State lawmakers examine exploding growth of data centers across Texas

The Texas House Committee on State Affairs held a hearing in Austin to examine the exploding growth of data centers across the state, which have become a point of controversy for residents concerned about their impact on the Texas power grid and local resources. ERCOT CEO Pablo Vegas testified that data centers constitute 87% of the new projects in its interconnection queue, proposing a new 'batch approach' to approve projects to ensure grid reliability and provide stability for developers. This process would require significant financial deposits to secure transmission capacity and prevent wasted infrastructure. Data center industry representatives, including Skybox Data Centers Chief Development Officer Haynes Strader and Data Center Coalition Vice President of State Policy Dan Diorio, made a case for the industry's economic value, citing $65.8 billion contributed to Texas GDP and over 428,000 jobs. They addressed common criticisms regarding water consumption, stating modern facilities are highly efficient, and electricity usage, asserting the industry is committed to paying its full costs and can even aid grid stability through backup generation. Lawmakers also discussed tax exemptions for data centers, with some expressing interest in limiting or eliminating them. The committee plans another hearing, potentially later this month, for public testimony, and a Senate committee is also expected to hold discussions this summer. The issue is set to be a key topic in the next legislative session in January.