Analysis-Texas' halt on powering data centers reflects US reckoning over 'ghost' demand

Sept 1 (Reuters) - Data centers have requested roughly as much electricity across the middle swath of the United States as it takes to power every home in the country, but much of that demand may be an illusion.

In an attempt to find out what is real, Texas recently became the first major data center hub to freeze new grid connections for the facilities and investigate their plans. Other U.S. states are taking similar ‌steps to fix the intensifying problem that is vexing regulators and politicians nationwide.

A Reuters review of utility and grid data found that electricity requests from very large power users, mostly data centers, exceed 700 gigawatts — or more than ‌10 times industry estimates of current U.S. data center power use — across portions of the Midwest, Mid-Atlantic and the South.

Consumer advocates and regulators have cautioned that many requests are likely to be duplicative, or made by companies without the funds or expertise to see the projects through, threatening to stymie grid planning that is ​crucial to keeping the lights on.

Some of those warnings are now being validated, with major utilities cutting their data center demand figures once financial guardrails, like requiring upfront payments, are put in place.

The uncertainty is leading data center hot spots like Texas, Pennsylvania and Ohio to enact rules to filter out projects that could drive up prices and provoke political backlash without ever even getting built.

"When you don't know what is real, you really don't know how to build the infrastructure for it," Texas Public Utility Commission Chairman Thomas Gleeson said at an industry conference in March.

As Big Tech's planned AI data center spending tops $700 billion this year, companies and landowners with access to power or grid connections have rushed to cash in on the boom by securing electricity supplies needed to run those facilities.

Since 2023, requests ‌from data centers and other large energy users to connect to the Texas grid have ⁠soared from about 48 gigawatts to more than 474 gigawatts, according to documents from grid operator ERCOT and Governor Greg Abbott, making it the fastest-growing region for AI and cloud server warehouses in the world by some measures.

Outside of Texas, data center electricity demand requests in 10 of the biggest U.S. utilities in the Midwest, Mid-Atlantic and U.S. South, including AEP Ohio, Southern Co and PPL, have reached ⁠about 270 gigawatts, according to a review of the latest utility quarterly earnings calls with investors.