelligence drives a surge in electricity demand.

The Public Utility Commission of Texas approved a plan from the Electric Reliability Council of Texas to evaluate large energy users’ requests in groups rather than individually.

The change comes as Texas faces a wave of proposed data centers and other energy-intensive facilities that could significantly increase demand on the state’s electric grid. The new process is aimed at helping ERCOT identify projects that are likely to move forward and better plan for future power needs.

ERCOT approved its process earlier this month, including an initial group of projects known as “Batch Zero.” The first group will focus on projects that are further along in development, including those that have secured land and financing.

The commission’s clarification of the process would help with implementation as large energy users seek to connect to the grid, PUC Chair Thomas Gleeson said.

“I think this makes our implementation more congruent with what we’re going to see in this space going forward,” Gleeson said.

Bryn Baker, state director for the Texas Energy Buyers Alliance, called the transmission planning process the “cornerstone of ensuring reliable load interconnection.” The group was also glad to see the initial study batch include projects for which transmission had already been planned.

Baker said the Alliance also supports ERCOT’s intention to implement comprehensive transmission reforms in its next batch.

“Load additions depend on available transmission to energize—enabling more qualified loads will boost the state’s economic competitiveness,” Baker said in an email.

The rapid growth of data centers has forced Texas officials to reconsider how the state plans for new power demand while balancing the economic investment tied to AI.

Gov. Greg Abbott (R) this month directed PUC and ERCOT officials to take steps to shield residential customers from paying for infrastructure needed to support data center growth.

“Data centers must operate in ways that reduce costs for residential electricity customers, do not drain water needed for our communities, and take into consideration the needs of our neighborhoods,” Abbott said.

Abbott said he also plans to work with lawmakers next session on legislation addressing data center energy and water use.