Friday, June 26, 2026

Five Tests Now Separate Real Load From Speculation in Texas

ERCOT's new five-test screen for its 368 GW interconnection queue just drew the line between real load and speculative placeholders, and the developers who pair onsite generation with grid connection are the ones who clear it. Project Kilby's 2.67 GW Chevron-Microsoft deal and the Stargate sites prove the playbook: secure power, water, and local buy-in upfront, or wait for rules written without you.

Today's Lead

Texas is sorting committed AI load from speculation, and the mechanism is now live. The Public Utility Commission of Texas approved ERCOT's "Batch Zero" study in June 2026, a single centralized framework that tests very large new power users against one readiness standard: site control, active permitting, financing plans, equipment orders, and realistic load forecasts. With ERCOT projecting demand could hit 368 GW by 2032, queue position is becoming destiny.

The developers who secured power first are already pulling ahead. The ones banking on future grid capacity face longer queues and higher capital costs. That's the whole game in Texas right now.

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Power

Co-located generation is how the smart money skips the queue

Chevron and Microsoft signed a 20-year PPA committing 2.67 GW of dedicated generation to a West Texas data center under Project Kilby, structured through Chevron subsidiary Energy Forge One LLC. The mix stacks GE Vernova gas turbines with Solar Turbines capacity, phased and modular, targeting final investment decision by end of 2026 and first power in 2028. That's the same logic driving execution across the OpenAI Stargate sites: Abilene (1.2 GW), Shackelford (2 GW), and Milam County (1.2 GW) all stay on track because they pair onsite gas with grid interconnection rather than depending on ERCOT clearance alone.

The constraint isn't generation, it's wires. ICF projects 21% demand growth by 2030, but reserve margins in ERCOT and PJM are already gone, and Rob Gramlich of Grid Strategies calls it plainly a grid delivery problem. Developers betting on grid power alone face 12 to 18 month delays or cancellation. Those who secure dedicated power at cost move into 2026 and 2027 while utilities that can't deliver speed and certainty lose share.

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Water

Closed-loop cooling cuts the demand, but the campus still drinks

Nvidia's DSX reference design runs next-gen Rubin infrastructure on near-zero water using 100% closed-loop liquid cooling at 45°C inlet temperature, claiming roughly $4 million in annual cooling savings for a 50 MW facility. Microsoft says it hit fleet-wide water positivity in 2025, five years early, cutting water use effectiveness to 0.27 L/kWh and sourcing 79% of its San Antonio operation from recycled or non-potable supplies. Chevron's Kilby project flags brackish groundwater for cooling instead of freshwater. The engineering is real and it reshapes where projects can move fast.

But Nvidia's win stops at the building wall: makeup water, process water, and water-intensive upstream generation still count. A University of Texas study found a single large data center consumes as much water annually as more than 5,000 homes, and less than a third of Texas operators answered the state's mandatory water survey, with some preferring the $500 noncompliance fine to disclosure. Developers who model total campus water demand and secure offsets early defuse the opposition vector before it reaches a county commissioners court.

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Politics

Texas counties move while the Legislature waits for 2027

Hays County commissioners enacted an emergency water protection review period this week, pausing data center construction through year-end and standing up a board to evaluate groundwater impacts. The state itself doesn't track data center development, and Gov. Abbott has pivoted from calling Texas an AI "epicenter" to naming industry regulation a priority for the 2027 legislative session. At least 248 projects are planned atop 335 existing facilities, per Texas Tribune analysis of Cleanview and Data Center Map data. SB 6, enacted June 2025, already shifts grid-connection costs onto customers roughly 75 MW and up and allows curtailment during emergencies.

The friction is sharper out of state, which is the contrast worth holding. Wisconsin's PSC raised collateral requirements on Oracle's $15 billion Lighthouse campus after negotiations closed, potentially adding $100 million annually in letters of credit, and Oracle is suing over the process. Ohio's 88 counties regulate piecemeal, with Butler County's six-month moratorium the latest. Texas developers who establish disclosure norms, lock water and power commitments upfront, and engage local officials now will shape the 2027 rules. The ones who wait will inherit whichever framework gets written without them.

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Sources we cited

8 articles across 7 publishers · 323 reviewed today

[1]Datacenter Knowledge
Texas AI Data Centers: Power, Policy, and Progress
Jun 25, 2026·The future of AI infrastructure is taking shape in Texas, where policy reform, power-first strategies, and transmission constraints are dete…
[2]ESG News
Chevron, Microsoft Sign 20-Year Power Deal for 2.67GW West Texas AI Data Center
Jun 24, 2026·West Texas is becoming a test case for one of the biggest questions facing the AI economy: who can deliver power fast enough to keep it grow…
[3]NextBigFuture
Major AI Data Center Build Projects – Timelines, Status 2026–2028
Jun 25, 2026·Epoch.ai tracks the top ~17+ frontier sites via satellite. SemiAnalysis uses its Datacenter Industry Model for hyperscaler self-build/coloca…
[4]Datacenter Knowledge
ICF Warns Grid Deliverability May Limit AI-Era Power Growth
Jun 25, 2026·US electricity demand could rise 39% by 2035, but a new ICF report suggests the bigger challenge may be delivering power to fast-growing loa…
[5]Tech Times
AI Data Center Water Use Is Not Solved: Nvidia’s Cooling Fix Stops at the Walls
Jun 26, 2026·On June 22, 2026, Nvidia published a reference design claiming its next-generation AI data centers can run on virtually no water at all. The…
[6]Data Center Dynamics
Microsoft claims water positivity across data center operations
Jun 26, 2026·Did not disclose water consumption levels Microsoft has claimed that it has achieved water positivity across its operations, five years ahe…
[7]Austin American-Statesman
Time for Texas leaders to take data center regulation seriously | Editorial - Austin American-Statesman
Jun 25, 2026·Construction of the Sabey Data Center abuts a Round Rock neighborhood last August. State leaders must enact polices to protect neighbors fro…
[8]Texas Tribune
Hundreds of data centers are coming to Texas. Here’s what you need to know.
Jun 26, 2026·In the span of a couple years, hundreds of massive electricity- and water-hungry data centers have proposed construction in Texas — a verita…

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