Tuesday, July 28, 2026

Post Security Before the Study, or Watch Your 2027 Slot Go to a Buildable Project

ERCOT's Batch Zero locks capacity by location and year and turns permanent in 2027, and Neil Osnato's open question is whether the eligibility test separates financeable megawatts from anyone willing to post security. Get that filing wrong and you're carrying land and engineering costs while a buildable project takes the slot you priced your model around.

Today's Lead

Texas just told AI developers to pay their own way onto the grid. Following Gov. Greg Abbott's June 10 directive, the Public Utility Commission of Texas outlined a rulebook that requires large loads to pay transmission charges once capacity becomes available (operating or not), post financial security before entering planning studies, and cover direct interconnection costs. PUCT expects the rulemaking complete by December, and developers targeting 2027 interconnection should be filing comments now.

[1]·[2]

NATIONAL CONTEXT

The cost-shifting consensus is hardening in Washington and in statehouses. More than 200 entities lobbied on data center issues between April and June 2026, per federal disclosures reviewed by POLITICO, more than double the same quarter in 2025. President Trump signed more than 200 companies to a nonbinding Ratepayer Protection Pledge requiring them to fund all grid and generation upgrades their facilities need, and the House advanced legislation directing state utility regulators to impose cost-allocation standards. FERC is drafting new interconnection rules that will set who pays for capacity expansion in the interstate markets.

The restrictive signals are sharper elsewhere. New York became the first state to enact a moratorium on large-scale data center construction; congressional leaders from both parties rejected a national one. In Minnesota, a Goodhue County judge paused Google's Pine Island campus, and the Minnesota Center for Environmental Advocacy has active litigation in Faribault, Hermantown, and Monticello over environmental review and open-meeting failures. Israel's Electricity Authority froze new interconnection applications 8 MW and larger for 140 days after operators filed 19 GW of requests in two months, pushing pending capacity to 27 GW. VisionWave dropped its hyperscale project citing the freeze. Texas isn't freezing anything; it's pricing the queue.

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Power

ERCOT's Batch Zero Turns Projects Into Planning Assumptions

ERCOT's new Batch Zero process replaces individual project review with a one-time study bundling proposed loads of at least 75 MW to assess combined transmission impact through 2032. It allocates capacity by location and year and becomes permanent in 2027. Neil Osnato of Persistence Analytics Group flagged the open question: whether eligibility criteria can "distinguish submitted megawatts from financeable, buildable, and durable megawatts." A developer can post security and claim capacity without building.

Bottom line: if your eligibility filing doesn't survive scrutiny, you're carrying land and preliminary engineering costs while your slot goes to a project that will actually energize.

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Politics

The $3.3B Tax Exemption Goes Under the Microscope

Senate Finance held the first full accounting of the state's data center sales tax exemption on July 27, with Chair Joan Huffman (R-17) committing to file legislation next session. Certifications jumped from a cumulative 10 through 2020 to 138 certified plus five pending, with 59 added in fiscal 2026 alone. The Comptroller projects the program at $3.3B for the 2028-29 biennium, up from $14.6M a decade ago. On nine facilities with verified capital, investment hit $9.1B against a $2.7B requirement, a 3.4x multiple; but of 20 compliance audits, six are non-compliant and one surrendered its certification.

Bottom line: developers underwriting on the current cost-per-cert and capital-to-exemption ratio should expect Huffman's bill to tighten both thresholds.

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Grid

Community Consent Becomes a Site-Selection Input

A recent poll showed 56% of registered Texas voters oppose data center development in their communities, and at least 248 projects are planned statewide. Democratic Senate candidate James Talarico staked a position that mirrors Abbott's framework: cost-sharing, environmental protections, local veto authority, and repeal of tax exemptions. Rice University political scientist Mark Jones expects Attorney General Ken Paxton to align with Abbott, "the quarterback of Texas Republicans." Frank Maisano of Bracewell said the quiet part: hyperscalers "haven't done well enough" on building bridges before building projects.

Bottom line: developers without community benefit agreements and infrastructure plans locked in now will meet a 2026 campaign that's already committed to stricter rules.

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Policy

Texas Absorbs a Wave of Self-Funded Campuses

The developers moving fastest are the ones funding their own infrastructure. Three signals landed today: - Galaxy acquired ~500 acres in McGregor for a second Texas campus (after its 1.6 GW Helios site), starting at 74 MW with power targeted for 2028. It will build and fund its own private substation and carry full tax obligations from day one, adding an estimated $130 million to the local tax base. - Hut 8's 1 GW Beacon Point campus in Nueces County commercialized two 352 MW leases; the Financial Times reported Nvidia is behind them, with a projected $50.2B in total contract value over 15 years including renewals. - CoreWeave leased Building 1 (AUS02, 578,000 sq ft) at EdgeConneX's Cedar Creek campus in Bastrop County; EdgeConneX filed for two more buildings totaling 730,000 sq ft in June, with tenants for Buildings 2-4 still unannounced.

Bottom line: Galaxy's private-substation posture insulates it from the cost-sharing disputes stalling competitors, but 2028 energization still tracks against HOTEC's build timeline and ERCOT's transmission queue.

[8]·[9]·[10]

Capital

The Interconnection Queue Is Making Behind-the-Meter Economics Look Cheap

Berkeley Lab's 2026 queue report shows over 2,060 GW of capacity waiting for grid connection, with median wait times past five years and only 13% of 2000-2020 filings operating by year-end 2025. That math is why private generation is booming. ECL's Mountain View datacenter has run two years with no utility connection, self-supplying power from hydrogen fuel cells and cooling 1,800 GPUs with condensed water; it just ordered 5 MW-class stacks from PowerCell for delivery by end of 2026. Nvidia's financing reach extends past Texas: talks to guarantee up to $250 billion to help OpenAI lease a 10 GW campus in Piketon, Ohio, with a first phase near 800 MW by 2028.

Bottom line: self-supplied, water-efficient power is the interconnection arbitrage that separates projects in the queue from projects generating revenue; the BIS has already flagged the disclosure risk when the same companies finance each other's demand.

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Water

Closed-Loop Cooling Becomes Table Stakes in North Texas

Cooling technology now determines whether a site clears permitting. Microsoft's Medina County campus agreed to cut water demand by 85% (150,000 gallons daily) after a local supplier asked for reevaluation. QTS runs closed-loop at its Fort Worth facility with monthly water use below five households combined, with a second phase underway. Black Mountain and Edged have committed to closed-loop for Fort Worth entries; CyrusOne runs air cooling and returns 20% of withdrawn water. UT Austin's Michael Webber notes closed-loop systems may need no water addition for a decade.

Bottom line: municipalities are asking harder water questions earlier, and developers who lead with quantified offsets and local supply commitments clear siting faster than those treating it as a communications afterthought. A Fort Worth Report panel convenes August 20.

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Technology

Powered Land Is the New Brokerage

Jim Kerrigan closed his first datacenter lease in 1998; today he walks farmland negotiating "powered land" for projects reaching two gigawatts, 56 times his early footprint. Hyperscalers are on track to spend nearly $700 billion this year, and McKinsey pegs total AI investment near $7 trillion by 2030. Ali Greenwood of Cushman & Wakefield in Dallas calls site identification a technical discipline that barely existed before hyperscale.

Bottom line: the workforce shortage is acute, and firms treating this as commodity real estate lose to those treating it as infrastructure engineering (power procurement, utility coordination, transmission queue position).

Water is otherwise quiet outside the Fort Worth cooling thread. National megaproject watch: Nebius detailed a 1.2 GW owned campus in Schuylkill County, Pennsylvania, with power locked via a PPL energy service agreement and 260 MW slated for October 2027, an out-of-state build that secured power before queue position.

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Sources we cited

13 articles across 12 publishers · 493 reviewed today

[1]Datacenter Knowledge
Texas Pushes AI Data Centers to Pay Their Own Grid Costs
Jul 27, 2026·PUCT outlines new interconnection rules, cost reforms and planning changes following Gov. Abbott’s order to protect ratepayers and the ERCOT…
[2]E&E News by POLITICO
[3]MinnPost
In pausing data centers, Minnesota courts did what local officials wouldn’t
Jul 27, 2026·If city leaders and a developer had their way, shovels would be breaking the soil in Pine Island by now. July was supposed to be the starti…
[4]Data Center Dynamics
Israeli Electrical Authority freezes grid processing of new data centers for 140 days
Jul 28, 2026·Applies to data centers with a capacity of 8MW or more Israel’s power grid is struggling to manage the influx of data center projects seeki…
[5]TLO Senate Committee Meetings
Texas Senate Finance takes up the data center sales tax exemption: 138 certified, 59 added this year, and a chair who says she will file legislation
Jul 27, 2026·Senate Finance spent 5.5 hours on the Tax Code 151.359/151.3595 data center sales tax exemption. Chair Joan Huffman committed on the record …
[6]MyRGV.com
Texas data centers get billions in tax breaks from the state. Should that end?
Jul 27, 2026·By Eleanor Dearman | Fort Worth Star-Telegram (TNS) Should Texas keep giving data centers a break on paying sales tax? That’s the $3 billio…
[7]Washington Examiner
Daily on Energy: Talarico brings data centers into the mix in Texas
Jul 27, 2026·WHAT’S HAPPENING TODAY: Good afternoon and happy Monday, readers! We hope you all had a restful weekend. The House is out of town, but the S…
[8]galaxy.com
Galaxy Expands Data Center Footprint with Acquisition of 500 Acre Campus in McGregor, Texas
Jul 28, 2026·Galaxy's second data center campus in Texas will grow the Company's footprint, with the execution of a services agreement with the utility f…
[9]Startup Fortune
Nvidia is financing a $50 billion Texas data center that will run on its own chips
Jul 28, 2026·Nvidia's reported $50 billion Texas data center lease is not just another AI infrastructure headline. It's the clearest sign yet that the ch…
[10]Data Center Dynamics
CoreWeave to lease capacity from EdgeConneX at data center campus in Cedar Creek, Texas
Jul 27, 2026·Bastrop County campus will feature four data centers AI cloud company CoreWeave is set to lease one of the data center buildings at EdgeCon…
[11]Autonocion.com
A California data center has run for two years with no power line at all, making its own electricity from hydrogen and cooling its 1,800 GPUs with the water that drips out of the fuel cells, and it just ordered stacks for a bigger one
Jul 27, 2026·Published: Jul 27, at 11:00am ET Hydrogen fuel cells were supposed to end up under the hood. Carmakers spent two decades and a great deal …
[12]Fort Worth Report
Data centers require substantial water, energy. Sustainable practices, technology can lessen impact
Jul 27, 2026·As interest in data centers continues to crop up in North Texas, so does concern among residents who are trying to understand just how much …
[13]CoStar
News | Here are some real estate pros behind the data center development boom
Jul 28, 2026·Jim Kerrigan brokered his first data center lease in 1998 — the same year PhD students Larry Page and Sergey Brin launched Google out of the…

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