Texas Data Center Developers Play Offense on Water, Claiming Huge Cuts in Usage

Texas is grappling with increasing demands for electricity and water from data centers, prompting state officials to seek clearer data on consumption. Public Utility Commission Chairman Thomas Gleeson emphasized the need for understanding data center water usage to a state House committee. This comes as developers, including Skybox Datacenters and Lancium, are actively promoting new closed-loop cooling systems, claiming they significantly reduce water consumption compared to older evaporative methods. Haynes Strader of Skybox Datacenters highlighted that their average facility uses less water than five typical households, while Michael McNamara of Lancium detailed minimal water use at their large Stargate Campus in Abilene and a plan to give back water at their Childress facility. The state Senate Business and Commerce Committee is tasked with recommending policies to balance economic growth with impacts on water infrastructure and property rights, ahead of the 2027 legislative session. A key focus is the implementation of Senate Bill 6, a new law aimed at regulating data centers and their electricity use, especially those consuming at least 75 megawatts. This legislation seeks to manage the rapid growth of data centers in Texas, which is projected to surpass Virginia in new construction. Developers, however, are expressing frustration over the state's reworked grid interconnection queue under SB 6, as the Electric Reliability Council of Texas (ERCOT) transitions from individual project studies to a batch-based approach to handle the overwhelming volume of requests. ERCOT CEO Pablo Vegas explained that the previous system, designed for 40-50 projects annually, could not cope with last year's 225 new requests and a current waitlist of 410,000 megawatts, largely driven by data centers. Major corporate stakeholders like Google, Meta, Amazon, and OpenAI have voiced concerns about the uncertainty and risks posed by the current process. The new batch study method, with admission criteria to be announced by June, aims to alleviate these issues and ensure projects have the financial maturity to proceed, shifting transmission costs to large-load users. Lancium's Michael McNamara proposed fast-tracking projects, like his own, that commit significant financing to transmission infrastructure, expressing worry about potential unfairness in batch selection.