AUSTIN, Texas — An estimated 800 industry stakeholders gathered in the heart of Texas Feb. 25-27 for Infocast’s ERCOT Market Summit to discuss and share opinions on the unprecedented expansion of energy demand.
According to ERCOT projections, demand will reach 152 GW by 2030, up 73% from its current record peak of 85.51 GW set in 2023. A flood of data centers, cryptocurrency miners, new residents, and electrification of oil and gas production in the Permian Basin is driving that demand, which will require more generation and transmission and distribution infrastructure.
That has left the Texas grid operator, the industry and the state’s policy makers and regulators scrambling to find the best way forward to deal with the coming tsunami.
Legislators have responded with Senate Bill 6, which would create rules and policies for large loads looking to hook up to the grid. The bill would hit data centers with minimum transmission charges and require generation co-located with load to serve the Texas grid during grid emergencies.
ERCOT plans to add real-time co-optimization and a new dispatchable reliability reserve service within the year. The Texas Energy Fund, voted into law in 2023, offers about $5 billion for new dispatchable generation. At the same time, the Public Utility Commission is considering whether to approve 765-kV lines into the Permian Basin to serve that load.
Will it be enough?
“We’re used to integrating 5%, 8% growth … I don’t think that we’ve ever even conceived of the magnitude of loads trying to move in so quickly in such concentrated areas,” said Scott Bruns, director of power markets for Enverus. “It’s a three-legged stool. It’s the load, it’s the generation, it’s the transmission, and we can generally build all of those in sort of sync and phase. But right now, we’re having the conversation of, ‘If we build 20 GW of demand tomorrow, do we have the ability to transmit it?’ Then, do we have the ability to generate versus whatever generation sources we want to choose?”
“The grid was always built to manage load. Whatever the load wanted to do or whenever the lights came on, generation had to spin up. Whenever the lights were turned back on, [generation] had to back down,” said Clayton Greer, vice president of Cholla Petroleum’s energy division. “That was all fine for the last 100 years. That has all been turned on its head with these data-center-type loads.”
State Sen. Phil King (R) laid out SB6 during a Feb. 27 Senate Business and Commerce hearing, saying, “These large load customers’ demand for electricity is requiring ERCOT to plan for load growth at dramatically higher levels than experienced ever in the history of Texas and, frankly, ever in the history of the United States.”
In just 2025 alone, Oracle and Open AI announced Abilene, Texas, would be the first site of its $500 billion artificial intelligence network of data centers called the Stargate Project. Apple made a big splash with another $500 billion investment in a server-manufacturing facility in the Houston region to meet the demand.
Most recently, startup developer Last Energy said Feb. 28 it plans to build 30 micro nuclear reactors, with a combined capacity of about 600 MW, north of Abilene. The company has filed an interconnection request with ERCOT and is prepping an early site permit with the Nuclear Regulatory Commission.
ERCOT told stakeholders in February it had 99 GW of flexible large loads — defined as 75 MW connected to a transmission service provider or 20 MW when connected to a resource request — in various stages of study. In 2022, it had 2.6 MW.
“Some of these requests in excess of 1,000 MW are really starting to pose a risk to things like frequency stability or other kind of larger cascading events that we just haven’t seen with loads in the past,” said ERCOT’s Agee Springer, senior manager of grid interconnections. “The size of these interconnections, I think, is a potential risk for [system] reliability.”
Building out ERCOT’s aging grid to serve load will not come cheap. The proposed EHV transmission lines into the Permian Basin will cost at least $30 billion, in addition to normal upgrades.
“There’s going to be a time sometime in this decade, sometime in the next decade if reform isn’t achieved, where a customer will open their bill and more than half of the charges will derive not from their choices in retail electric provider, but in charges that result from centrally planned, socialized cost grid decisions,” said NRG Energy’s Travis Kavulla, vice president of regulatory affairs.
NRG has joined the party too, saying during its February quarterly earnings conference call that it plans to build 5.4 GW of combined-cycle gas plants to serve data centers in Texas and Virginia. The latter leads all worldwide regions in operational data centers with about 4.6 GW of facilities, more than doubling second-place Beijing.
“One of the things that we’ll need to make sure that as we grow the load, that we don’t continue to alienate individual customers. … Eventually the consumer is going to notice, and they’re going to take up their pitchforks,” Bruns said. “And so, we need to make sure that as we bring these loads in, that it’s not onerous to the rest of the system.”
EHV Lines Offer a Lifeline
One solution to the large load conundrum could be EHV lines. ERCOT has proposed 345- and 765-kV lines as options for its Permian Basin Reliability Plan. It also has proposed using EVH facilities as part of an upgraded transmission backbone.
The PUC, faced with a May deadline to decide which way to go, is holding a workshop March 7 that features equipment vendors and infrastructure builders offering their perspectives. Commission Chair Thomas Gleeson said he wants to ensure what he’s hearing from the transmission and distribution utilities is “accurate and reflects reasonable expectation from those manufacturers.”
“I know that we’re behind on building transmission, particularly to the Permian customers,” he said. “There are no solutions. There are only trade-offs, and so we want to make sure that we build enough transmission, particularly to the Permian, where their demand is just going to skyrocket. But it has to be done at a reasonable cost and on a reasonable timeline. Any delay of getting that transmission to the Permian is not acceptable, because we’re probably 10 to 15 years behind on what they already need.”
The plan is receiving a thumbs up from many stakeholders.
“ERCOT’s 765- versus 345-kV plan is some of the best long-term planning I’ve seen come out of ERCOT in over 10 years,” said former Oncor planner and current Owl Electric Reliability Consulting principal Ken Donohoo. “They’re finally talking about the right topic, transfer capability, not just about thermal limits or voltage limits or so on. It’s about transferring those megawatts across the grid.”
“It does sound like 765, especially for the Permian Basin, is the perfect solution,” said Sumeet Mudgal, transmission planning manager with photovoltaic manufacturer Qcells. “We have to also think about the contingencies. If we are adding a line that is going to carry 5,000 to 4,000 MW, we can’t just build one 765-kV line. We should think of adding another path that is able to carry an equivalent amount of power. I think a 765 backbone transmission is what probably will become our future.”
There’s a slight kink in the plan.
Texas State Sen. Charles Schwertner (R), chair of the powerful Business and Commerce Committee, filed a bill (SB1665) Feb. 27 that requires the PUC to conduct a study before approving a 765-kV line. The study, which would assess costs to residential customers, supply chain and workforce limits, and mitigation of cost overruns, is to be submitted to a third party for review.
“We need to do it now. If we don’t do it now, inflation and supply chain issues will only increase those costs,” warned ENGIE’s Bob Helton.
How Reliable are Future Projections?
Taking part in a panel discussing ERCOT’s market design, Katie Coleman, who represents Texas Industrial Energy Consumers, was asked about the grid operator’s load projections and whether all of it will show up. Saying a demand peak of 105 GW or 110 GW is a “better number” than ERCOT’s 152 GW projection, “I’ve said this 1,000 times, like I’m screaming into the void, but you cannot forklift a transmission planning number for resource adequacy purposes. They’re measuring two completely different things. There’s also this optics issue of the load over here, but you’re not counting any of that in the resource adequacy analysis, so you’ve got to do something to align those two.
“I don’t think putting all that load in a resource adequacy analysis is the right thing to do,” she added, noting that developers are putting a capacity number in their interconnection request that finds its way into transmission and resource adequacy planning numbers alike.
“I think the other thing that we’re seeing is a very different type of interconnection activity than what my traditional industrial and manufacturing clients have done,” Coleman said. “You have an end user who wants to use electricity to produce some product. They have their own business plans that they can discuss with the utility. There’s just a race to market in this area. You’ve got people putting in speculative interconnection requests.”
Coleman and other speakers also raised concerns with ERCOT’s Capacity, Demand and Reserves (CDR) report. Delayed for two months while staff revised the load forecast and renewable capacity, the report indicated negative reserve margins within two years under the most dire scenarios. (See ERCOT’s Revised CDR Report Met with Doubts.)
“Now, all of a sudden, it looks like Armageddon. Well, the facts on the ground haven’t changed really since the prior CDR,” Coleman said, saying her clients don’t like to put money around the report. “It’s a dangerous thing to use these types of tools which are so susceptible to sensitivities and inputs to move big dollars around.”
“The CDR itself is a static snapshot in time,” Luminant’s Ned Bonskowski said. “It does not reflect market dynamism, it doesn’t reflect behavioral responses from demand loads, load flexibility. It doesn’t reflect market signals that will incentivize supply to come in.”
“The more finicky or the more fussy that we get with the CDR, the less useful it is,” added Beth Garza, ERCOT’s former market monitor now with R Street Institute.
“Even if you doubt the CDR, no one can doubt that Texas is a tight market,” Kavulla said. “It’s not unreasonable, candidly, for people to have policy concerns around adding incremental loads, and frankly, good luck finding another market and another state that doesn’t have those same concerns. Everyone has those same concerns.”
Renewables Fight Headwinds
While the focus in Texas may be on dispatchable generation (i.e., nuclear and thermal), renewables continue to set production records that justify ERCOT CEO Pablo Vegas’ frequent references to an “all-of-the-above” strategy for resources.
On March 2, renewables set a new mark for renewables-to-load ratio, at 76%. With March arriving like the proverbial lion, wind (28.47 GW), solar (24.82) and storage resources (4.83 GW) all set record highs with the calendar’s turn. According to a January report, solar and batteries account for 82% of the resources in ERCOT’s interconnection queue, or 320 GW of capacity.
Yet the clean energy resources continue to face headwinds at the State Capitol, where proposed legislation (SB819) has been filed that would require only renewable developers to jump through additional hoops for operating permits. Neighboring property owners also would gain new authority to block the developments.
“I’m going to do my best to be diplomatic here,” said the Advanced Power Alliance’s Judd Musser, who tried his very best. He said the bill is “couched as siting and permitting,” except that it’s not.
“It’s a discriminatory and punitive permitting bill towards two resources and only two resources: wind and solar,” Musser said. “It would be a devastating blow to our industry. It would take us from a market here in ERCOT, where we’ve done the most business for the last 30 years, to probably the place where we would do the least.
“As a state that has thrived in harvesting our own kind of homegrown energy for so long, I think it would be a real shame to jeopardize that in the name of partisan politics or just the fact that maybe somebody doesn’t like to look at something,” he added.
Musser warned that the legislation will send a negative message to potential investors that could have lasting effects on the state.
“[Investors] want to be here because of a friendly tax environment and access to a skilled workforce and all those things,” he said. “If you send the message to them as a legislature that you’re going to pull the rug on them or you’re going to move the goal post … I think we really risk this Texas miracle that we talk so much about kind of falling by the wayside.”
