As data centers seek to tap Texas’ energy, grid regulators are close to approving a new way of vetting requests

This article was originally published by Texas Tribune.

If you look at recent forecasts for future demand on Texas’s energy grid, the state must find a way to more than quadruple its energy production in the next six years or risk high energy prices and blackouts.

However, the Electric Reliability Council of Texas, the energy grid operator that produces the forecasts, says they are wrong thanks to a massive influx of data centers prematurely requesting connection to the grid.

“Our existing process really was not designed for the volume of large load interconnection requests that we have been experiencing,” Jeff Billo, ERCOT’s vice president of interconnection and grid analysis, said at the organization’s June 2 board meeting.

Interconnection requests from “large loads” like data centers, cryptocurrency mines and industrial facilities that use significant amounts of energy have forced ERCOT to revise its planning and approval process to keep pace with a changing world and economy. ERCOT now wants to evaluate data centers in batches, voting June 2 to proceed with its first combined study, or batch, of such facilities, known as “Batch Zero.”

That new process for vetting energization requests from energy-intensive facilities will be reviewed and potentially approved by the Public Utility Commission of Texas on Thursday.

ERCOT’s last preliminary forecast issued in April found a peak load forecast of 367,790 megawatts in 2032, far exceeding the highest recorded peak demand for Texas’ grid — 85,508 megawatts in August 2023. That is largely due to over 250,000 megawatts of forecast demand from large load projects, ERCOT CEO Pablo Vegas said at the June meeting.

The current system, built for a large load queue totalling 40 to 50 projects, is now bogged down by the 225 new interconnection requests ERCOT received in 2025, according to a December report. About 70% of the large load projects requesting connection to the ERCOT grid are data centers, according to ERCOT.

This rate of requests makes it harder for ERCOT to evaluate what electric infrastructure it needs to build in a given area to connect a data center to the grid when other nearby projects are being proposed so frequently. The current process is also challenging data center developers because by the time one data center finishes its planning studies, those results are out of date almost immediately by other data centers joining the interconnection queue and changing local transmission needs.

Matthew Boms, executive director for the Texas Advanced Energy Business Alliance, said that while ERCOT does not have an exact number, many of those data center connection requests will never come to fruition. Speculators put their names in the queue seeking to capitalize on the “gold rush” of data center development without doing the necessary work to actually get a new data center financed, approved and built. All companies have to do to get in line is to fill out an information form.

“The old, one-at-a-time interconnection process wasn’t built for hundreds of gigawatts of large load requests,” Boms said. “Texas as a state is welcoming all of these growth opportunities, but ERCOT and the (PUCT) have to separate real projects from paper projects and protect grid reliability, which is always the No. 1 issue for us in Texas.”

The new process aims to separate the “mature” proposals from the speculative ones by evaluating proposals in groups, Billo said.

“Batch Zero” will be made up of data center proposals that have already secured financing and land to build on. It’s not clear how many or which companies are in the batch to be vetted, but most likely all of them will be data centers.

The vast majority of data centers in the queue will be eligible in subsequent batches, which will face new regulatory hurdles to be set next year, Billo said.

ERCOT has spent much of this year seeking feedback on the process from corporate stakeholders, including Google, Meta, CenterPoint, Amazon and OpenAI, which are all looking for grid capacity in Texas. The effort began after the PUCT, which oversees ERCOT, urged the grid operator to rework its process to meet the coming energy demand.

“That was sort of our ‘put a man on the moon by the end of the decade’ moment, and we rallied internally,” Billo said.

Vegas lauded his organization’s efforts, noting ERCOT is one of the first grid operators in the country to grapple with the question of how to address the rapid growth of their interconnection queue.

“When we get this done, it will be the first step in that solution set actually being defined,” Vegas said. “We could potentially be solving a national issue on how to do this in a way that can be done reliably, stably, with consideration for the economic growth considerations, with consideration for the cost implications and with consideration for the reliability and stability of the grids that are going to support these assets.”

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