Texas is experiencing an artificial intelligence-driven data center boom, with at least 248 new projects planned across the state, according to a recent analysis by The Texas Tribune. The surge is reshaping the state’s energy and water landscape while prompting calls for regulation from state officials.
The analysis, based on data from Cleanview and Data Center Map, found that Texas currently has 335 existing data centers with hundreds more in the pipeline. North Texas leads with 86 planned projects, followed by 56 in Central Texas and 45 in West Texas, as Houston Public Media reported. Nearly half of the planned data centers are set to be built in unincorporated areas not governed by cities or towns, marking a shift from existing data centers where only 12 percent are in unincorporated areas.
The state has become a magnet for data center developers because of cheap land, available power, fiber infrastructure, and a business-friendly regulatory environment. Dan Diorio, vice president of state policy for the industry association Data Center Coalition, said Texas’s ability to build energy infrastructure relatively easily has attracted projects, along with its strong workforce and available land, water, and fiber infrastructure.
However, the rapid expansion is raising concerns about water and power consumption. Data center servers generate significant heat, requiring extensive cooling systems that consume large volumes of water. One estimate from The University of Texas at Austin suggests data centers could account for 3% to 9% of Texas’s total water use by 2040, up from less than 1% today, according to a UT Austin white paper.
Google plans to use closed-loop cooling systems in water-stressed regions of Texas. Ben Townsend, head of infrastructure and sustainability at Google, said an initial fill for the system per building can range from 1.5 to 2 million gallons, equivalent to the average use of more than 6,000 U.S. households, as reported by Houston Public Media.
Gov. Greg Abbott has shifted from celebrating Texas as an epicenter of AI development to signaling that regulation will be a priority for the 2027 legislative session. Nearly 60% of planned or under-construction data centers are in state House districts that voted for Trump and elected a Republican representative in 2024, the Tribune found. Rachel Hanes, policy director at Greater Edwards Aquifer Alliance, said the industry has long relied on non-disclosure agreements and the absence of disclosure requirements.
Critics have questioned whether billions in tax breaks given to data centers outweigh their investment in local communities. Meanwhile, the tech industry argues that tax incentives are crucial to maintain investment. Meta has announced a free job training program with Texas as a pilot location, and Amazon Web Services has touted increased jobs and renewable energy projects. With Abbott now signaling regulation is coming, the industry’s freewheeling growth in Texas may face new constraints in the years ahead.
