Texas Set to Overtake all States as Data Center Capital

Texas is on track to become the largest data center market in the U.S. within three years, as artificial intelligence turbocharges demand for power, land and infrastructure across the state.

That’s the conclusion of a new report released Tuesday by Bloom Energy, a California-based provider of onsite power generation systems for data centers. The Texas Tribune reported that the report found that grid demand from Texas data centers alone is expected to exceed 40 gigawatts by 2028, a staggering jump from today’s levels and an amount that would put the state ahead of every other market in the country.

For context, data centers in Texas had a maximum power demand of about 8 gigawatts in 2025, compared with the state’s peak grid demand of 94 gigawatts, according to the Electric Reliability Council of Texas, which manages the grid. One gigawatt is enough to power roughly 700,000 homes for a year.

Texas is already home to about 387 data centers, but the pipeline is swelling fast. Over the past year, companies including Google, Nvidia and Anthropic announced major projects in the state, along with ventures tied to former Google CEO Eric Schmidt and Rick Perry’s Fermi REIT. Texas is also expected to capture part of “Project Stargate,” a $400 billion joint venture between Oracle, OpenAI and SoftBank aimed at building out AI infrastructure over the next three years.

Developers are flocking to Texas for familiar reasons: abundant land, relatively low costs and easy access to natural gas in a regulatory environment friendlier to new power generation than coastal markets. Bloom Energy projects Texas’ data center growth will outpace all other states, leapfrogging traditional hubs like Oregon and California, where restrictions on new gas-fired power plants are tighter.

“As you think about onsite generation, no matter where you are in the U.S., 100 percent of onsite generation is largely happening with natural gas — and Texas certainly has a lot of access,” Bloom Energy’s chief commercial officer, Aman Joshi, told the outlet.

The scale of projects is also ballooning. By 2030, one in five data centers nationwide is expected to exceed 1 gigawatt in maximum energy demand. By 2035, that ratio climbs to one in three, according to the report, underscoring how AI workloads are reshaping both real estate and energy planning.

Capital is already pouring in. As previously reported in The Real Deal, more than $3.4 billion in new data center construction projects were registered in Texas in 2025, according to filings with the Texas Department of Licensing and Regulation. In December alone, new projects’ construction budgets totaled more than $1.4 billion.

But Bloom Energy’s analysis also flags a growing disconnect between data center developers and power providers. As demand surges, grid interconnections are becoming harder to secure and more expensive.

“Power can no longer be treated as a downstream consideration,” the report stated, warning that developers who plan around traditional grid assumptions risk delays and downsized projects.

To get around those constraints, more operators are pairing data centers with onsite power generation, including natural gas plants and fuel cells like those made by Bloom Energy. About one-third of all data centers are expected to have onsite generation by 2030.— Eric Weilbacher