Do Texas Data Centers Impose additional Electricity Costs on Consumers?
Texas, known for its historically low electricity prices, is facing an uncertain future as the state witnesses a surge in data centers, artificial intelligence, and bitcoin mining facilities. This influx, which has been ongoing for the past two years, is expected to significantly increase electricity demand, potentially leading to upward pressure on prices for consumers.
The West South Central Census Division, of which Texas is a part, is forecasted to account for a substantial portion of the U.S. increase in commercial and industrial electricity demand. About 34% of the increase in commercial and 69% of the increase in industrial demand nationally is expected from this region in 2025, driven largely by data centers and cryptocurrency mining operations [1][4].
AEP Texas utility region projects a substantial rise in electricity consumption, with 13 GW of new load growth between 2025 and 2030. Five gigawatts of this growth are attributed to cryptocurrency operations, and 2 GW to data centers [2]. This surge in demand is putting pressure on power availability, with energy costs rising nearly 30% since 2020 and power connections requiring long timelines [3].
The Public Utility Commission of Texas and ERCOT are considering multiple plans to increase electricity access, one of which is the Southern Spirit project. Intended to run a generator in Texas, the Southern Spirit project aims to bring electricity from other states to meet the growing demand [5]. Alabama, Georgia, and Mississippi are potential sources for this project.
However, the future of consumer electricity prices in Texas is uncertain. The number of data centers actually built will significantly influence these prices. If many of these planned data centers are built with their own power plants, as many are, this could impact the overall electricity supply in Texas [6].
Ed Hirs, an energy analyst and University of Houston Energy Fellow, suggests that a significant factor in the future electricity prices is the perceived extra capacity available when the building of these centers begins. He notes that it's not yet clear how many of these planned data centers will actually be built [7].
The increase in residents moving into Texas and the planned data facilities have caused the assumption of cheap electricity to no longer hold true. Initially, it was assumed that Texas electricity prices would remain lower than other states and countries due to the influx of data projects [8]. However, recent trends and forecasts indicate that Texans are likely to see continued gradual increases in electricity prices, partially driven by these new technology loads [1][2][3][4].
In summary, while the surge in AI, bitcoin mining, and data centers will increase electricity demand in Texas—driving infrastructure strain and contributing to cost pressures—electricity prices are influenced by multiple factors, including fuel prices, grid reliability, and supply growth. Given these trends and forecasts, Texans should prepare for continued gradual increases in electricity prices.
Data centers and bitcoin mining operations are predicted to substantially contribute to the increase in commercial and industrial electricity demand in the West South Central Census Division, with Texas accounting for a significant proportion of this increase. The projected rise in electricity consumption in Texas, driven by these new technology loads, is expected to put pressure on power availability and potentially lead to upward pressure on consumer electricity prices.
The increase in electricity demand from data centers and cryptocurrency mining operations could impact the overall electricity supply in Texas, especially if many of these centers are equipped with their own power plants. Given these trends and forecasts, Texans should be prepared for continued gradual increases in electricity prices.
