ERCOT approves $9.4B project to improve grid, meet data center demand

The Electric Reliability Council of Texas (ERCOT), which operates the power grid for about 90 percent of Texans, has approved a $9.4 billion project to strengthen the state’s electricity transmission system. Approved on December 9, the initiative responds to rapidly growing power demand driven by population growth and the expansion of data centers and cryptocurrency-mining facilities. The project will add 1,109 miles of new 765-kilovolt transmission lines, creating an electricity “super highway” that can move power longer distances with fewer losses. This is the first phase of ERCOT’s Strategic Transmission Expansion Plan (STEP), a broader program expected to cost nearly $33 billion and eventually build 2,468 miles of high-voltage transmission lines statewide. Although ERCOT has added about 11,000 megawatts of new generation capacity since last winter, demand is rising faster. This year, ERCOT received 225 requests from large power users to connect to the grid, a 270 percent increase in requested megawatts compared with last year, with nearly 73 percent coming from data centers. Experts warn that the rapid growth of data centers is placing unprecedented pressure on the grid, potentially affecting reliability and electricity costs for households and critical facilities. Data-center demand is expected to continue rising as AI and high-density computing expand. Texas already hosts around 400 data centers, making it one of the top U.S. states for data-center power demand, second only to Virginia.