Texas Sees Significant Electricity Demand Growth Fueled by Data Centers and Cryptocurrency Mining: EIA

Electricity consumption is increasing in Texas, due to higher demand from large scale computing facilities such as data centers and cryptocurrency mining operations, according to an Oct. 3 report published by the U.S. Energy Information Administration. Texas, with relatively low costs for land and electricity, has attracted a high concentration of cryptocurrency mining operations and data centers.

The agency projects electricity demand from customers identified by the Electric Reliability Council of Texas (ERCOT) as large flexible load, or LFL, to add up to 54 billion kilowatthours (kWh) in 2025, up nearly 60 percent compared to projected demand during 2024.

LFL facilities utilize high volumes of power, due to their computing equipment and to keep them cool. Specific large load facilities, mainly cryptocurrency mining facilities but also data centers and some industrial factories have entered into voluntary curtailment agreements with ERCOT to momentarily lower their electricity usage during periods of significantly high system demand or low generation availability.

The agency projects that ERCOT would have approved operations of 9,500 MW of LFL demand capacity by the end of 2025, up 73 percent compared to what is currently approved. Historically, LFL consumers have utilized around 65 percent of their total signed off capacity, based on this the agency forecast total LFL of 54 billion KWh for 2024.

ERCOT initiated its LFL program for large load consumers to help manage the effect of potentially strong demand growth. The LFL process by necessitating approval of projects and encouraging reduction of demand when required aims to minimize extreme price volatility and reduce the likelihood that wholesale power prices reach levels of $1,000/MWh or above. Texas is also pursuing other pathways to manage the projected rise in power demand from large computing facilities such as the Texas Energy Fund. The fund aims to provide grants and loans to finance the construction, maintenance, modernization, and operation of electric facilities in the state.

The rapid surge in power demand from data centers has prompted calls for additional capacity to maintain grid reliability. Unlike “electrify everything” initiatives, such as transportation electrification, which are part of broader policy goals and planned through regulatory proceedings, large loads like data centers have emerged unexpectedly.