Texas is on track to become the largest data center market in the United States within the next few years, driven largely by the rapid expansion of artificial intelligence, cloud computing, and digital infrastructure. A new report from Bloom Energy projects that the state’s growth in data centers will outpace every other region in the country, fundamentally reshaping electricity demand, grid planning, and energy investment decisions across Texas.
The report, published Tuesday, finds that grid demand driven by data centers in Texas alone could exceed 40 gigawatts (GW) by 2028. To put that number in perspective, one gigawatt is enough to power roughly 700,000 homes for a year. While Texas already operates the largest power grid in the continental United States, the scale and speed of projected growth present challenges that extend beyond simple capacity additions.
A Rapidly Growing Baseline
As of 2025, data centers in Texas have a maximum power demand of about 8 GW. During the same period, the state’s overall grid peak demand reached 94 GW, according to the Electric Reliability Council of Texas (ERCOT), which manages the state’s independent grid. While data centers currently represent a relatively modest share of peak demand, their growth trajectory is steep.
Texas already hosts approximately 387 data centers scattered across the state, serving cloud computing, enterprise data storage, streaming services, and increasingly, artificial intelligence workloads. AI has become a major driver of demand because training and running advanced models requires enormous computing power, and therefore vast amounts of electricity.
Bloom Energy’s report, which is based on surveys of electric utilities and data center developers conducted throughout much of last year, suggests that Texas’ share of national data center capacity will rise faster than any other state over the next several years.
Why Texas Is Attracting Data Centers
Several factors explain why Texas has become such an attractive destination for data center development. The state offers relatively inexpensive natural gas, abundant land suitable for large industrial facilities, and a regulatory environment that is generally more favorable to building new gas-fired power plants compared with states such as California or Oregon.
These advantages matter because modern data centers are not only large consumers of power, but also highly sensitive to reliability, cost, and permitting timelines. Operators often prefer markets where they can secure both land and long-term power supplies with fewer regulatory hurdles.
According to Bloom Energy, the growth of data centers in Texas is expected to push the state ahead of other top markets that face tighter restrictions on new power generation. As other states grapple with constraints on fossil fuel infrastructure or long interconnection queues, Texas has positioned itself as a place where large-scale energy users can move faster.
Bigger Data Centers, Bigger Demands
Not only are data centers increasing in number, they are also growing in size. Bloom Energy projects that by 2030, one in five data centers nationwide will exceed 1 GW in maximum energy demand. By 2035, that figure is expected to rise to one in three.
Facilities of that size rival the electricity demand of major cities and require careful coordination with utilities, grid operators, and fuel suppliers. In Texas, where some individual data center campuses are already planned at multi-gigawatt scale, this trend is particularly pronounced.
Nationally, Bloom Energy estimates that maximum energy demand from data centers was about 80 GW in 2025. By 2028, that number is expected to surge to 150 GW. This rapid expansion is occurring faster than many utilities originally planned for, creating friction between developers seeking power and utilities responsible for delivering it.
A Growing Disconnect Between Developers and Utilities
One of the report’s key findings is the widening gap between data center developers’ expectations and utilities’ ability to supply power on desired timelines. In Texas, developers responding to the survey typically expected to be connected to the grid about a year earlier than utilities believed that power would actually be available.
This mismatch reflects broader challenges in grid planning. Transmission upgrades, new power plants, and substations often take years to permit and build. Meanwhile, data center projects are moving from concept to construction at unprecedented speed, fueled by competitive pressure in the AI and cloud markets.
Bloom Energy concluded that this disconnect is likely to grow as demand accelerates. As the report states, “Power can no longer be treated as a downstream consideration. Operators that continue to plan projects around traditional grid assumptions risk falling behind on both schedule and scale.”
Onsite Power Generation Gains Momentum
To manage these risks, more data center developers are turning to onsite power generation built alongside or directly connected to their facilities. This approach can reduce reliance on grid upgrades, shorten timelines, and provide greater control over reliability.
Bloom Energy estimates that about one-third of all data centers will have onsite power generation by 2030. These systems often include natural gas power plants or fuel cell technologies, which can operate continuously and are well-suited to the constant loads typical of data centers.
Aman Joshi, chief commercial officer at Bloom Energy, highlighted the economic and logistical pressures driving this shift. “Grid power is not easily available at all and prices have gone up,” he said. “As you think about onsite generation, no matter where you are in the U.S., 100% of onsite generation is largely happening with natural gas and Texas certainly has a lot of access [to gas].”
Texas’ extensive natural gas infrastructure gives it a particular advantage in this area. Pipelines, storage facilities, and supply basins are already in place, making it easier to support large-scale onsite generation compared with regions that lack similar resources.
Implications for the Texas Grid
The projected growth of data centers raises important questions for Texas policymakers, utilities, and grid operators. While data centers can bring investment, jobs, and tax revenue, they also introduce significant new demands on an already complex power system.
ERCOT has faced scrutiny in recent years over grid reliability, especially during extreme weather events. Adding tens of gigawatts of new, largely constant demand will require careful coordination to ensure that supply keeps pace without undermining reliability for other consumers.
At the same time, data centers can potentially contribute to grid stability if properly integrated. Some facilities may offer demand response, flexible load management, or even surplus generation during emergencies. Whether those capabilities are fully realized will depend on market rules, incentives, and coordination between private developers and public institutions.
A Balancing Act Ahead
Texas’ rise as the nation’s top data center market reflects broader trends shaping the U.S. economy: digitalization, artificial intelligence, and the growing importance of data infrastructure. The state’s energy resources and regulatory environment have positioned it at the center of this transformation.
However, the scale of projected growth underscores the need for realistic planning and clear communication between developers, utilities, and regulators. As Bloom Energy’s report suggests, assumptions that worked in the past may no longer be sufficient in an era of multi-gigawatt facilities and rapidly accelerating demand.
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