Texas Is Building the Future of Electricity

Travis Fisher and Glen Lyons

Texas is showing the country how to grow its electricity supply faster than anywhere else. The grid operator that covers the vast majority of the state, the Electric Reliability Council of Texas (ERCOT), accommodates growth because it adds supply and integrates new technologies more quickly than other systems. When “speed to power” is the name of the game—as it is for the artificial intelligence (AI) transformation underway—data center developers will continue to choose Texas. 

But even the most flexible system can be improved. ERCOT is not broken, but some of the largest new loads do not fit neatly into the traditional utility service model. Even in ERCOT, delays are stacking up in interconnecting new generators and large new loads (in electricity-speak, meaning customers). In May of 2025, the large load queue of ERCOT was 169,615 megawatts (MW), and last month it reached 410,618 MW. A growing queue means longer delays and a system increasingly unable to meet the AI moment.

Source: ERCOT’s Large Load Interconnection Status Update, March 26, 2026

To help Texas stay ahead, customers should be able to bring their own power or buy it from third parties rather than forcing every project through the same regulatory process. Avoiding the interconnection queue (or operating off-grid while waiting in it) allows projects to come online much sooner than they otherwise would. That is where Consumer Regulated Electricity (CRE) comes in.

CRE would complement the ERCOT system. The idea is simple: if a sophisticated customer wants to finance, build, or simply contract for its own dedicated electricity supply separate from the existing grid, regulators don’t need to second-guess it. ERCOT is already leading in the grid-connected space by embracing the “connect and manage” approach. CRE would essentially be a system that says, “If you don’t connect, there’s nothing for us to manage.”

We both submitted written comments supporting this concept to the Texas House State Affairs Committee ahead of their April 9 hearing on data centers. Travis’s comments emphasized CRE as a solution that can 1) accommodate new data centers while keeping the broader grid reliable and affordable and 2) bring to the electricity sector the same free-market dynamism that helped Texas become America’s economic powerhouse. Travis made some of the same points on a recent podcast hosted by the Competitive Enterprise Institute.

Glen’s comments highlighted another benefit of CRE: it would allow off-grid projects to connect, forming an off-grid grid. Connecting off-grid projects would allow the supporting power systems to scale, lowering costs, improving reliability, and reducing the environmental footprint. Through scale, off-grid systems could approach the high reliability and low cost of utility systems while moving swiftly enough to meet new customers’ timelines.

The concept is moving from theoretical to practical. West Texas offers two good examples. In Pecos County, Pacifico Energy’s GW Ranch is being developed as an off-grid campus designed to provide more than 5 GW of power to hyperscale data centers, with first power targeted for Q1 2027 and a larger phased buildout thereafter. In January, Pacifico announced that the project secured permits for 7.65 GW of generation capacity, underscoring the scale of what developers are trying to build outside the traditional queue-and-upgrade model. 

In Midland County, FO Permian Partners and HiVolt Energy announced in 2025 an off-grid platform for hyperscale and cloud data centers with 150 MW of contractable capacity in the initial phase and expansion potential to multiple gigawatts. In both examples, the developers tout bypassing interconnection queues to rapidly begin operation as the major benefit to the islanded approach.

CRE would simplify similar projects. Increasing the speed of development and supporting larger scale would lower costs, improve reliability, and reduce environmental impact. In other words, through the large-scale enabled by CRE, off-grid systems could approach the attributes of utility systems and help keep more data center projects from burdening the grid.

Conclusion

Texas already has a better electricity model than most states. CRE would improve it by preserving what ERCOT does well while creating room for large new customers to pave a new path. Instead of slowing Texas down, policymakers should give these projects the regulatory certainty they need. CRE is the next logical step in Texas’s success.

Source: https://www.cato.org/blog/texas-building-future-electricity