Peak demand for the Texas grid is projected to hit 145 GW by 2031 – nearly double current peak demand – as AI data centers flock to the state, and the state’s power authority, the Electric Reliability Council of Texas (ERCOT), is playing catchup to address this historic demand.
Texas is facing an unprecedented transformation as 2025’s AI CAPEX boom drives a surge in demand for electrons, prompting ERCOT to make big changes to how it processes and manages large loads like data centers.
On the latest Blockspace Pod, Tom Kleckner, a veteran energy correspondent from RTO Insider, joined the show to discuss how ERCOT is managing the massive interconnection queue for AI data centers, plus the implications of Texas Senate Bill 6 for these data centers.
ERCOT and Texas officials are leaving no stone unturned as they address the AI CAPEX boom as they propose new ancillary services, change who pays for transmission infrastructure, and tweak the Four Coincident Peak (4CP) program.
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ERCOT interconnection queue surges amid AI demand
The latest long term forecasts for the Texas grid indicate that peak power demand could jump 70% to 145 GW by 2031. This surge is driven largely by a rush of data center companies deploying AI and high performance computing infrastructure in the state.
By mid November, the 5-year large load interconnection queue (anything 75 MW or greater) had swelled to 233 GW, representing a nearly 300% increase from the beginning of the year. (It’s worth noting that some of these GW come from the same company filing for capacity with multiple energy providers).
Data centers currently account for approximately 73% of these interconnection requests. The sheer volume of applications has outgrown ERCOT’s existing review processes, which were originally designed to handle only 40 to 50 large loads at a time.
As one solution to manage this backlog, ERCOT has proposed a “batch process” system. This new approach will group requests, starting with a “Batch Zero” baseline, and enforce missed milestone requirements to ensure capacity is held only for viable projects.
Senate Bill 6 shifts costs to large loads, mandates remote disconnect during emergencies
A recent bill from the Texas Senate will also change who pays for critical infrastructure to pipe power from producer to its end source.
State regulators are working to implement Senate Bill 6, a law passed in 2025 that mandates standardized interconnection rules and, in some cases, shifts transmission costs to large load users.
Under these new definitions, a large load is classified as 75 MW or greater connecting to the ERCOT grid. ERCOT CEO Pablo Vegas has stated the goal is to ensure these large loads pay an equitable share of the cost to erect transmission infrastructure that will largely benefit them.
In addition to cost allocation, the legislation authorizes the Public Utility Commission to develop mandatory and voluntary demand management programs. The mandatory program applies to loads of 75 MW or greater and allows utilities to remotely disconnect load during grid emergencies.
These changes come amid ERCOT mulling over how to change its 4CP program, which is used to manage capacity and load during peak grid demand over the summer months, to adapt to the surge in data center demand.
ERCOT weighs new ancillary services and future fundraising
Bitcoin miners, data centers, and other large load consumers in Texas will also soon have a new ancillary service for managing costs and load.
ERCOT is also fleshing out the Dispatchable Reliability Reserve Service (DRRS), a new ancillary service mandated by state law in 2023.
This product aims to support grid stability by procuring capacity that can respond to fluctuations in supply and demand. While Bitcoin miners, like CleanSpark (Nasdaq: CLSK), often participate in voluntary curtailment due to economic incentives, AI data centers are viewed as less flexible, necessitating these stricter reliability frameworks.
Finally, looking toward funding future generation, the Texas Energy Fund has made $10 billion available, with roughly three fourths designated for dispatchable gas power to shore up baseload capacity. While there is interest in nuclear energy and small modular reactors, the immediate focus for bridging the supply deficit remains on natural gas and the integration of battery storage.
