State of Texas: House committee hears testimony on data center growth

The Texas House State Affairs Committee recently convened to hear testimony regarding the rapid growth of data centers across the state. Lawmakers expressed significant concerns over the substantial electricity and water requirements of these facilities, despite industry representatives highlighting their economic benefits. State Capital Correspondent Adam Schwagger reported that these discussions are expected to influence legislation in the upcoming session.

Texas has emerged as a key destination for data centers, attracting developers with low-cost energy, available workforce, and land. The American Edge project indicates that Texas ranks second only to Virginia in both existing and planned data center capacity. Future projects are projected to be far more intensive, with facilities growing from 40 megawatts a decade ago to 500-1000 megawatts today. Lawmakers are particularly focused on ensuring that residential ratepayers are not burdened with the costs associated with connecting these data centers to the state's energy grid.

During the hearing, data center representatives argued for the economic advantages, citing examples like Loudoun County, Virginia, which has reportedly lowered taxes due to data center revenue. ERCOT and the Public Utilities Commission also discussed plans to streamline the electricity approval process for data centers to enhance speed and reliability, aiming to support Texas's economic growth. Concerns about water usage were also addressed by some representatives, who pointed to the industry's adoption of closed-loop water systems designed to recirculate water after an initial large intake. These data center discussions are slated to continue throughout the 2026 legislative off-year.