Texas lawmakers discuss impact of data center growth in hearing

Texas state lawmakers held a hearing to discuss the rapid growth of data centers across the state, prompted by increasing community pushback. The hearing provided a platform for data center industry leaders to present their case, emphasizing the economic benefits. They reported that the industry contributed $65.8 billion to Texas's GDP and generated $4.5 billion in state and local tax revenue in 2024, supporting over 428,000 jobs. Much of the criticism directed at data centers revolves around environmental concerns, including air pollution, noise, and water consumption, particularly given water scarcity in some parts of the state. In response, one data center developer asserted that their average facility uses less water annually than five houses. The discussion also focused heavily on the potential strain on the Texas power grid. Hanes Strader, Chief Development Officer at Skybox Data Centers, stated that their goal is not to increase transmission costs or decrease grid reliability for Texans, suggesting data centers act almost as a reverse battery by consuming existing capacity that can be released during backup generation. Lawmakers additionally questioned data center leaders regarding state and local incentives, particularly sales tax exemptions, which Texas offers along with 36 other states. Some lawmakers expressed support for either limiting these tax breaks or eliminating them entirely. Today's hearing was limited to invited testimony, but the committee plans to hold another public hearing later this month, and a Senate committee is expected to hold a separate hearing on data centers this summer at the Texas Capitol.