The Dallas-Fort Worth region is experiencing a remarkable data center boom, driven largely by the surging demand for artificial intelligence services.
This surge has transformed traditional office spaces into massive buildings dedicated to housing computer systems and servers.
As the need for efficient data storage skyrockets, stakeholders on Wall Street express enthusiasm about potential financial gains, predicting a massive investment surge in AI technologies.
However, with this optimism comes growing concern over how this rapid expansion of data centers will impact essential resources such as energy and affordable property.
Experts are increasingly questioning whether there is adequate infrastructure to support this unprecedented demand.
Currently, North Texas enjoys prominence as a critical hub in the data center boom, with new installations popping up consistently across the region.
Steven Lim, senior vice president of marketing and product at NTT Global Data Centers Americas, emphasized, “Everything we do has a physical footprint somewhere.”
He noted that common digital activities, including streaming movies and posting on social media, rely heavily on these centers.
“The term ‘cloud’ misled many into thinking data is floating inconspicuously in the air,” Lim humorously pointed out.
The region hosts a number of major players in the data center industry, including NTT Data, which ranks as the third-largest provider globally, operating over 150 facilities across more than 20 countries.
Its 42-acre campus in Garland features the TX1 Data Center, recognized as one of the most aesthetically pleasing data centers worldwide.
The exterior presents a two-story boxy design adorned with mustard yellow details, while the interior showcases a complex and secure arrangement of servers.
Inside the facilities, staff members navigate through densely packed equipment, much like wandering through a computer’s intricacies.
Adjacent to TX1 are the TX2 and TX3 data centers, with TX4 under construction, boosting the campus’s total IT capacity to an impressive 124 megawatts.
Bruno Benti, senior vice president of global product management at NTT Global Data Centers Americas, stated, “Data centers are really designed to be the optimal place to put all of this equipment that is being rolled out in support of everything we do.”
The significance of data centers in today’s economy cannot be overstated.
Dan Diorio, vice president of state policy at the Data Center Coalition, remarked, “Data centers are the backbone of the 21st-century economy, and they’re economic drivers for D-FW and in Texas communities.”
Despite an electric grid that has faced challenges, including recent demand issues, Texas seems well-positioned to become a leader in data center development.
As of last September, Texas boasted a total of 279 data centers, with around half of them situated in Dallas-Fort Worth.
By the following year, this figure surged to an estimated 388 data centers, with 190 located in D-FW.
Data centers in the Dallas-Fort Worth area accounted for 591 megawatts of inventory as of fall 2022, ranking second nationally after Northern Virginia.
Though other cities like Chicago and Atlanta have recently taken the top spot, experts suggest that North Texas remains competitive.
By the end of the previous year, Texas had nearly 41 million square feet dedicated to data center capacity, primarily in the D-FW area.
This expansion has corralled over $1.6 billion in tax revenue for the state and an additional nearly $1.6 billion for local authorities, as indicated by a report from the Data Center Coalition.
Mike Rosa, Dallas Regional Chamber’s senior vice president of economic development, remarked that by embracing data centers, the region aims to foster a promising job market and maintain relevance in a technology-driven future.
He likened data center development to essential infrastructures like highways and airports.
Recent months have seen a flurry of agreements from major companies looking to establish new data centers in the region.
For example, Google announced a $1 billion investment into data center campuses in Midlothian and Red Oak, while DataBank is constructing a 480-megawatt facility in the same area.
Likewise, a $700 million data center in Plano has secured occupants, including a company supported by Nvidia that specializes in AI development.
Plans are also underway for a $650 million project comprising two data centers in southern Dallas County.
Market predictions indicate that Dallas-Fort Worth’s data center inventory could more than double by the end of 2026, with at least 605 megawatts worth of projects under construction.
Rosa pointed out that the region is focused on ensuring it has the infrastructure capable of supporting its thriving technological sector amid increasing data consumption.
He expressed confidence that D-FW would draw in numerous companies by maintaining a competitive advantage in infrastructure, particularly in data centers.
Data centers have become increasingly identified with the surge in AI but are also pivotal for supporting a modern economy reliant on constant digital accessibility.
Raul Martynek, CEO of Data Bank, remarked during a recent event, “A data center is basically the foundation for technology adoption.”
Every digital interaction, whether on a phone or a computer, can be traced back to a data center.
The essential role of data centers was further emphasized at the “AI for Real: Powering Tomorrow” event, which highlighted the vital link between data technology and energy consumption.
Humans’ growing reliance on technology has propelled data consumption, leading to rising demand for data centers.
Martynek highlighted that all information, including data from popular apps, must be stored in dedicated facilities.
Oncor, Texas’s largest energy delivery company, is observing this trend closely as they manage electric service for roughly 40% of the state.
Geoffrey Bailey, VP of corporate strategy for Oncor Electric Delivery, noted that the average size of data centers requesting service has risen dramatically in recent years, from 30-50 megawatts to currently between 700-800 megawatts.
Bailey highlighted that some facilities now demand between 1,000 to 2,000 megawatts of power—comparable to the energy needs of an entire city.
For context, he explained that Fort Worth’s peak demand reaches about 3,000 megawatts.
If all data center demands in Wilmer were to be interconnected, it could generate a peak load eight times greater than that of a street equivalent to the city of Austin.
Bailey pointed to a significant shift in scale, particularly in the past two to five years.
As of June 30, Oncor had a queue of 552 requests for interconnections, translating into a potential load of approximately 186,000 megawatts from data centers.
This figure represents a staggering 38% increase year-over-year.
With such rapid growth, meeting the demands for energy and avoiding pressure on the grid has been a priority for Texas lawmakers.
The U.S. Energy Information Administration reported that Texas leads in electricity consumption, predicting that large computing facilities, encompassing data centers, could consume 54 billion kilowatthours by year’s end, reflecting a nearly 60% increase from 2024 projections.
While some experts argue these figures could be overstated, they emphasize the potential challenges for the Electric Reliability Council of Texas (ERCOT).
ERCOT has estimated that by 2030, it will require nearly 150 gigawatts of peak demand, mainly due to expected growth in AI and data center usage.
Each large data center typically demands 100 megawatts or more, equivalent to the annual needs of around 350,000 to 400,000 electric vehicles, according to the International Energy Agency (IEA).
The IEA also projected that ERCOT would authorize approximately 9,500 megawatts of large flexible load capacity by year’s end, marking a 73% increase.
In response to emergency situations, state legislation has passed a bill permitting officials to cut power to data centers.
A recent amendment mandates a 24-hour notice before shutting down facilities, accommodating some operators with critical functions.
To mitigate grid impact, many data centers have sought to develop on-site generation or utilize nearby existing power sources.
Water usage for cooling systems remains a major concern for data centers, particularly in Texas, where certain regions experience drought.
Researchers predict that AI could be responsible for the withdrawal of up to 2.4 million Olympic-sized swimming pools worth of freshwater by 2027, according to Environment Texas.
Efforts are underway to explore innovative solutions to manage water consumption effectively.
For instance, NTT has implemented green technologies like direct contact liquid cooling to improve efficiency, adapting methods used in countries facing similar challenges.
The key challenge moving forward is balancing the ever-increasing energy demands of data centers with responsible stewardship of energy and ecological resources.
Diorio from the Data Center Coalition acknowledged that while data centers contribute to rising energy demands, they are one aspect of broader changes occurring in society.
He cited a resurgence in domestic manufacturing, the electrification of numerous sectors, and the rising number of internet-connected devices in average households as contributing factors.
“We expect to generate twice as much data in the next five years as we have in the last decade,” he explained.
“This data needs secure storage, and we want it to remain in the U.S., safe, and well managed.”
Diorio expressed confidence that data centers are committed to being responsible partners within their communities.
He stressed the importance of maintaining low visual impact on properties, covering the full costs associated with their energy services, and promoting efficient water usage practices.
As Texas continues to innovate and lead in the technology sphere, data centers are central to that evolution.
Dallas-Fort Worth is positioned to play a crucial role in this burgeoning industry, securing its status as a leader in shaping the future of data infrastructure.
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