Data centers in Texas are constructing on-site natural gas power generation facilities to secure reliable energy supply independent of grid constraints.

Abigail Lindsey worries the days of peace and quiet are nearing an end at her rural, wooded property where she lives with her son outside New Braunfels. Across the street, developers plan to build an expansive complex of supercomputers for artificial intelligence, paired with a large private power plant generating 1,200 megawatts of capacity fueled by West Texas shale gas—sized to supply the new data center and possibly other large data centers recently proposed down the road. The project is a partnership between AI startup CloudBurst and natural gas pipeline giant Energy Transfer, marking Energy Transfer's first-ever contract to supply gas for a data center. The company stated it was "in discussions with a number of data center developers and expects this to be the first of many agreements." Lindsey expressed her concerns plainly: "It just sucks. They've come in and will completely destroy our way of life: dark skies, quiet and peaceful."

This project exemplifies a broader trend across Texas, where a frantic race to build energy-hungry data centers has led developers to construct their own gas-fired power plants rather than wait for grid connection. The challenge is acute: there were more than 2,000 active generation interconnection requests as of April 30, totaling 411,600 MW of capacity, according to grid operator ERCOT. Facing yearslong wait times to connect to the state's public grid, developers have opted to bypass it entirely, encouraged by supportive state policies. In response, a bill awaiting signature on Gov. Greg Abbott's desk, S.B. 6, would impose a $100,000 fee for interconnection studies to filter out unserious projects. As Kent Draper, chief commercial officer at Australian data center developer IREN, explained: "There is such a shortage of data center capacity and power. Even the large hyperscalers are willing to turn a blind eye to their renewable goals for some period of time in order to get access."

Previously, conventional wisdom assumed this new generation of digital infrastructure would be powered by emissions-free energy sources like wind, solar, and battery power. However, that vision is not materializing as desires to build quickly overcome sustainability concerns. Operating alone, a wind or solar farm cannot run a data center. Battery technologies still cannot store the massive amounts of energy required to provide steady, uninterrupted power for 24 hours per day, and small nuclear reactors remain a decade from commercial deployment. Gas companies now approach developers regularly with offers to quickly provide additional power generation.

Texas's energy landscape is shifting dramatically toward gas to meet AI demands. Gas provides almost half of all power generation capacity in Texas, far more than any other source, though the amount of gas power in the state has remained flat for 20 years while wind and solar have grown sharply according to records from the U.S. Energy Information Administration. The disparity in future projections is striking: Texas, with 9 percent of the U.S. population, accounted for about 15 percent of current gas-powered generation capacity in the country but 26 percent of planned future generation at the end of 2024, according to data from Global Energy Monitor. GEM identified 42 new gas turbine projects under construction, in development or announced in Texas before the start of this year, with additional projects announced since then, including CloudBurst and Energy Transfer's facility, that will include dedicated gas power plants on site at data centers.

For gas companies, the AI boom has become an unexpected gold mine. The buildout promises strong demand and high gas prices for a generation to come, benefiting Texas's fossil fuel industry—the largest in the nation. This expansion also means more air pollution and emissions of planet-warming greenhouse gases, even as the world continues to barrel past temperature records. Meanwhile, U.S. gas production has risen steadily over 20 years since the fracking boom began, but gas prices have tumbled since 2024, dragged down by surging supply and weak demand.