Thursday, February 19, 2026

Water, Not Power, Will Decide Who Wins the Texas Data Center Race

Black Mountain Power's 430-acre data center just cleared Fort Worth zoning unanimously, but CEO Rhett Bennett couldn't specify how much water the facility will consume. That's the Texas data center story in miniature: 6.5 GW under construction, a real shot at overtaking Northern Virginia by 2030, and no regulatory framework for the resource that'll actually run out first. A single midsized facility drinks 300,000 gallons daily, and as Margaret Cook of the Houston Advanced Research Center put it, communities permitting these projects are "gambling against being able to get new water from future State Water Plans." SB 6 gave ERCOT emergency load-shedding authority over 75 MW+ users, but nothing equivalent passed for water, leaving the PUC's upcoming rulemaking to sort out a competition where the binding constraint isn't on anyone's scorecard yet.

Today's Lead

Texas is on track to overtake Northern Virginia as the world's largest data center market by 2030, with 6.5 GW under construction and a structural shift in site selection now driven almost entirely by power availability. JLL's latest market analysis shows North American data centers at 1% vacancy for the second consecutive year, with 35 GW in the construction pipeline and $710 billion in 2026 capex from the top five cloud providers alone. Grid connection timelines now stretch four years or more, pushing hyperscalers toward behind-the-meter generation and making ERCOT's abundant generation mix across solar, wind, and natural gas the decisive competitive advantage.

[1]·[2]

Water

Texas's Binding Constraint Isn't Electricity, It's Water

Water is the quieter crisis alongside power. Texas hosts 448 data centers consuming 9,402 MW, with a tenfold expansion forecast by 2030. A single midsized facility drinks 300,000 gallons daily; OpenAI's Stargate campus in Abilene will consume far more. Margaret Cook, VP of Water and Community Resilience at Houston Advanced Research Center, warned that communities permitting datacenters are "gambling against being able to get new water from future State Water Plans." Senate Bill 6, signed into law in late June 2025, gave ERCOT emergency load-shedding authority over 75 MW+ users, but no equivalent water-use regulation passed.

In Fort Worth, Black Mountain Power's 430-acre project cleared zoning unanimously, yet CEO Rhett Bennett couldn't specify water consumption figures, and nearby Weston Gardens president Jackson Weston raised alarm about potential groundwater depletion. Phoenix's nearly 60 data centers already consume approximately 177 million gallons per day. Querétaro, Mexico, where 17 of 18 municipalities face severe water stress, offers a preview of what unregulated datacenter water demand looks like in drought conditions. The gap between energy policy and water policy in Texas is widening at exactly the wrong moment.

[3]·[4]·[5]·[6]

Politics

States Diverge Sharply on Datacenter Oversight, Creating a Regulatory Patchwork

Minnesota Sen. Jen McEwen (DFL-Duluth) plans legislation imposing a two-year datacenter moratorium while the state reviews environmental and infrastructure impacts. Sen. Erin Maye Quade (DFL-Apple Valley) is reintroducing bills to ban NDAs in datacenter development and eliminate $30 million per biennium in state tax exemptions. North Carolina Democratic Rep. Lindsey Prather (NC-115) sponsored ratepayer protection legislation last spring that stalled in committee. Wisconsin faces 4 GW in combined requests from just two projects, with utilities citing datacenter demand to justify new gas plants and delay coal retirements.

Texas took a different path with SB 6: rather than moratoriums, it imposed cost-sharing mandates, remote-disconnect capability, and behind-the-meter disclosure requirements on 75 MW+ loads. Claire Swingle, Senior Analyst at CPower, said the law will "enhance grid reliability across ERCOT by accelerating collaboration between utilities and large energy users." Moratorium states will redirect demand to permitting-friendly markets. Texas's regulatory willingness to set rules without freezing development could accelerate its lead, but only if the PUC's rulemaking on transmission cost allocation and priority exemptions keeps pace with project timelines.

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Power

Supply Chain Signals Confirm This Isn't Cyclical

Vertiv's Q4 results put hard numbers on what the industry already suspects: this build cycle isn't peaking. Organic orders surged 252%, backlog hit $15 billion at 2.9x book-to-bill, and large customers are placing 12 to 18-month delivery windows pushing fulfillment into 2027. CEO Giordano Albertazzi rejected pull-forward concerns, saying the pipeline is "growing quarter to quarter." Meanwhile, oil and gas majors are moving aggressively into datacenter power. ExxonMobil and NextEra are building a 1.2 GW dedicated gas plant; Chevron partnered with GE Vernova on gas-fired datacenter supply. The Union of Concerned Scientists warns these deals lock in fossil infrastructure behind opaque agreements with zero public disclosure.

In Texas, Tract expanded its Caldwell County campus to nearly 3,000 acres supporting up to 4 GW, with 360 MW grid energization through Blue Bonnet Electric Cooperative targeted for 2028. Separately, 1606 Corp. (OTC: CBDW) signed a non-binding term sheet to acquire a 55 MW captive generation facility in Lufkin, Texas for $11.67 million, though closing depends on inspection, financing, and definitive documentation. Transformer scarcity and power delivery sequencing will likely become binding constraints before physical construction bottlenecks emerge.

Texas Spotlight: SB 6's Real Teeth Are in the PUC Rulemaking

SB 6's passage created the framework; the PUC's implementation will determine whether it actually works. The law requires 75 MW+ loads to cover grid connection costs, disclose backup generation capable of meeting 50% of demand, install remote-disconnect capability, and report behind-the-meter agreements for ERCOT evaluation. The PUC has 180 days to approve, deny, or condition behind-the-meter setups, with auto-approval as the default. The question now is how aggressively the PUC interprets its authority on transmission cost allocation, which industries win priority exemptions from the kill switch, and whether the 180-day review window creates a de facto fast lane for well-capitalized hyperscalers. If rulemaking lags project timelines, developers will exploit

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Sources we cited

12 articles across 11 publishers · 258 reviewed today

[1]Datacenter Knowledge
Could Texas Overtake Northern Virginia as the Data Center Capital?
Feb 18, 2026·Fresh analysis from JLL indicates that explosive capacity growth, rising rents, and power constraints are reshaping where data centers are b…
[2]Data Center Frontier
Vertiv’s AI Infrastructure Surge: Record Orders, Liquid Cooling Expansion, and Grid-Scale Power Reshape Data Center Growth
Feb 16, 2026·Vertiv’s latest earnings report confirms what many data center developers and operators already suspected: AI infrastructure demand has move…
[3]Austin Chronicle
Texas Is Still in Drought, and AI Data Centers Are Quietly Guzzling Up Water
Jul 24, 2025·After Donald Trump and Elon Musk’s public breakup, Sam Altman replaced Musk as the president’s new favorite tech guy. Altman, the CEO of Ope…
[4]Fort Worth Report
Data center on 431 acres in southeast Fort Worth moving forward amid environmental concerns
Sep 30, 2025·An energy giant is set to break ground for a data center project across about 430 acres in southeast Fort Worth amid concerns about noise po…
[5]Lockhart Post Register
Texas’ Data Center boom is surging, but so are questions about power and water
Feb 19, 2026·Texas is quickly becoming the engine room of America’s digital future, and the numbers are staggering. According to Baxtel.com, which track…
[6]Mongabay
AI data center revolution sucks up world’s energy, water, materials - news
Nov 14, 2025·In 2024, the state of Querétaro in north-central Mexico suffered its worst drought in a century, impacting crops and communities. Seventeen …
[7]Minnesota Women's Press
Minnesota Lawmakers and Activists Call for Moratorium on Data Centers
Feb 19, 2026·Activitists concerned about the Big Tech incursion into communities without strong environmental and economic impact oversight was the subje…
[8]WHQR
What are data centers? Here’s how they could affect your power bill
Feb 16, 2026·A data center is a warehouse full of computer servers that provide data and power for online businesses, including additional space to save …
[9]Data Center Frontier
Texas Senate Bill 6: A Bellwether On How States May Approach Data Center Energy Use
Jul 2, 2025·Texas Senate Bill 6, signed into law in late June of 2025, imposes mandates on large energy users (like data centers) to fund infrastructure…
[10]Wisconsin Examiner
Wisconsin’s data center moment: Protect customers, power growth with clean energy
Jan 23, 2026·Data centers are mushrooming all over the country, with many planned projects on deck in Wisconsin. We need to get ahead of them by putting …
[11]Union of Concerned Scientists
Data Centers Are Not a License to Drill - The Equation
Feb 18, 2026·Tell me if this sounds familiar: Your city entered into an agreement with a developer to build a massive data center on the outskirts of tow…
[12]Business Insider
1606 Corp. Signs Term Sheet to Acquire 55 MW Texas Power Generation Facility and 50,000 Sq. Ft. Data Center-Ready Infrastructure Site
Feb 17, 2026·PHOENIX, Feb. 17, 2026 (GLOBE NEWSWIRE) -- 1606 Corp. (OTC: CBDW) (“1606” or the “Company”), a publicly traded Nevada corporation focused…

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