- Texas is projected to become the largest US data center market by 2028.
- State data center grid demand could exceed 40 gigawatts within three years.
- Reliance on onsite power generation is rising due to grid constraints.
- Major tech firms and investors are accelerating construction investments in Texas.
AI Acceleration Fuels Growth
The Real Deal reports that Texas data centers are expanding fast, driven by the AI boom and rising demand for land and electricity. Google, Nvidia, and Anthropic have launched major projects. Oracle, OpenAI, and SoftBank also teamed up on Project Stargate, a major joint venture.
Texas offers key advantages: cheap land, lower costs, easy access to natural gas, and fewer regulations. These benefits give it an edge over states like California and Oregon. Texas now looks set to surpass them as the top data center hub.
Power Demand Spurs Onsite Generation
According to a Bloom Energy report, Texas data center electricity demand is forecast to reach over 40 gigawatts by 2028, up from 8 gigawatts in 2025. This jump will set Texas above other US markets for overall data center power use.
Growing challenges in obtaining grid connections are pushing more data center operators toward onsite generation, particularly leveraging Texas’s natural gas supply. By 2030, about one-third of all US data centers are expected to feature their own power generation systems.
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Capital and Construction Ramp Up
Investment in Texas data centers is rapidly increasing. Over $3.4B in new data center projects were registered in the state in 2025, with $1.4B in new project budgets announced in December alone. Developers are now focusing on adapting to both the power supply environment and rapidly growing data needs.
What’s Next
Artificial intelligence workloads are driving massive demand for data centers. Texas is ready to lead the US market in size and innovation. Developers see onsite power generation as a strategic necessity. Grid connection delays push operators to find alternatives. These shifts solidify Texas’s position in the fast-changing data center landscape. But a growing shortage of gas turbines could complicate this transition, adding new pressure on developers relying on onsite power. As operators rush to secure long-term energy strategies, equipment availability becomes as critical as location or cost.
