As artificial intelligence (AI) technology surges ahead, the hidden cost of this innovation is becoming increasingly visible—especially in Texas. The Lone Star State, long a magnet for tech and energy development, is now facing growing strain from energy-hungry data centers rapidly expanding to support the AI revolution. But at what cost?
Why Texas Is Ground Zero for the Data Center Boom
Texas has always been appealing to tech developers due to its cheap land, low regulation, and abundant energy supply. With major cities like Dallas, Austin, and San Antonio becoming regional tech hubs, it’s no surprise that dozens of data center projects are setting up shop across the state.
According to a recent analysis from News From The States, the number of massive facilities requiring over 100 megawatts of power—each equivalent to powering a medium-sized city—is skyrocketing.
How Much Energy Are These Centers Consuming?
The rise of generative AI, such as ChatGPT and large language models, requires immense computing power. This means data centers must scale like never before. A single AI data center can consume the same electricity as 350,000+ electric vehicles annually.
In a report by the Houston Chronicle, the Electric Reliability Council of Texas (ERCOT) projects that peak demand could double by 2030, rising from around 85 GW to over 145 GW. This growth is driven largely by AI data centers, crypto mining, and hydrogen facilities.
Gas Power: A Quick Fix or Long-Term Problem?
Because the grid can’t keep up with these huge power draws, many developers are opting to build their own on-site natural gas power plants. A notable example is the Stargate site in Abilene, backed by OpenAI, which plans to deploy nearly 1 gigawatt of gas turbines (Tom’s Hardware).
Similarly, a $4 billion data center campus near Dallas, launched by investment firms KKR and ECP, will be powered by a direct agreement with a gas plant, ensuring uninterrupted electricity (Financial Times).
While effective, this model raises serious questions about greenhouse gas emissions and Texas’s ongoing reliance on fossil fuels.
The Water Crisis No One Talks About
Cooling servers requires not just energy but water. AI-focused data centers use millions of gallons per day for evaporative cooling. As Texas battles frequent droughts, this is sounding alarms for environmentalists.
In a piece by the Dallas Observer, researchers warn that rapid data center development may be putting local water supplies at risk, especially in rural and arid regions.
Are Renewables Being Left Behind?
While natural gas remains the go-to for fast deployment, companies like Meta are investing in large-scale solar PPAs (power purchase agreements) to balance their footprint. One recent deal included 600 megawatts of solar energy for future data centers in Texas (Chron.com).
However, grid instability, lack of transmission lines, and ERCOT’s fragmented market design still make renewables a slower and riskier path compared to fossil-based generation.
What This Means for Texans
The boom comes with real tradeoffs:
- Higher energy prices for residential users.
- Grid reliability risks, especially during extreme heat or cold events.
- Environmental degradation from new gas plants and water overuse.
- Unequal distribution of infrastructure benefits and burdens.
Policymakers are now exploring ways to manage this explosive growth. Proposals include demand fees, curtailment clauses, and encouraging large users to invest in self-generation or storage. According to the Texas Tribune, the regulatory debate is heating up as lawmakers try to keep up with the tech industry’s pace.
The AI boom promises revolutionary changes to productivity, science, and business. But powering that progress comes at a high price—and Texas is paying it first. As energy demand balloons, the balance between economic opportunity and environmental responsibility will define the next chapter of this digital frontier.