Texas has temporarily suspended permitting for new data centers to conduct an audit of pending projects, putting several Bcf/d of potential gas demand on the backburner.
Last Monday (Aug. 3), Governor Greg Abbott issued a directive requiring the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive review of all data center projects moving through ERCOT’s permitting process for a grid interconnect. Abbott cited reliability risks to the Texas grid for implementing the pause.
The review comes as ERCOT manages an unprecedented wave of new electricity demand. The grid operator has received ~474 GW of large-load requests, the majority associated with data centers. ERCOT also recently set a new all-time peak load of 91 GW on July 22, exceeding the upper end of its trailing five-year peak load range. Together, the developments highlight the challenge of integrating rapid load growth while maintaining grid reliability.
In the ‘Data Centers’ dashboard in Energy Data Studio, East Daley Analytics currently tracks nearly 94 GW of identified data center load across Texas, including 10.7 GW already in service and more than 83 GW still under development (see dashboard above). Much of the planned capacity is expected to enter service between 2027 and 2031, making a significant portion of the project pipeline sensitive to changes in interconnection timelines and regulatory review.
Texas currently operates nearly 196 GW of installed generation capacity, including ~83 GW of natural gas-fired generation. Based on proposed projects and planned retirements, total capacity could increase to ~251 GW by 2030, with natural gas capacity growing to roughly 101 GW (see figure at right). While solar and battery storage account for much of the remaining additions, natural gas is expected to remain the state’s largest source of dispatchable generation, supporting the around-the-clock power requirements of hyperscale data centers.
The review also highlights the growing importance of power readiness. Abbott directed the agencies to gather new information for each data center project, including the extent to which data centers would provide their own electricity or depend on the ERCOT grid for power.
Projects dependent on future ERCOT interconnections could face greater uncertainty during the review, while developers that have secured dedicated power supplies, including behind-the-meter generation, may be better positioned to maintain project schedules.
However, behind-the-meter generation introduces its own challenges. Growing demand for dedicated natural gas generation is expected to lengthen lead times for gas turbines and other critical electrical equipment, shifting execution risk from grid interconnection to equipment procurement and project delivery.
East Daley recently developed a project-level risk framework that assigns each announced data center a ‘Likelihood’ rating based on permitting, power availability, timeline credibility and developer track record. The Likelihood rating is currently available in the downloadable data and will be integrated into the Data Centers dashboard in a future release for clients, providing a risk-adjusted view of project-level electricity and natural gas demand. The ERCOT review directly affects several of these factors by increasing uncertainty around project timelines and power procurement, particularly for grid-dependent projects in the early stages of development.
In our view, the project review doesn’t change the long-term opportunity for Texas; nevertheless, some projects will likely be delayed. The added uncertainty could also increase development costs and make planning more difficult, especially given the long lead times for generation and electrical equipment.
The permitting pause reinforces that project realization is becoming just as important as project announcements. As regulatory scrutiny increases, understanding which projects are most likely to secure power and move forward on schedule will become increasingly important for forecasting future electricity demand and associated natural gas consumption. – Kritika Gaikwad.
Demand is Coming. Where Will the Supply Come from — and Who’s Going to Deliver?
The largest growth cycle in US energy demand is on deck, and the infrastructure required to meet it could reshape US energy markets over the next decade.
LNG infrastructure in the Lower 48 and Mexico could grow by 45 Bcf/d by 2035, while gas-fired power generation serving data centers could add another 7.6 Bcf/d of natural gas demand. More than 32 Bcf/d of major pipeline expansions and newbuild projects have already been proposed to connect growing supply with LNG, power, residential and commercial demand.
And natural gas is only part of the story.
- Midstream consolidation is accelerating as operators position themselves from wellhead to water, including Williams’ move to acquire Momentum.
- Nearly 1,200 Mb/d of Y-grade and purity product expansions are proposed out of the Permian alone, while Mont Belvieu could face more than 1,000 Mb/d of fractionation constraints by 2032.
- A possible ATEX conversion project from liquids to gas could unleash more Northeast supply and reshape NGL flows in the region.
- Permian crude oil takeaway is already running tight, with routes to Corpus Christi at 99% utilization and Cushing/Houston routes at 92%. With only about 75 Mb/d of expansions on the books, takeaway capacity could become a constraint on future Permian growth.
- Roughly $32B per year of infrastructure has been sanctioned and underwritten by long-term contracts through 2031 — representing more than $191B of committed capital over the next five years.
Where are the biggest infrastructure gaps? Which projects get built? And which companies are positioned to capture the opportunity?
Join East Daley Analytics on August 26 at 10:00 AM MT as we connect the dots across natural gas, NGLs, crude oil and capital investment to map the infrastructure buildout ahead. Click here to register now and reserve your spot.
One Market, One Model: Gain a Holistic View of North America Supply & Demand
East Daley Analytics is pleased to announce the Canada Supply & Demand report. The Canada S&D completes our North American model, providing a fully integrated supply and demand forecast for crude oil and natural gas. East Daley follows molecules from Canadian production through US infrastructure to end-markets. Clients now have a continental view to anticipate trends, from how Canadian gas is reshaping Midwest markets, to how crude imports flow to Gulf Coast refiners. The Canada S&D report and dataset is available exclusively in Energy Data Studio. Reach out to learn more about East Daley’s North American energy model.
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