What you need to know about data centers in Texas

Key Points:

• Texas is experiencing a surge in data center construction, with at least 248 new projects planned, driven by demand for artificial intelligence infrastructure and the state's business-friendly environment and lax regulations.
• Data centers require massive amounts of electricity and water, mainly for cooling servers, raising concerns about their impact on Texas' already strained energy grid and water resources; estimates suggest data centers could use up to 9% of the state's water by 2040.
• While industry leaders highlight economic benefits such as job creation, renewable energy investments, and community programs, critics argue that generous tax breaks for data centers outweigh their contributions to local communities.
• Texas officials, including Gov. Greg Abbott, have shifted toward increased regulation, proposing to repeal tax exemptions, tighten oversight on infrastructure costs, and task lawmakers with studying data center water usage ahead of the 2027 legislative session.
• Local communities have shown mixed responses, with some imposing bans or moratoriums on data center construction, while others face legal challenges; environmental groups continue to advocate for stronger regulations to mitigate resource strain.