Texas Grid Faces Data Center Surge: ERCOT Warns Major Upgrades Needed to Keep Up With Exploding Power Demand

Texas’s electric grid is entering a critical turning point. The Electric Reliability Council of Texas (ERCOT) has issued fresh warnings that the state’s unprecedented surge in power consumption—driven by data centers, AI growth, and manufacturing—requires urgent infrastructure expansion to prevent strain on the grid.​

Texas Electricity Demand Surges to Historic Levels

In 2025, Texas electricity demand hit record highs. Between January and September, ERCOT supplied 372 terawatt-hours (TWh) of electricity—23% more than in 2021 and a 5% increase over 2024, making Texas the fastest-growing energy market in the country.​

Electricity consumption is poised to rise another 14% by 2026, with the growth largely attributed to the boom in AI-powered data centers, industrial operations, and renewable manufacturing projects clustering statewide.

Renewables Carry the Load—For Now

Wind and solar continue to take on a growing share of Texas's grid mix, providing 36% of total generation in 2025, according to the U.S. Energy Information Administration.​

• Utility-scale solar generation soared by 50% year-over-year, quadrupling since 2021.

• Wind generation increased modestly but remains the state’s largest renewable contributor.

• Battery storage now plays a key balancing role, outputting up to 4 gigawatts (GW) during evening peaks.

This combination—solar, wind, and storage—has helped Texas meet daytime demand spikes and limit overreliance on natural gas generation.

Natural Gas Still Dominates, But with Less Share

Even as renewables grow, natural gas still accounts for about 43% of Texas’s power in 2025. Yet its share has fallen from nearly half (47%) in 2023–2024. During midday hours, when solar peaks, gas generation’s share dropped from 50% in 2023 to just 37% this year.​

ERCOT warns that without grid reinforcement and new interconnection infrastructure, the pace of industrial expansion could outstrip generation growth by 2027.

The Data Center Effect

ERCOT has received an influx of interconnection requests totaling more than 205 gigawatts of new load capacity, primarily from massive data centers supporting cloud computing, AI, and cryptocurrency operations. These centers demand high consistency and consume power at all hours, often outstripping local transmission capacity.​

The agency is pressing state leaders and utilities to accelerate transmission upgrades, battery integration, and interconnection queue reforms—steps seen as essential to maintaining grid reliability amid exponential growth.

What This Means for Texas Consumers

While large-scale industrial demand drives much of the load increase, residential customers may soon feel the effects in their electricity costs. Rising demand can lead to transmission congestion, eroding price stability. However, this fall and early winter remain favorable periods to lock in fixed-rate electricity plans before infrastructure investments and higher wholesale costs ripple through retail pricing.

Strong Consumer Takeaway

The Texas grid remains strong, but demand is growing faster than ever before. If you live in Texas, now is the ideal time to compare electricity rates and secure a fixed plan while prices remain steady and competitive.

Enter your ZIP code to see today’s lowest rates and lock in your plan before demand growth and grid upgrades push prices higher.