Wednesday, February 25, 2026

Co-Located Power Is the New Default. Texas Counties Can't Stop It.

Google and AES just signed a 20-year co-located power deal in Wilbarger County that puts the generation assets directly on the data center campus, sidestepping ERCOT's transmission bottleneck entirely. AES now claims nearly 12 GW in signed data center energy agreements, and they're not alone: Amp Z is pursuing 2.1 GW near Lufkin, 1606 Corp. is acquiring a 55 MW biomass plant for behind-the-meter operations, and Soluna is converting curtailed wind into compute in Willacy County. Meanwhile, the counties where these projects are landing have almost no tools to shape what's coming. Hays County's own legal counsel killed a proposed moratorium on water-intensive development, State Sen. Paul Bettencourt asked the AG to investigate any such attempts, and San Marcos rejected a $1.5 billion project outright after hundreds protested. With the next regular legislative session not convening until January 2027, the gap between local resource pressure and local regulatory authority is widening fast.

Today's Lead

Google and AES have locked a 20-year co-located power deal for a new data center campus in Wilbarger County, Texas, with AES owning all generation assets and providing powered land, interconnection, and energy management. The deal advances a model that bypasses grid congestion entirely: AES brings the power plant to the data center site, avoiding the transmission bottleneck choking Texas expansion. Critical details remain undisclosed, including generation capacity, fuel type, water requirements, and construction timeline, but AES now claims nearly 12 GW in signed data center energy agreements, 9 GW via direct hyperscaler PPAs.

[1]·[2]

Politics

Texas Counties Hit Legal Wall on Data Center Regulation, Demand Special Session

Hays County commissioners wanted a 30-day moratorium on water-intensive developments exceeding 20,000 gallons per day. Their own legal counsel killed it: Hays County Assistant District Attorney Chase Young warned of "significant legal liability," and State Sen. Paul Bettencourt (R-Houston) asked Attorney General Ken Paxton to investigate any moratorium attempts. Texas statute bars counties from regulating zoning or development approvals, full stop.

Meanwhile, seven activists and roughly two dozen supporters rallied at the Capitol demanding Gov. Abbott call a special session, with Hood County residents and Rena Schroeder, a Republican Senate candidate in South Texas, framing data center expansion as a rural threat. Separately, San Marcos City Council rejected a $1.5 billion data center project after hundreds of protesters mobilized.

Local governments face acute resource pressure but lack statutory tools to respond. The next regular legislative session doesn't convene until January 2027. Counties are boxed in, and developers know it. Watch whether Abbott signals any willingness to call a special session, or whether counties attempt workarounds through water utility drought emergency declarations.

[3]·[4]

Power

Half of 2026 Data Centers Face Delays as Captive Generation Models Multiply

Sightline Climate research identifies 16 GW of data center capacity planned for 2026, nearly triple 2025 levels, but only 5 GW is under construction and a quarter of 140 tracked projects haven't disclosed power plans. Between 30% and 50% face delays from power constraints, equipment shortages, and local opposition.

Texas is spawning alternative models in response. Near Lufkin, Amp Z is pursuing a 2.1 GW hybrid campus on a former paper mill site, combining utility service from Oncor with on-site generation. Nearby, 1606 Corp. signed a term sheet to acquire a 55 MW former biomass plant for pure behind-the-meter operations. Soluna Holdings is converting curtailed wind energy into compute at its 166 MW Project Kati in Willacy County, with initial energization underway. These reflect a structural response to what Sightline's Olivia Wang calls "steeper challenges" than 2025.

If interconnection queues don't clear, captive generation becomes the default path. The risk cuts both ways: projects dependent on grid connection face delay, while captive-power projects face permitting and equipment supply bottlenecks of their own.

[5]·[6]·[7]

Power/Politics

The Cost-Shifting Playbook Spreads Beyond Texas

Multiple jurisdictions are converging on the same answer to datacenter-driven grid costs: make the hyperscaler pay. In Minnesota, Google's Pine Island project features a "Clean Energy Accelerator Charge" binding Google to all electric service costs, paired with 1,900 MW of new generation (1,400 MW wind, 200 MW solar, 300 MW storage). In Louisiana, SWEPCO confirmed Amazon will cover all transmission and substation costs for a new Northwest Louisiana facility.

According to a JD Supra analysis, over 200 data center bills were introduced across 50 states in 2025, with 40+ enacted. California has proposed special tariff classes for loads above 75 MW. New York's governor proposed full interconnection cost recovery from large-load projects lacking job creation. This legislative momentum creates a fragmented compliance map. Can hyperscalers absorb full infrastructure costs across dozens of jurisdictions without repricing capacity commitments? Federal preemption litigation is a growing possibility.

[8]·[9]·[10]

Power/Politics

Grid Curtailment Is Becoming an Operational Reality for Data Centers

During Winter Storm Fern in early 2026, the U.S. Department of Energy issued an emergency order authorizing Duke Energy, PJM, and ERCOT to compel data centers to switch to backup generators. Brief switchovers occurred — hyperscalers ran on diesel. The Uptime Institute's Daniel Bizo warned that AI workload growth and grid operator expectations are reshaping resiliency demands. S&P Global and World Economic Forum scenario analyses project weather-driven costs could hit 9.5% of total data center asset value by 2055.

For Texas operators, ERCOT's positioning of data centers as emergency load-reduction assets directly conflicts with always-on SLA commitments. Curtailment has moved from planning scenario to operational event. Watch for ERCOT policy refinements on curtailment protocols and whether hyperscaler contracts begin pricing in load-shedding risk.

[11]·[10]

Sources we cited

11 articles across 9 publishers · 326 reviewed today

[1]Data Center Dynamics
Google to develop 'clean energy' colocated data center in Wilbarger County, Texas
Feb 24, 2026·Set to be powered by onsite 'clean energy' developed by AES Google has announced a new data center in Wilbarger County, Texas, to be powere…
[2]Stock Titan
Google’s new Texas data hub gets 20-year clean power deal
Feb 24, 2026·AES (NYSE: AES) announced 20-year Power Purchase Agreements with Google to provide co-located generation and powered land for a new Google d…
[3]Austin American-Statesman
Hays County wants power over data center development, commissioners say - Austin American-Statesman
Feb 25, 2026·SAN MARCOS — Hays County is joining an increasing push for state lawmakers to give local governments more regulatory authority over industry…
[4]Reporting Texas
Texans Demand Special Legislative Session for Data Center Debate
Feb 24, 2026·Photography By Rachel N. Madison Protesters opposing data centers rally at the Capitol to call for state action. Rachel N. Madison, Reporti…
[5]Latitude Media
Up to half of the world’s data centers may be delayed this year
Feb 24, 2026·An analysis by Sightline Climate finds local opposition and moratoriums are derailing billions in planned data center builds. The post Up to…
[6]The Lufkin Daily News
Trump calls for AI firms to generate own power as Lufkin data center projects advance
Feb 25, 2026·The Aspen Power plant in Lufkin is pictured in November 2014. Nevada-based 1606 Corp. announced last week that it has entered into a nonbond…
[7]Datacenter Knowledge
Soluna CEO on Stranded Renewables, AI Data Centers, and a 'Grid Revolution'
Feb 24, 2026·The green energy data center firm is using untapped renewable energy to spark a new wave of AI data centers that promote grid efficiency. A…
[8]FOX 9 Minneapolis-St. Paul
Google building data center in Pine Island, Minnesota - FOX 9 Minneapolis-St. Paul
Feb 24, 2026·A general view of the Google Midlothian Data Center where Texas Gov. Greg Abbott and Alphabet and Google CEO Sundar Pichai are scheduled to …
[9]Stock Titan (AEP/SWEPCO)
Amazon data center brings grid upgrades, no added costs for SWEPCO users
Feb 23, 2026·SWEPCO (AEP) announced Amazon will build a new data center in Northwest Louisiana, bringing customer-funded utility upgrades that SWEPCO say…
[10]JD Supra
State Regulation of Data Centers: Emerging Trends and Potential Legal Complexities
Feb 24, 2026·Data centers are proliferating across the United States—and across the legislative and regulatory agendas of state and local governments. In…
[11]Datacenter Knowledge
How Data Centers Are Adapting to Extreme Weather
Feb 25, 2026·From Texas to São Paulo, data center operators are adopting smarter site selection, resilient design, and operations playbooks to withstand …

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