Is Texas prepared for the added demand of AI data centers?

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Texas shattered the record for electricity demand last week, and this week we’ll likely set another record. The grid managed just fine, without any need for emergency text messages, mandatory power cuts or brownouts.

The grid is strong thanks to an all-of-the-above strategy, which is exactly how the Electric Reliability Council of Texas is designed. But the huge electricity needs of AI data centers is threatening to throw a new wrench in ERCOT’s delicate balance of pricing and demand. 

ERCOT starts planning 24 hours in advance with a weather forecast and an estimate for how much power will be needed. Generators bid in their lowest prices per megawatt-hour, and ERCOT keeps contracting until they have the amount they need. When the power is consumed the next day, every generator gets paid the same price as the most expensive megawatt.

On Aug. 10, 2023, ERCOT set a record of 85,508 megawatts and called on all Texans to conserve energy. But this year, ERCOT met 91,308 megawatts without any problem. Natural gas provided 52% of the mix, solar 18%, coal 11%, wind 8%, nuclear 5% and battery storage 3% for the 7 p.m. hour on July 22.  

Renewable sources like solar, batteries and wind are the fastest-growing segment of the Texas fuel mix and provide the cushion. Without them, ERCOT could not have met the record demand last week or this week. They are why the grid has more than 100,000 megawatts ready to meet our needs.

Natural gas and coal remain critical. On the hottest evenings and coldest nights, we need fossil fuels, and probably will for another decade or more.

The challenge for generators is no longer peak demand, but when demand is low. Often, we need less than 50,000 megawatts in the spring and fall. Renewables offer the cheapest electrons, which means ERCOT uses them first. Natural gas and coal power plants cannot make enough money to survive if we only use them during peak periods.

Data center companies argue they help the grid by adding demand year-round, providing natural gas and coal power plants more time to make money. The only problem is that natural gas and coal need higher prices than renewables to fire up.

This is how data centers could run up our electricity bills. ERCOT’s wholesale electricity market pays all generators the same price and levies that cost on all consumers. Higher demand equals higher prices all year long.

Only the Texas Legislature can solve this conundrum by redesigning ERCOT’s electricity market. Texans should vote for the lawmaker who will protect them from higher prices, not spread the data center-induced price hike across all consumers.

Nations pay for war with blood and treasure. Leaders of democracies must justify that expenditure to the people. However, accountability is only possible if information is available and accurate.

The Trump administration is obfuscating the cost of the Iran War by cooking the books on blood and treasure. The Pentagon recently removed Pvt. Isabella Gonzales, a 19-year-old from Carrollton, from the list of combat deaths, even though she died when an Iranian missile hit her barracks in Jordan.

If the Pentagon fails to recognize her death as combat-related, she may not receive the Purple Heart she earned. Some REMF, a technical military term, determined that because a cease-fire was in place, she did not die from enemy fire in combat.

Defense Secretary Pete Hegseth is taking an equally creative approach to accounting for the treasure wasted on the war. He asked Congress for $37.5 billion to cover expenses, but the actual tally is far higher. The Pentagon’s internal estimates are closer to $100 billion, and the war is not over.

Trump is throwing good money after bad. He played his hand, hoping the Iranian regime would collapse. It didn’t, which means Trump lost. The sooner the president and his lieutenants recognize they don’t have the cards to win, the quicker they’ll stop wasting our blood and treasure.

Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.