Texas’s power grid, approximately 55 years old, is long past its prime. Reports show that the state saw an estimated 263 power outages from 2019 to 2023 alone. Now, when the power grid of America’s beloved Lone Star State is already stretched thin due to fast renewable integration and slow transmission upgrades, it is truly being pushed to the limit by a rush of AI and data center developments. While utilities forecast that new power won’t be available for years, developers are not deterred.

In San Antonio, grid operators informed data center operators they would not receive another megawatt of power until 2032. For most companies, that would be a signal to stand down. But data center developers are moving ahead with construction plans, resorting to behind-the-meter power sources like natural gas turbines and fuel cells to stay on course.

Experts at Texas-based IIR Energy, an energy market intelligence firm powered by Industrial Info Resources, indicate the trend as a milestone for Texas energy and technology industries. The firm’s research teams are observing how growth in data centers is transforming power usage, grid stability, and the economic landscape of the state.

The Texas Boom That Outpaced the Grid

Texas has become one of the hottest data center markets in the nation. IIR Energy estimates around $2.7 trillion in data center projects underway globally, with roughly $1 trillion in new capital spending invested in the United States in the last nine months. Much of this momentum is in Texas. Builders continue flocking to the state due to its mix of renewable energy, business-friendly tax incentives, and low-cost real estate.

Shane Mullins, IIR Energy’s Director of Global Power, explained how, in San Antonio, developers have already been informed that it will be 2032 before they can utilize another megawatt of power for growth. “It’s not holding up developers,” he said. “They’re just finding a way to do it another way.”

That resolve illustrates a larger truth: the digital economy is expanding faster than the infrastructure that supports it.

Behind the Meter: How Developers Are Adapting

To avoid delays on the grid, Texas developers are capitalizing on on-site generation systems to keep plans on track. The behind-the-meter strategy enables facilities to generate power independently, typically from natural gas-fired engines, small gas turbines, or fuel cells.

By building on-site power facilities, operators are becoming resilient and adaptable.
Mullins called this transition a revolution in how industry considers power. “Every data center is now a power project,” Mullins stated. “And every data center that’s not a power project is influencing the power industry.”

These developments bring technology and energy production closer together, with each new plant bringing stress as well as opportunity to the larger system.

A Reliability Crisis in the Making

Despite innovation, experts warn that Texas’s energy infrastructure is lagging behind. While renewable generation has grown rapidly, it cannot fully support AI’s constant power requirements.

Vice President of Power Industry Research at IIR Energy, Britt Burt, stated the imbalance is worse. “We’ve added a lot of wind, solar, and battery storage, but not much baseload generation—and that’s what we depend on every day to meet demand. The system hasn’t caught up,” he added.

While demand for electricity rises by up to two percent annually, reliability issues are accumulating nationwide. Texas, previously touted as energy independent, has become a benchmark for the consequences of digitalization outpacing infrastructure upgrades.

Coal-fired plants have postponed retirement to maintain pace with increasing load requirements, and wholesale prices have risen up to 800 percent in regional capacity auctions.

Reliable Data Matters

In this high-speed market that’s changing by the day, accurate information is critical. IIR Energy’s proprietary research approach enables its analysts to track projects from announcement to in-service, providing insight into developments that are actually happening and those that will fall short on grid constraints.

Executive Vice President of Marketing and Analytics at IIR Energy, Mike Bergen, noted that the value of the company lies in that level of verification. “We track projects through to completion,” he said. “So, at any given point in time, we can actually say how much of this $2 trillion market is actually approved and moving forward.”

This transparency gives confidence to energy traders, utilities, banks, and investors when making choices about where to invest and how to prepare for increasing demand.

In the end, the grid challenge in Texas is a national one: how to reconcile AI-driven innovation with sustainable, scalable energy supply. As Texas, the U.S., and beyond keep a close eye on the industry and data center progression, IIR Energy surfaces as more than a provider of numbers. They help determine where the next wave of opportunities and risks will land. Seeing those dynamics now will inform how Texas fuels the AI decade to come.

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