Big Tech's Grid Bypass Meets a 14-State Backlash

SB Energy, SoftBank's U.S. energy arm, has been tapped to build a 9.2-GW natural gas power complex near Portsmouth, Ohio, valued at $33 billion, as the anchor project of a $550 billion U.S.-Japan strategic investment framework. The deal's first $36 billion tranche also includes a $2.1 billion deepwater crude export terminal off Brazoria County, Texas, tied to the Texas GulfLink project. No details on plant configuration, permitting pathway, grid interconnection, financing, or in-service date have been disclosed, leaving this a political announcement rather than a shovel-ready project. SB Energy already operates a 5-GW-plus portfolio including the 900-MW Orion Solar Belt serving Google's Midlothian datacenter in Milam County, and in January 2026 signed a 1.2-GW datacenter lease with OpenAI as part of the Stargate initiative.

Big Tech is building its own power infrastructure to sidestep grid queues. Cleanview has identified 47 off-grid datacenter projects nationwide, with GW Ranch in West Texas consuming 8,000 acres and more electricity than Chicago via on-site gas and solar. TigerDC's $3 billion Project Spero in Spartanburg County, South Carolina plans 550 MW of on-site natural gas generation across three phases, with Phase I targeting 100 MW by 2027. Former Biden energy official Jigar Shah warned that Big Tech's capital advantage will outcompete utilities for transformers, turbines, and maintenance equipment, inflating costs for ratepayers.

In Texas, this trend compounds ERCOT's planning challenge: if the largest loads bypass the grid entirely, transmission investment assumptions and reliability models built around centralized dispatch become unreliable. The result is a two-tier energy system where hyperscalers self-generate while utilities absorb stranded costs passed to residential and commercial customers.

Senator Bernie Sanders (I-VT) announced legislative support for a nationwide datacenter moratorium Tuesday, backed by over 200 groups including Texas-based physician networks. At least 14 states now host municipalities with active moratoriums. Meta's Newton County, Georgia facility consumes roughly 10% of county daily water; its Louisiana "Hyperion" campus caused a 600% spike in local car crashes during construction, closing an elementary school playground.

Virginia's legislature remains deadlocked at its session midpoint: both chambers passed bills allowing utilities to delay service to customers exceeding 90 MW for reliability reasons, but disagree sharply on enforcement mechanisms, tax incentive conditions, and effective dates. The $2 billion annual cost of Virginia's datacenter tax exemption is a flashpoint, with approaches ranging from extension to 2050 (outgoing Gov. Glenn Youngkin's budget) to outright cancellation (Sen. Danica Roem, D-Loudoun). In San Marcos, Texas, the city council rejected a datacenter rezoning plan, reinforcing a pattern of local resistance overriding state-level permissiveness. If moratorium momentum reaches Texas municipalities at scale, the state's core competitive advantage of minimal zoning friction erodes fast.

Texas Spotlight: 6.5 GW Under Construction, but the Resource Squeeze Is Real

JLL research shows Texas has 6.5 GW of datacenter capacity under construction, one-fifth of the 35 GW added to the U.S. pipeline last year. ERCOT projects datacenters will drive a 71% surge in Texas energy demand by 2031. Central Texas between Temple and San Antonio has emerged as the nation's top secondary datacenter market with at least 55 completed or planned projects. The water math is punishing: a 100 MW facility consumes roughly 2 million liters daily, and large facilities can match a town of 50,000.

Rural South Carolina's playbook of nondisclosure agreements and fast-track winter-storm votes to approve billion-dollar projects is already replicating across Texas counties, particularly in water-stressed regions. The Illinois Farm Bureau's new resolution requiring water withdrawal plans before datacenter permitting signals a governance model that Texas counties may face pressure to adopt. If water constraints or community vetoes fragment the permitting pipeline, the 2030 market leadership timeline compresses dangerously.

The Illinois Farm Bureau passed a resolution in December requiring datacenter developers to submit water withdrawal plans to counties before permitting. The American Farm Bureau Federation followed with a national resolution in January. LaSalle County Farm Bureau President David Isermann raised a parallel concern about energy cost inflation for farmers competing with datacenters for regional power. Ryan Reeverts, an Ogle County farmer, voted against rezoning 500-plus agricultural acres to industrial near Constellation Energy's Byron Clean Energy Center, citing aquifer depletion risk.

Michigan's situation adds a different water dimension: 40% to 75% of Great Lakes residents depend on groundwater despite living near 20% of the world's surface freshwater, and groundwater shortages already occur in every Great Lakes state. The organized farm lobby brings political infrastructure, fundraising capacity, and rural voter mobilization that ad hoc community groups typically lack. Should this model reach Texas agricultural counties courting datacenter development, the permitting calculus shifts materially.

A podcast discussion with Drew Baglino, former Tesla energy and powertrain lead, flagged Heron Power's solid-state transformer technology as potentially eliminating roughly 70% of traditional electrical equipment at datacenters by distributing power directly to racks. Traditional transformer manufacturing bottlenecks have stretched interconnection timelines by months or years. If SSTs reach commercial deployment, the implications for ERCOT's interconnection queue and Texas datacenter buildout timelines are significant. Key unknowns: manufacturing scale, regulatory acceptance by grid operators, and cost validation in real deployments. No commercial pilots have been announced publicly.