Monday, February 16, 2026

States Race to Write the Rules Before the Next Megawatt Comes Online

ERCOT's "batch zero" interconnection study won't launch until late summer at the earliest, stranding 232 GW of large load requests on a grid that has never cracked 85.5 GW of peak demand. While Texas works through that bottleneck, a wave of state legislatures from Pennsylvania to Illinois to South Carolina is racing to answer the cost allocation question: who pays when datacenters show up? The answers are diverging fast, creating a fragmentation problem that makes multi-state portfolio planning increasingly treacherous. Meanwhile, water is quietly emerging as the binding constraint nobody budgeted for, community opposition in Central Texas is escalating from testimony to shouting matches, and a 7GW campus announcement in New Mexico is testing the line between ambition and vaporware.

Today's Lead

ERCOT's "batch zero" interconnection study won't begin until late summer at the earliest, leaving 232 GW of large load requests in limbo on a grid that has never exceeded 85.5 GW of peak demand. Jeff Billo, ERCOT's vice president of interconnection and grid analysis, described the June deadline for new admission criteria as "somewhere between a target and a mandate," while the Data Center Coalition's Cameron Poursoltan warned that projects already meeting all existing requirements have waited years for approval. With the queue nearly quadrupling from 56 GW to 205 GW in roughly a year, the batch study framework still under development will determine which projects advance and which die on the vine.

[1]

Politics

The National Cost Allocation Fight Is Converging Fast

From Pennsylvania's HB 1834 to Illinois's POWER Act to South Carolina's trio of Senate bills to Michigan's legislative blitz, state lawmakers are racing to answer the same question: who pays when data centers show up? President Trump brokered an unprecedented emergency PJM auction deal with 13 governors to force hyperscalers into 15-year PPAs financing new generation, a mechanism estimated to unlock $15 billion. Illinois Gov. JB Pritzker, who signed datacenter tax incentives in 2019, now says "if they do threaten to raise rates, we've got to slow them down."

The bipartisan consensus is real, but every state is designing different rules: Illinois mandates renewables; South Carolina's S.867 creates a new permitting office with tiered water caps; Pennsylvania directs its PUC to build a framework from scratch; Michigan wants to repeal tax breaks entirely. Harvard's Ari Peskoe put it sharply: "'Fair share' is a pretty squishy term." For operators, the cumulative regulatory fragmentation makes multi-state portfolio planning increasingly unpredictable. States that move fastest on cost allocation rules will either repel or attract capital depending on how they balance ratepayer protection with development speed.

[2]·[3]·[4]·[5]·[6]·[7]

Water

The Binding Constraint Nobody Planned For

Water is emerging as the sector's next chokepoint. Bloomberg found nearly two-thirds of data centers built or in development since 2022 sit in high water-stress locations, with Texas among the top five states for new builds in acutely stressed areas. A typical 100MW facility consumes two million liters daily, per the IEA, and global datacenter water use could more than double to 1,200 billion liters by 2030. Virginia's Loudoun County saw datacenter water consumption surge 63 percent from 2019 to 2023, hitting roughly 900 million gallons. Loudoun Water's reclaimed water system delivered 736 million gallons in 2024, but only 10 percent of operators even monitor usage across their facilities.

Illinois's POWER Act and South Carolina's S.867 both introduce mandatory water reporting and efficiency standards, signaling that disclosure requirements are coming whether the industry volunteers or not. In Texas, operators like Skybox claim closed-loop systems equivalent to 15 homes' consumption, but the aggregate impact of eight approved data centers in Round Rock alone, with six not yet operational, remains unquantified. Cooling innovation helps: Microsoft's Nature study shows cold plates and immersion cooling cut water use 31 to 52 percent. The gap between technology adoption timelines and near-term demand growth is a real vulnerability, and permitting for water rights in stressed Texas basins could become the bottleneck that power never was.

[8]·[9]·[10]

Politics/Texas

Central Texas Community Opposition Is Escalating

Round Rock City Council voted unanimously to approve Skybox Data Centers' facility on nearly 30 acres, the city's eighth AI data center approval with only two operational. Residents shouted at council members after the vote. Nearby in Jarrell, residents are pushing back on the proposed 200MW Mesone Data Center ahead of a council vote, with Prominent Property Group, Savannah Developers, and Power Infrastructure Partners behind the project but no end-user publicly identified.

The Virginia Court of Appeals' September 2025 ruling in Caparoula v. Board of County Commissioners of Prince William County reinforced broad deference to local rezoning decisions even against organized opposition, a precedent that cuts both ways. In Texas, where municipalities and counties handle these fights with varying levels of sophistication, the political temperature in the Austin-to-Temple corridor is rising fast. Developers who don't address water, noise, and transparency concerns proactively risk moratorium discussions of the kind already active in Virginia jurisdictions.

[10]·[11]·[12]

Power

7GW New Mexico Ambition Meets Hard Reality

Early reports suggest New Era Energy & Digital has signed a land option for roughly 3,500 acres in Lea County, New Mexico, targeting a 7GW campus powered by 2GW-plus natural gas and 5GW-plus nuclear, with initial power delivery in 2028. The scale is attention-grabbing, but a land option is not a project. No reactor vendor, NRC engagement, or permitting timeline has been disclosed for the nuclear component, and a 5GW nuclear buildout would be unprecedented for a company of any size, let alone one that recently rebranded from New Era Helium. Water availability for nuclear cooling in southeastern New Mexico warrants scrutiny.

Separately, according to a Data Center Knowledge year-in-review, the broader behind-the-meter trend is accelerating as operators confront a projected 45 GW shortfall and multi-year utility interconnection delays. Natural gas dominates current deployments; SMRs remain aspirational with no US commercial units operational. Watch whether New Era secures anchor tenants and reactor vendors, or whether this joins the growing list of multi-GW announcements that never reach financial close.

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Sources we cited

14 articles across 12 publishers · 167 reviewed today

[1]Inside Climate News
Texas to Study ‘Batch Zero’ of Data Centers by Late Summer
Feb 15, 2026·A month after the state’s grid operator said it would pull together data centers and other large load projects that have been waiting to con…
[2]WHYY
Pa. lawmakers consider bill aiming to protect ratepayers from data centers
Oct 23, 2025·In-depth analysis and commentary on today's biggest news stories as only the BBC can deliver. BBC "Newshour" covers everything from the grow…
[3]Peoria Journal Star
How Illinois could regulate large-scale data center projects
Feb 14, 2026·CHICAGO — Amid concerns about data centers’ impact on prices, electricity supplies and the environment, two Illinois lawmakers have introduc…
[4]South Carolina Policy Council
A trio of data center bills filed in the Senate
Feb 13, 2026·Written by Neil WolinFebruary 13, 2026 Last year, the governor signed energy legislation that expedited energy projects in the state, most …
[5]The Well News
As Electricity Costs Rise, Everyone Wants Data Centers to Pick Up Their Tab. But How?
Feb 13, 2026·HARRISBURG, Pa. (AP) — As outrage spreads over energy-hungry data centers, politicians from President Donald Trump to local lawmakers have f…
[6]American Action Forum
Emergency Energy Auction to Prevent Data Center-driven Rate Increases
Jan 20, 2026·President Trump recently met with several governors of both parties and reached an agreement to direct PJM (a regional transmission organiza…
[7]Planet Detroit
‘Erosion of trust’: Michigan legislators push back on flood of data center proposals
Dec 23, 2025·- Multiple bills introduced in the Michigan Legislature are aimed at a proliferation of data center proposals. - Rep. Reggie Miller, who int…
[8]DatacenterDynamics
Is water the new power?
Jun 23, 2025·Controlling water usage remains one of the biggest questions for data centers At the end of the movie The Big Short, which focuses on the 2…
[9]Broadband Breakfast
Dateline Ashburn: The Thirst for AI Raises Alarms in Virginia
Sep 12, 2025·Drought and water restrictions have already hit 'data center alley,' but closed loop systems used by 2/3 of Ashburn data centers promise rel…
[10]KEYE
Round Rock City Council approves Skybox AI data center ordinance after hours of comments
Feb 13, 2026·The Round Rock City Council heard hours of public comment Thursday night on the Skybox Data Centers’ rezoning proposal. (Photo: CBS Austin) …
[11]DatacenterDynamics
Locals oppose data center project in Jarell, Texas, ahead of vote
Oct 6, 2025·Developer claims will offer 200MW at full buildout Local residents have voiced opposition to a data center project in Jarell, Texas, ahead …
[12]JD Supra
Virginia Data Center Zoning Case Highlights Need to Address Expanding Land Uses
Oct 7, 2025·The “cloud” is an ever-present part of modern life. It can be difficult to watch television or to read something on the internet without see…
[13]DatacenterDynamics
New Era plans 7GW AI data center in Lea County, New Mexico, powered by gas and nuclear
Nov 7, 2025·Signed land option purchase agreement for around 3,500 acres in Lea County, New Mexico New Era Energy & Digital has signed a land option pu…
[14]Data Center Knowledge
How Data Centers Redefined Energy and Power in 2025
Dec 10, 2025·Energy-efficient AI, battery storage systems, and renewed interest in nuclear have reshaped how data centers generate, consume, and manage e…

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