Why Texas Is Making Data Centers Wait
“A “private grid” that ties several plants and campuses together can take back many of the benefits a lone island gives up, at least in theory. But today Texas, like most states, only allows building your own power within tight limits:
Supplying yourself: You aren’t a utility if you supply only yourself, your employees, or your tenants, and nobody resells the power.
Running a private use network: You can also run on colocated generation, sell the surplus into the grid, and draw from it when you fall short. This is the model for the Armstrong County campus, and for the West Texas one once it connects.
Selling to a neighbor: If you sell to the factory across the road, you need a retail electric provider certificate.
Stringing a wire: Build your own line, and you’re probably running into the local utility’s service territory.
The Cato Institute’s consumer-regulated electricity proposal would loosen those limits by allowing private utilities to serve multiple customers across their own network. This isn’t an entirely new idea; Utah’s SB 132 lets loads of 100 MW or more contract for a fully off-grid system. Texas currently doesn’t let a network like this serve multiple customers, but if the demand for power remains insatiable, I’d expect the more permissive states to win larger chunks of the buildout with this “Wild West” utility structure. (However, you may also risk a utility “death spiral,” with the grid’s fixed costs falling on fewer and fewer customers.)”
