Texas data centers increase risk of power outages during extreme winter weather

The rapid expansion of data centers in Texas has increased demand for electricity in the winter, increasing the risk of supply shortages that could lead to subzero power outages.

The Lone Star State is attracting tremendous demand for data centers, driven by abundant renewable energy and natural gas resources and a business-friendly environment. For example, OpenAI is developing its flagship Stargate campus in Abilene, about 240 miles west of Dallas-Forth Worth. The campus could require up to 1.2 gigawatts of power, equivalent to a large nuclear power plant.

The North American Electric Relibaility Corporation warned this week that data centers’ 24-hour energy consumption will make it more difficult to maintain adequate power supply during extreme demand conditions at subzero temperatures, such as 2021’s devastating winter storm Uri.

NERC said in an analysis released Tuesday that for Texas, “significant increases in load from new data centers and other large industrial end users are driving up winter electricity demand forecasts and contributing to the continued risk of supply shortages.” Although Texas is at increased risk during extreme winter weather, the state’s power grid remains reliable during normal peak demand times, NERC said.

During Uri, demand for home heating surged due to sub-zero temperatures, and at the same time the same weather caused numerous power plants to fail. Texas utility ERCOT ordered rolling blackouts of 20 gigawatts to prevent the system from collapsing, according to a Federal Energy Regulatory Commission report. Most of the power plants that were shut down were running on natural gas.

It was the “largest manually controlled power outage event in U.S. history,” leaving 4.5 million people without power for several days. At least 210 people died in the storm. FERC said most of the deaths were related to power outages, including cases of hypothermia, carbon monoxide poisoning and medical conditions exacerbated by subfreezing temperatures.

In the years since Uri, Texas has received an incredible amount of requests from data centers, crypto mining facilities, and industrial customers seeking grid connectivity. More than 220 gigawatts of projects have requested connections as of this month, a 170% increase compared to 83 gigawatts of project requests in January, according to data released by ERCOT on Wednesday.

According to ERCOT, about 73% of projects requesting connectivity are data centers.

If all of these projects were actually built, they would be equivalent to the average annual electricity consumption of about 154 million Texas households, according to a CNBC analysis based on 2024 residential power data. However, the Lone Star State’s population is only about 30 million people.

Beth Garza, former head of the ERCOT watchdog, said she was highly skeptical that all of these projects would be built, describing the size of the numbers as “extraordinarily large.” According to ERCOT, more than half of projects do not submit planning studies.

“There’s just not enough on the equipment side or on the consumption side to handle this kind of load. There’s just so much in the world to get to those kinds of numbers,” said Garza, who served as director of ERCOT’s independent market monitor from 2014 to 2019.

Phantom data centers are popping up in grid connection requests across the country as developers sell the same projects to multiple jurisdictions, said John Moura, director of reliability assessments at NERC. This makes it difficult for power companies to predict future demand conditions.

The projects that ERCOT has actually approved to connect to the grid are much smaller at 7.5 gigawatts, but that’s still a significant amount of new demand. By comparison, the six-county region of southeastern Pennsylvania that includes Philadelphia, with a population of 1.7 million, had peak demand of about 8.6 gigawatts in 2024, according to the State Electricity Commission.

The balance between supply and demand will become tighter in the winter, and Texas may fall into the red. According to NERC, the state has 92.6 gigawatts of available resources and peak demand could reach around 85.3 gigawatts in an extreme Uri-like scenario.

However, extreme winter weather could reduce available power to about 69.7 gigawatts, leaving a shortage of more than 15 gigawatts. This is due to normal power plant maintenance and forced power plant shutdowns, as well as reduced power capacity due to winter conditions.

“What’s important to understand is the strain we’re seeing,” Moura said. He said NERC’s winter assessment included only data center facilities that reached certain milestones to eliminate speculative projects.

“I can’t overstate how big of a change this is for the electrical industry,” Moura said of the data center request. One solution, he said, is for data centers to exhibit flexibility in power consumption and maintain a balance between supply and demand even in extreme winter scenarios.

In Uri’s case, natural gas plants accounted for 58% of all unplanned outages in Texas, according to FERC. Subzero temperatures reduced gas production, making fuel supplies difficult and causing power transmission problems as power lines fell.

In response to the storm, Texas introduced rules to shore up natural gas infrastructure in preparation for the harsh winter months.

Solar power and battery storage also face challenges when gas plants are shut down on such a large scale, NERC said. Moura said peak demand in the winter occurs in the early morning when sunlight is weak, so batteries may not have had enough time to charge.

With data centers running 24 hours a day, “maintaining sufficient battery charge during prolonged periods of high load, such as during multi-day severe storms like Winter Storm Uri, becomes increasingly difficult,” NERC said in its analysis.

Rob Gramlich, president of power consulting firm Grid Strategies, said “there is a real possibility of power shortages and rolling blackouts in certain regions” of the U.S. over the next few years as demand from data centers and other facilities exceeds supply. “They are unacceptable to anyone in the United States.”

Garza said he is confident that reliable demand from data centers will bring new supply. “Plants love opportunities like that,” she said. “My expectation is that this will attract additional private capital investment to meet supply needs.”