ERCOT's Batch Rules Are Still in Draft. Your Invoices Are Not.

Texas is ground zero for the data center grid crisis. ERCOT CEO Pablo Vegas told the House Committee on State Affairs that incoming data center projects plan to draw 410,000 additional megawatts from the grid, roughly seven times the new demand ERCOT managed just two years ago. About 87% of the incoming queue is data centers, with submissions accelerating sharply in the past six weeks.

ERCOT is responding with a structural overhaul: a new "batch interconnection process" that will prioritize connections, require upfront capital for grid upgrades, and reserve transmission capacity for the first time. "That's a big change from what we do today," Vegas said. The rules should be finalized before the 2027 legislative session, and developers who engage during rulemaking will shape terms that govern Texas data center economics for a decade.

The hearing surfaced immediate friction alongside the structural shift. State Reps. Charlie Geren and John McQueeney reported developers receiving surprise transmission utility charges reaching $24 million with just six days' notice. PUC Chair Thomas Gleeson committed to investigating. Meanwhile, ERCOT's application fee structure, authorized by legislation last year, is designed to filter speculative filers from serious developers by requiring upfront capital for feasibility studies. Ed Hirs, oil and gas expert, put it bluntly: data centers seeking grid access will need to fund their own generation or power supply.

Texas is tracking 140 planned data centers that would add 75,089 MW to the state's current 3,789 MW of operating data center capacity, per Cleanview's tracker. Bloomberg Energy projects Texas could exceed 40 GW of total capacity by 2028, representing roughly 30% of U.S. demand. The geographic spread stretches from San Antonio to Dallas, across the Panhandle, and into West Texas. Developers who assume today's pricing and timelines hold face the biggest risk: interconnection costs are unsettled, and ERCOT's batch process will reset expectations for every project in the queue.

Oracle expanded its Bloom Energy fuel cell commitment from 1.2 GW to 2.8 GW of Solid Oxide Fuel Cell systems, with deployments already underway. Bloom has parallel deals with Equinix (exceeding 100 MW across 19 data centers) and a 1 GW commitment from American Electric Power for off-grid AI facilities. Brookfield invested up to $5 billion in Bloom last year. In Indiana County, Pennsylvania, Knighthead Capital is building a $10 billion, 4.4 GW natural gas plant with an attached hyperscale campus at the former Homer City coal site, with 1,200 Kiewit workers already on the ground.

These projects confirm the pattern: hyperscalers and capital-heavy developers are solving the power constraint themselves rather than waiting in grid queues. The Homer City model is especially instructive, feeding excess generation into PJM while powering its own campus. Risk sits in execution and permitting. Bloom's fuel cell manufacturing is unproven at hyperscale deployment speeds. Homer City's stormwater discharge permit faces a May 12 public hearing, and the 2028 online date has already slipped from 2027.

Two Texas projects this week made water strategy their centerpiece. Aligned Data Centers broke ground on Project Caprock, a 540 MW campus in Hale County, deploying DeltaFlow liquid cooling with closed-loop, recirculated systems designed to protect the Ogallala Aquifer from drawdown. In Cameron County, Eneus Energy's proposed $14 billion, 2 GW facility near Harlingen prompted the Commissioners Court to unanimously pass a resolution opposing open-loop evaporative cooling and demanding transparent reporting of water and electricity usage. County Judge Eddie Trevino Jr. drew a hard line. Eneus responded by proposing a closed-cycle system using reclaimed wastewater.

Harlingen Mayor Norma Sepulveda said the City Commission began exploring a data center moratorium last week. Cameron County's resolution also calls on state lawmakers to grant local governments "meaningful participation" in data center permitting, an implicit acknowledgment that Texas law constrains county regulatory authority. Risk: if the legislature doesn't address local authority questions, counties will improvise, creating a patchwork of standards that slows permitting statewide.

Organized opposition groups surged from 142 in 24 states to 188 in 40 states in one year. Halted or delayed project value jumped from $64 billion to $162 billion, per Data Center Watch. The conflicts are escalating: Festus, Missouri voters recalled four council members over a $60 billion AI data center approval. Indianapolis councilmember Ron Gibson's home was shot at 13 times with a note reading "No data centers allowed." Port Washington, Wisconsin became the first jurisdiction to hold a referendum targeting data centers, with 66% voting to require public approval of large TIF subsidies.

In Texas, the pattern is emerging. Hays County/San Marcos rejected a $1.5 billion project 5-2. Black Mountain Energy's Fort Worth project cleared the Zoning Commission but faces sustained Echo Heights neighborhood opposition over pollution, noise, water, and the absence of municipal data center regulations before a June City Council vote. Nationally, eight states have submitted or passed development pauses, including Maine, which passed its moratorium through the House 82-62. Illinois is holding three hearings on data center standards, with Aurora already enacting noise, water, and energy study requirements. The risk is straightforward: developers who skip community engagement upfront will lose months or years to opposition, recalls, and referendums downstream.