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Houston data center capacity could more than double by 2028, CBRE report says

data analysis

Houston's data center scene has received its latest bullish forecast. Photo via serverfarmllc.com

The Houston market could more than double its data center capacity by the end of 2028, a new report indicates.

The report, published by commercial real estate services provider CBRE, says greater demand for data center capacity in the Houston area is being fueled by energy companies, along with large-scale cloud services and AI-driven tenants.

In the second half of 2025, the Houston market had 154 megawatts of data center capacity, which was on par with capacity in the second half of 2024. Another 28.5 megawatts of capacity was under construction during that period.

“Multiple providers are advancing new builds and redevelopments, including significant power upgrades to recently purchased buildings, underscoring long-term confidence even as the market works through elevated vacancy and uneven absorption,” CBRE says of Houston’s data center presence.

One project alone promises to significantly boost the Houston market’s data center capacity. Data center developer Serverfarm plans to use part of a $3 billion credit facility to build a 250-acre, AI-ready data center campus near Houston with a potential capacity of more than 500 megawatts. The Houston campus and two other Serverfarm projects are already leased to unidentified tenants, according to CoStar.

A 60-megawatt, AI-ready Serverfarm data center is under construction in Houston. The $137 million, 438,000-square-foot project, located near the former headquarters of computer manufacturer Compaq, is supposed to be completed in the third quarter of 2027.

Data Center Map identifies 59 data centers in the Houston area managed by 36 operators, including DataBank, Data Foundry, Digital Realty, IBM, Logix Fiber Networks, Lumen and TRG Datacenters. That compares with more than 180 data centers in Dallas-Fort Worth, more than 50 in the San Antonio area and 40 in the Austin area.

Texas is home to more than 400 data centers, according to Data Center Map.

In November, Google said it’s investing $40 billion to build AI data centers in West Texas and the Texas Panhandle.

“This is a Texas-sized investment in the future of our great state,” Gov. Greg Abbott said when Google’s commitment was announced. “Texas is the epicenter of AI development, where companies can pair innovation with expanding energy. Google's $40 billion investment makes Texas Google's largest investment in any state in the country and supports energy efficiency and workforce development in our state.”

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A new report predicts that Texas will be home to 30 percent of the U.S. data center market by 2028. Photo via Chevron.com

New report predicts major data center boom in Texas by 2028

data analysis

Data centers are proving to be a massive economic force in Texas.

For instance, a new report from clean energy company Bloom Energy predicts Texas will see a 142 percent increase in its market share for data centers from 2025 to 2028. That would be the highest increase of any state.

Bloom Energy expects Texas to exceed 40 gigawatts of data-center capacity by 2028, representing a nearly 30 percent share of the U.S. market. A typical AI data center consumes 1 to 2 gigawatts of energy.

“Data center and AI factory developers can’t afford delays,” Natalie Sunderland, Bloom Energy’s chief marketing officer, said in the report. “Our analysis and survey results show that they’re moving into power‑advantaged regions where capacity can be secured faster — and increasingly designing campuses to operate independently of the grid.”

“The surge in AI demand creates a clear opportunity for states that can adapt to support large-scale AI deployments at speed,” Sunderland adds.

Further evidence of the data center explosion in Texas comes from ConstructConnect, a provider of data and software for contractors and manufacturers. ConstructConnect reported that in the 12-month span through November 2025, data-center construction starts in Texas accounted for $11 billion in spending. At $12.5 billion, only Louisiana surpassed the Texas total.

Capital expenses for U.S. data centers were expected to surpass $425 billion last year, according to ratings agency S&P Global.

ConstructConnect also reports that Texas is among five states collectively grabbing 80 percent of potential data center construction starts. Currently, Texas hosts around 400 data centers, with close to 60 of them in the Houston market.

A large pool of data-center construction spending in Texas is flowing from Google, which announced in November that it would earmark $40 billion for new AI data centers in the state.

“Texas leads in AI and tech innovation,” Gov. Greg Abbott proclaimed when the Google investment was unveiled.

Other studies and reports lay out just how much data centers are influencing economic growth in the Lone Star State:

  • A study by Texas Royalty Brokers indicates Texas leads the U.S. with 17 clusters of AI data centers. The study measured the density of AI data centers by counting the number of graphics processing units (GPUs) installed in those clusters. GPUs are specialized chips built to run AI models and perform complex calculations.
  • Citing data from construction consulting company FMI, The Wall Street Journal reported that spending on construction of data centers is expected to rise 23 percent in 2026 compared with last year. Much of that construction spending will happen in Texas. In the 12 months through November 2025, the average data center cost $597 million, according to ConstructConnect.
  • Data published in 2025 by commercial real estate services company Cushman & Wakefield shows three Texas markets — Austin, Dallas and San Antonio — boast the lowest construction costs for data centers among the 19 U.S. markets that were analyzed. The mid-range of costs in that trio of markets is roughly $10.65 million per megawatt. Houston isn’t included in the data.

Although Houston isn’t cited in the Cushman & Wakefield data, it nonetheless is playing a major role in the data-center boom. Houston-area energy giants Chevron and ExxonMobil are chasing opportunities to supply natural gas as a power source for data centers, for example.

“As Houston rapidly evolves into a hub for AI, cloud computing, and data infrastructure, the city is experiencing a surge in data-center investments driven by its unique position at the intersection of energy, technology, and innovation,” says the Greater Houston Partnership.
Jarred Shaffer has been named director of the new Texas Advanced Nuclear Energy Office. Photo via LinkedIn.

Policy adviser tapped to lead ‘nuclear renaissance’ in Texas

going nuclear

As Texas places a $350 million bet on nuclear energy, a budget and policy adviser for Gov. Greg Abbott has been tapped to head the newly created Texas Advanced Nuclear Energy Office.

Jarred Shaffer is now director of the nuclear energy office, which administers the $350 million Texas Advanced Nuclear Development Fund. The fund will distribute grants earmarked for the development of more nuclear reactors in Texas.

Abbott said Shaffer’s expertise in energy will help Texas streamline nuclear regulations and guide “direct investments to spur a flourishing and competitive nuclear power industry in the Lone Star State. Texas will lead the nuclear renaissance.”

The Texas Nuclear Alliance says growth of nuclear power in the U.S. has stalled while China and Russia have made significant gains in the nuclear sector.

“As Texas considers its energy future, the time has come to invest in nuclear power — an energy source capable of ensuring grid reliability, economic opportunity, and energy and national security,” Reed Clay, president of the alliance, said.

“Texas is entering a pivotal moment and has a unique opportunity to lead. The rise of artificial intelligence and a rebounding manufacturing base will place unprecedented demands on our electricity infrastructure,” Clay added. “Meeting this moment will require consistent, dependable power, and with our business-friendly climate, streamlined regulatory processes, and energy-savvy workforce, we are well-positioned to become the hub for next-generation nuclear development.”

Abbott’s push for increased reliance on nuclear power in Texas comes as public support for the energy source grows. A 2024 survey commissioned by the Texas Public Policy Institute found 55 percent of Texans support nuclear energy. Nationwide support for nuclear power is even higher. A 2024 survey conducted by Bisconti Research showed a record-high 77 percent of Americans support nuclear energy.

Nuclear power accounted for 7.5 percent of Texas’ electricity as of 2024, according to the Nuclear Energy Institute, but made up a little over 20 percent of the state’s clean energy. Currently, four traditional reactors produce nuclear power at two plants in Texas. The total capacity of the four nuclear reactors is nearly 5,000 megawatts.

Because large nuclear plants take years to license and build, small factory-made modular reactors will meet much of the shorter-term demand for nuclear energy. A small modular reactor has a power capacity of up to 300 megawatts. That’s about one-third of the generating power of a traditional nuclear reactor, according to the International Atomic Energy Agency.

A report from BofA Global Research predicts the global market for small nuclear reactors could reach $1 trillion by 2050. These reactors are cheaper and safer than their larger counterparts, and take less time to build and produce fewer CO2 emissions, according to the report. Another report, this one from research company Bloomberg Intelligence, says soaring demand for electricity — driven mostly by AI data centers — will fuel a $350 billion boom in nuclear spending in the U.S., boosting output from reactors by 63 percent by 2050.

Global nuclear capacity must triple in size by 2050 to keep up with energy demand tied to the rise of power-gobbling AI data centers, and to accomplish decarbonization and energy security goals, the BofA report says. Data centers could account for nine percent of U.S. electricity demand by 2035, up from about four percent today, according to BloombergNEF.

As the Energy Capital of the World, Houston stands to play a pivotal role in the evolution of small and large nuclear reactors in Texas and around the world. Here are just three of the nuclear power advancements that are happening in and around Houston:

Houston is poised to grab a big chunk of the more than 100,000 jobs and more than $50 billion in economic benefits that Jimmy Glotfelty, a former member of the Texas Public Utility Commission, predicts Texas will gain from the state’s nuclear boom. He said nuclear energy legislation signed into law this year by Abbott will provide “a leg up on every other state” in the race to capitalize on the burgeoning nuclear economy.

“Everybody in the nuclear space would like to build plants here in Texas,” Inside Climate News quoted Glotfelty as saying. “We are the low-regulatory, low-cost state. We have the supply chain. We have the labor.”
A new white paper from the University of Houston cautions that Texas faces a potential electricity shortfall of up to 40 gigawatts annually by 2035 if the grid doesn’t expand. Photo courtesy UH.

New UH white paper details Texas grid's shortfalls

grid warning

Two University of Houston researchers are issuing a warning about the Texas power grid: Its current infrastructure falls short of what’s needed to keep pace with rising demand for electricity.

The warning comes in a new whitepaper authored by Ramanan Krishnamoorti, vice president of energy and innovation at UH, and researcher Aparajita Datta, a Ph.D candidate at UH.

“As data centers pop up around the Lone Star State, electric vehicles become more commonplace, industries adopt decarbonization technologies, demographics change, and temperatures rise statewide, electricity needs in Texas could double by 2035,” a UH news release says. “If electrification continues to grow unconstrained, demand could even quadruple over the next decade.”

Without significant upgrades to power plants and supporting infrastructure, Texas could see electricity shortages, rising power costs and more stress on the state’s grid in coming years, the researchers say. The Electric Reliability Council of Texas (ERCOT) grid serves 90 percent of the state.

“Texas, like much of the nation, has fallen behind on infrastructure updates, and the state’s growing population, diversified economy and frequent severe weather events are increasing the strain on the grid,” Datta says. “Texas must improve its grid to ensure people in the state have access to reliable, affordable, and resilient energy systems so we can preserve and grow the quality of life in the state.”

The whitepaper’s authors caution that Texas faces a potential electricity shortfall of up to 40 gigawatts annually by 2035 if the grid doesn’t expand, with a more probable shortfall of about 27 gigawatts. And they allude to a repeat of the massive power outages in Texas during Winter Storm Uri in February 2021.

One gigawatt of electricity can power an estimated 750,000 homes in Texas, according to the Texas Solar + Storage Association.

The state’s current energy mix includes 40 percent natural gas, 29 percent wind, 12 percent coal, 10 percent nuclear and eight percent solar, the authors say.

Despite surging demand, 360 gigawatts of solar and battery storage projects are stuck in ERCOT’s queue, according to the researchers, and new natural gas plants have been delayed or withdrawn due to supply chain challenges, bureaucratic delays, policy uncertainties and shifting financial incentives.

Senate Bill 6, recently signed by Gov. Greg Abbott, calls for demand-response mandates, clearer rate structures and new load management requirements for big users of power like data centers and AI hubs.

“While these provisions are a step in the right direction,” says Datta, “Texas needs more responsive and prompt policy action to secure grid reliability, address the geographic mismatch between electricity demand and supply centers, and maintain the state’s global leadership in energy.”

Republicans and Democrats, environmental groups and the oil and gas industry all oppose the temporary sites. Photo via uh.edu

Supreme Court confronts what to do with growing pile of nuclear waste

The Debate Continues

The Supreme Court will hear arguments Wednesday in a fight over plans to store nuclear waste at sites in rural Texas and New Mexico.President Joe Biden's administration and a private company with a license for the Texas facility appealed a ruling by the 5th U.S. Circuit Court of Appeals that found that the Nuclear Regulatory Commission exceeded its authority in granting the license. The outcome of the case will affect plans for a similar facility in New Mexico roughly 40 miles away.

On this issue, President Donald Trump's administration is sticking with the views of its predecessor, even with Texas Gov. Greg Abbott, a Republican ally of Trump, on the other side.

The push for temporary storage sites is part of the complicated politics of the nation’s so far futile quest for a permanent underground storage facility.

Here's what to know about the case.

Where is spent nuclear fuel stored now?

Roughly 100,000 tons of spent fuel, some of it dating from the 1980s, is piling up at current and former nuclear plant sites nationwide and growing by more than 2,000 tons a year. The waste was meant to be kept there temporarily before being deposited deep underground.

A plan to build a national storage facility northwest of Las Vegas at Yucca Mountain has been mothballed because of staunch opposition from most Nevada residents and officials.

The Nuclear Regulatory Commission has said that the temporary storage sites are needed because existing nuclear plants are running out of room. The presence of the spent fuel also complicates plans to decommission some plants, the Justice Department said in court papers.

Where would it go?

The NRC granted the Texas license to Interim Storage Partners LLC for a facility that could take up to 5,000 metric tons of spent nuclear fuel rods from power plants and 231 million tons of other radioactive waste. The facility would be built next to an existing dump site in Andrews County for low-level waste, such as protective clothing and other material that has been exposed to radioactivity. The Andrews County site is about 350 miles west of Dallas, near the Texas-New Mexico state line.

The New Mexico facility would be in Lea County, in the southeastern part of the state near Carlsbad. The NRC gave a license for the site to Holtec International.

The licenses would allow for 40 years of storage, although opponents contend the facilities would be open indefinitely because of the impasse over permanent storage.

Political opposition is bipartisan

Republicans and Democrats, environmental groups and the oil and gas industry all oppose the temporary sites.

Abbott is leading Texas' opposition to the storage facility. New Mexico Democratic Gov. Michelle Lujan Grisham also is opposed to the facility planned for her state.

A brief led by Republican Texas Sen. Ted Cruz on behalf of several lawmakers calls the nuclear waste contemplated for the two facilities an “enticing target for terrorists” and argues it's too risky to build the facility atop the Permian Basin, the giant oil and natural gas region that straddles Texas and New Mexico.

Elected leaders of communities on the routes the spent fuel likely would take to New Mexico and Texas also are opposed.

What are the issues before the court?

The justices will consider whether, as the NRC argues, the states forfeited their right to object to the licensing decisions because they declined to join in the commission’s proceedings.

Two other federal appeals courts, in Denver and Washington, that weighed the same issue ruled for the agency. Only the 5th Circuit allowed the cases to proceed.

The second issue is whether federal law allows the commission to license temporary storage sites. Opponents are relying on a 2022 Supreme Court decision that held that Congress must act with specificity when it wants to give an agency the authority to regulate on an issue of major national significance. In ruling for Texas, the 5th Circuit agreed that what to do with the nation’s nuclear waste is the sort of “major question” that Congress must speak to directly.

But the Justice Department has argued that the commission has long-standing authority to deal with nuclear waste reaching back to the 1954 Atomic Energy Act.

A new study puts Texas at No. 2 among the states when it comes to manufacturing. Photo via Getty Images

Texas ranks as No. 2 manufacturing hub in U.S., behind only California

by the numbers

Texas ranks among the country’s biggest hubs for manufacturing, according to a new study.

The study, conducted by Chinese manufacturing components supplier YIJIN Hardware, puts Texas at No. 2 among the states when it comes to manufacturing-hub status. California holds the top spot.

YIJIN crunched data from the U.S. Census Bureau, International Trade Administration, and National Association of Manufacturers to analyze manufacturing activity in each state. The study weighed factors such as number of manufacturing establishments, number of manufacturing employees, total value of manufacturing output, total manufacturing exports and manufacturing’s share of a state’s gross domestic product.

Here are Texas’ figures for those categories:

  • 19,526 manufacturing establishments
  • 847,470 manufacturing employees
  • Total manufacturing output of $292.6 billion
  • Total manufacturing exports of $291.9 billion
  • 11.3 percent share of state GDP

According to Texas Economic Development & Tourism, the state’s largest manufacturing sectors include automotive, tech, petroleum, chemicals, and food and beverage.

“The Lone Star State is truly a manufacturing powerhouse,” the state agency says.

In an October speech, Texas Gov. Greg Abbott praised the state’s robust manufacturing industry.

“We are proud that Texas is home to a booming manufacturing sector,” he said. “Thanks to our strong manufacturing sector, ‘Made in Texas’ has never been a bigger brand.”

Houston is a cornerstone of Texas’ manufacturing industry. The region produces more than $75 billion worth of goods each year, according to the Greater Houston Partnership. That makes Houston the second-ranked U.S. metro area for manufacturing GDP. The more than 7,000 manufacturing establishments in the area employ over 223,000 people.

“As one of the most important industrial bases in the world, Houston has access to many global markets thanks to its central location within the U.S. and the Americas,” the partnership says.

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TotalEnergies strikes $1B federal deal to exit offshore wind sector

canceled projects

TotalEnergies, a French company whose U.S. headquarters is in Houston, has agreed to redirect nearly $930 million in capital from two offshore wind leases on the East Coast to oil, natural gas and liquefied natural gas (LNG) production.

In its agreement with the U.S. Department of the Interior, TotalEnergies has also promised not to develop new offshore wind projects in the U.S. “in light of national security concerns,” according to a department press release.

Federal agency hails ‘landmark agreement’

The Department of the Interior called the deal a “landmark agreement” that will steer capital “from expensive, unreliable offshore wind leases toward affordable, reliable natural gas projects that will provide secure energy for hardworking Americans.”

Renewable energy advocates object to what they believe is the Trump administration’s mischaracterization of offshore wind projects.

Under the Department of the Interior agreement, the federal government will reimburse TotalEnergies on a dollar-for-dollar basis for the leases, up to the amount that the energy company paid.

“Offshore wind is one of the most expensive, unreliable, environmentally disruptive, and subsidy-dependent schemes ever forced on American ratepayers and taxpayers,” Interior Secretary Doug Burgum said in the announcement. “We welcome TotalEnergies’ commitment to developing projects that produce dependable, affordable power to lower Americans' monthly bills while providing secure U.S. baseload power today — and in the future.”

TotalEnergies cites U.S. policy in move away from U.S. wind power

In the news release, Patrick Pouyanné, chairman and CEO of TotalEnergies, says the company was “pleased” to sign the agreement to support the Trump administration’s energy policy.

“Considering that the development of offshore wind projects is not in the country’s interest, we have decided to renounce offshore wind development in the United States, in exchange for the reimbursement of the lease fees,” Pouyanné says.

TotalEnergies redirects capital to LNG, oil, and natural gas

TotalEnergies will use the $928 million it spent on the offshore wind leases for development of a joint venture LNG plant in the Rio Grande Valley, as well as for production of upstream oil in the Gulf of Mexico and for production of shale gas.

“These investments will contribute to supplying Europe with much-needed LNG from the U.S. and provide gas for U.S. data center development. We believe this is a more efficient use of capital in the United States,” Pouyanné says.

TotalEnergies paid $133.3 million for an offshore wind lease at the Carolina Long Bay project off the coast of North Carolina and $795 million in 2022 for a lease covering a 1,545-megawatt commercial offshore wind facility off the coast of New Jersey.

“TotalEnergies’ studies on these leases have shown that offshore wind developments in the United States, unlike those in Europe, are costly and might have a negative impact on power affordability for U.S. consumers,” TotalEnergies said in a company-issued press release. “Since other technologies are available to meet the growing demand for electricity in the United States in a more affordable way, TotalEnergies considers there is no need to allocate capital to this technology in the U.S.”

Since 2022, TotalEnergies has invested nearly $12 billion to promote the development of oil, LNG, and electricity in the U.S. In 2025, TotalEnergies was the No. 1 exporter of LNG from the U.S.

Industry groups push back on offshore wind pullback

The American Clean Energy Association has pushed back on the Trump administration’s characterization of offshore wind projects.

“The offshore wind industry creates thousands of high-quality, good-paying jobs, and is revitalizing American manufacturing supply chains and U.S. shipyards,” Jason Grumet, the association’s CEO, said in December after the Trump administration paused all leases for large-scale offshore wind projects under construction in the U.S. “It is a critical component of our energy security and provides stable, domestic power that helps meet demand and keep costs low.”

Grumet added that President Trump’s “relentless attacks on offshore wind undermine his own economic agenda and needlessly harm American workers and consumers.” He called for passage of federal legislation that would prevent the White House “from picking winners and losers” in the energy sector and “placing political ideology” above Americans’ best interests.

The National Resources Defense Council offered a similar response to the offshore wind leases being paused.

“In its ongoing effort to prop up waning fossil fuels interests, the administration is taking wilder and wilder swings at the clean energy projects this economy needs,” said Pasha Feinberg, the council’s offshore wind strategist. “Investments in energy infrastructure require business certainty. This is the opposite. If the administration thinks the chilling impacts of this action are limited to the clean energy sector, it is sorely mistaken.”

Houston scientists' breakthrough moves superconductivity closer to real-world use

energy breakthrough

University of Houston researchers have set a new benchmark in the field of superconductivity.

Researchers from the UH physics department and the Texas Center for Superconductivity (TcSUH) have broken the transition temperature record for superconductivity at ambient pressure. The accomplishment could lead to more efficient ways to generate, transmit and store energy, which researchers believe could improve power grids, medical technologies and energy systems by enabling electricity to flow without resistance, according to a release from UH.

To break the record, UH researchers achieved a transition temperature 151 Kelvin, which is the highest ever recorded at ambient pressure since the discovery of superconductivity in 1911.

The transition temperature represents the point just before a material becomes superconducting, where electricity can flow through it without resistance. Scientists have been working for decades to push transition temperature closer to room temperature, which would make superconducting technologies more practical and affordable.

Currently, most superconductors must be cooled to extremely low temperatures, making them more expensive and difficult to operate.

UH physicists Ching-Wu Chu and Liangzi Deng published the research in the Proceedings of the National Academy of Sciences earlier this month. It was funded by Intellectual Ventures and the state of Texas via TcSUH and other foundations. Chu, founding director and chief scientist at TcSUH, previously made the breakthrough discovery that the material YBCO reaches superconductivity at minus 93 K in 1987. This helped begin a global competition to develop high-temperature superconductors.

“Transmitting electricity in the grid loses about 8% of the electricity,” Chu, who’s also a professor of physics at UH and the paper’s senior author, said in a news release. “If we conserve that energy, that’s billions of dollars of savings and it also saves us lots of effort and reduces environmental impacts.”

Chu and his team used a technique known as pressure quenching, which has been adapted from techniques used to create diamonds. With pressure quenching, researchers first apply intense pressure to the material to enhance its superconducting properties and raise its transition temperature.

Next, researchers are targeting ambient-pressure, room-temperature superconductivity of around 300 K. In a companion PNAS paper, Chu and Deng point to pressure quenching as a promising approach to help bridge the gap between current results and that goal.

“Room-temperature superconductivity has been seen as a ‘holy grail’ by scientists for over a century,” Rohit Prasankumar, director of superconductivity research at Intellectual Ventures, said in the release. “The UH team’s result shows that this goal is closer than ever before. However, the distance between the new record set in this study and room temperature is still about 140 C. Closing this gap will require concerted, intentional efforts by the broader scientific community, including materials scientists, chemists, and engineers, as well as physicists.”

Energy expert: What record heat and extended summers mean for Texans

guest column

Earth’s third-warmest year on record occurred in 2025, reinforcing a decades-long pattern of rising global temperatures. This warming trend is increasingly reflected in regional weather patterns across the United States, particularly in Texas, where hotter summers, prolonged droughts, and heavier rainfall events are becoming more common.

A 2024 report from Texas A&M University highlights how these shifts are already reshaping weather conditions across the Lone Star State. The assessment analyzes climate and weather data from 1900 through 2023 and projects likely trends through 2036.

Its findings suggest that extreme weather in Texas is not only increasing but also becoming more hazardous for communities, infrastructure, and the economy.

A Rise in Extreme Heat
One of the most dramatic changes is the increasing frequency of extreme heat events. Summer temperatures in Texas have climbed back to levels not seen since the early 20th century, and projections suggest they will exceed those historic highs within the next decade.

Triple-digit temperatures are becoming far more common. In the 1970s and 1980s, most parts of Texas experienced relatively few days above 100°F in a typical year. By 2036, those days are expected to occur about four times as often, especially across North, Central, and West Texas.

Houston reflects that broader trend. Five of the 10 years with the most 100-degree days on record in the city have occurred since 2000, according to records dating back to the late 1880s.

The summer of 2023 was Houston’s hottest on record, surpassing even the historic heat of 2011. While short-term cold snaps still occur, climate data suggests extreme summer heat will become more frequent in the years ahead.

Heat waves are also starting earlier in the year and lasting longer. As of 2024, the average length of heat-wave season in the United States has increased by 46 days since the 1960s. Their frequency has also increased steadily, rising from an average of two heat waves per year in the 1960s to about six per year in the 2010s and 2020s.

Energy Grid Strain
Heat waves occurring earlier in the year and more intensely place increasing pressure on the state’s electricity system. When temperatures spike early in the summer, households and businesses simultaneously increase air-conditioning use, pushing electricity demand close to record levels.

In recent summers, record-breaking electricity demand has repeatedly tested grid capacity. Energy experts warn that if heat extremes continue to intensify, maintaining grid reliability will require expanded generation capacity, improved energy efficiency, and greater integration of renewable energy and battery storage. Fortunately, Texas has already made strides in these areas of concern.

Texas continues to lead the nation in clean energy adoption and grid modernization, particularly in wind and solar power. With more than 40,000 megawatts (MW) of wind capacity, the state ranks first in the country in wind-powered electricity generation, supplying up to 35% when blowing and as low as 0%. Much of this growth was driven by the state’s Renewable Portfolio Standard (RPS), which requires utility companies to develop renewable energy in proportion to their market share. The policy originally set a goal of generating 10,000 MW of renewable capacity by 2025, but Texas surpassed this target years ahead of schedule due to rapid investment and expansion.

Solar energy is also growing quickly. Texas has officially overtaken California as the country’s. leader in utility-scale solar, according to recently released data from the U.S. Energy Information Administration. With over 37 GW of capacity, Texas now leads in new solar installations, supported by large-scale solar farm development and favorable policies that continue to diversify the state’s energy mix.

To build a more resilient and cost-effective power system, Texas is working to integrate wind and solar generation while strengthening grid reliability. Efforts include regulatory reforms, mandates for improved power infrastructure, and the deployment of renewable energy storage solutions. A recent report from the Solar Energy Industries Association indicates that Texas is on track to surpass California this year as the nation’s leader in energy storage capacity, driven largely by the rapid growth of battery storage facilities across the state. Alongside renewable expansion, the state also added 3,410 MW of natural gas–fueled power in 2024 to support growing electricity demand.

Economic Consequences
Extreme heat also has measurable economic impacts. For every 1-degree increase in the average summer temperature, Texas’ annual nominal GDP growth rate slows by about 0.4 percentage points. Because Texas already experiences hotter summers than most of the country, rising temperatures affect the state’s economic growth about twice as much as they do in the rest of the United States. Additional warming compounds the strain on productivity, infrastructure, and energy costs.

Some industries are more sensitive to heat than others. Construction, agriculture, manufacturing, and outdoor services often experience productivity losses during prolonged heat waves.

The effects were already visible during the record-breaking summer of 2023, when cities such as Houston, Dallas, and El Paso experienced prolonged stretches of triple-digit temperatures. Surveys conducted by the Federal Reserve Bank of Dallas found that roughly one-quarter of businesses responding to the Texas Business Outlook Surveys reported reduced revenue or production because of the heat.

The hardest-hit sector was leisure and hospitality, where outdoor activities and tourism often decline during extreme temperatures. However, businesses across manufacturing, retail, and services also reported disruptions.

Environmental and Infrastructure Stress
In addition to heat, there are growing risks related to drought, wildfire conditions, and urban flooding.

Extended heat waves tend to worsen drought conditions by increasing evaporation and reducing soil moisture. Lower water levels in lakes and reservoirs can lead to water restrictions for cities and agricultural producers, especially in regions that rely heavily on surface water supplies.

Dry conditions also increase the likelihood of wildfires, particularly across West Texas and the Hill Country. Strong winds, dry vegetation, and extreme heat can quickly turn small fires into fast-moving blazes that threaten homes, infrastructure, and ecosystems.

At the same time, Texas is experiencing an increase in severe rainfall events, which can overwhelm drainage systems in rapidly growing urban areas. Cities with large amounts of pavement and development are especially vulnerable to flash flooding when heavy rain falls in short bursts.

Along the Gulf Coast, rising sea levels are adding another layer of risk. Communities near Galveston Bay and other low-lying coastal areas face increasing threats from storm surge and high-tide flooding.

Preparing for a Hotter Future
Climate experts emphasize that over the next decade, Texans are likely to face more frequent heat waves, higher energy demand, and greater environmental stress.

Adapting to these changes will require a range of responses, including strengthening infrastructure, expanding water management strategies, improving urban planning, and enhancing emergency preparedness for extreme heat and flooding.

While the challenges are significant, understanding these trends now gives policymakers, businesses, and communities time to prepare. As the state’s population and economy continue to grow, resilience to extreme weather is an increasingly important priority for Texas in the years ahead.

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Sam Luna is director at BKV Energy, where he oversees brand and go-to-market strategy, customer experience, marketing execution, and more.

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