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Texas is known around the world for shaping energy trends, including conservation efforts. As we reflect on Earth Day this month, let’s take a closer look at where Texas is getting things right and where there is still room for improvement.

Texas is the nation’s top producer of energy across oil, gas, wind and solar power. We have built our identity on the idea of leading the world as a powerhouse for energy production, but Texas also has to deliver results to its residents and the United States; otherwise, our global leadership falls flat.

Measuring Texas’ Global Leadership

Texas is the nation’s largest energy producer, leading the U.S. in wind-powered electricity generation and rapidly expanding its solar capacity, according to the U.S. Energy Information Administration. Our state continues to lead nationally in large-scale energy investments, business-friendly policies and abundant natural resources.

Texas is not standing still or simply doing what it has always done. The state recognizes that to stay competitive, we must adapt and change. Diversification in the areas of liquefied natural gas exports and new investments in carbon and hydrogen capture are defining what the next chapter of Texas’ leadership will look like.

Energy leadership requires production, innovation and influence. Together, these will keep Texas as a formidable force in global energy production.

Our Local Texas Reality Is Important, Too

When we zoom in to look more closely at what is happening in Texas, the picture becomes a bit more nuanced. Our energy independence creates both flexibility and vulnerability, especially during major weather events such as winter storms and hurricanes.

Five years later, the effects of Winter Storm Uri remain in many of our minds. Demand for home generators has risen quickly in the state, with Houston leading the way due to grid uncertainty. As our population continues to rise quickly and more data centers are built in the state, grid stability remains a major factor in Texas’ ability to lead in energy innovation to meet the demands of residents.

ERCOT has developed a three-part plan to help mitigate the risk of grid failure during periods of extreme demand or emergencies. While this is an improvement over five years ago, Texas still needs to invest significantly in grid resiliency.

Texas’ Energy Market and Affordability

Often, proponents of our deregulated energy market in Texas hold it up as an example of healthy competition and consumer choice. Lawmakers claim that it gives residents the ability to select an energy plan that best meets their needs.

In practice, however, the market can be difficult to navigate. There are many electricity plans and providers, so residents often feel overwhelmed when navigating the energy market. With fluctuating rates, complex contracts and peak pricing structures, monthly energy bills can be surprising.

Additionally, as utility companies seek to distribute energy infrastructure costs to customers, prices are rising rapidly. According to TEPRI, electricity rates have risen by 30% since 2021, and the organization predicts an additional 29% increase by 2030.

A 60% increase in electricity prices over less than a decade will affect more than 4.1 million LMI (low- to moderate-income) households in Texas. Conservative projections by TEPRI estimate that by 2030, LMI households will pay an additional $863 annually for electricity, representing an electricity-pricing burden of 8.2%.

The energy affordability crisis is just beginning here in Texas, and greater education and proactive legislation are needed to help LMI households navigate the changing market and rising energy costs. LMI households are already choosing between paying for electricity and healthcare for their family members.

If Texas wants to remain a global leader in energy production, innovation, reliability and affordability, the rising cost of energy needs urgent attention.

Grid Resilience Is Mandatory

In addition to energy affordability, Texas frequently experiences extreme weather, making grid resilience foundational to its continued leadership in both local and global markets.

Between 1980 and 2024, Texas experienced 190 weather-related events with financial losses exceeding $ 1 billion. From hurricanes along the Gulf Coast to prolonged heat waves and drought, the state’s energy infrastructure is under increasing strain. These events necessitate that Texas invest in long-term planning and preparedness for its energy infrastructure.

Next Steps for Local Leadership

Texas needs to strengthen every part of its energy infrastructure. Leading locally means strengthening the grid by building out transmission, scaling battery storage, and deploying smarter, more responsive technology. At the same time, we need to make the market easier to navigate and ensure Texans are better educated and protected as they make energy decisions.

Additionally, as Texans become more informed about the energy landscape, it is crucial to equip them with the knowledge to use energy conservation tools such as programmable thermostats, mobile apps to monitor and adjust energy usage, shifting away from peak-hour usage and selecting energy plans without gimmicks or tricky clauses.

These important intersections are where Texas’ global leadership meets local impact in a critical time of change and transition in the Texas energy landscape.

Going Forward

Beyond addressing the critical issues of reliability and affordability at home here in Texas, it is important to recognize that they are also global. While we already export our energy products to the world, we have a unique opportunity to also export solutions in grid innovation, market design and technologies that are applicable to varied environments and markets around the world.

If we get it right, Texas will be known for not only producing energy but also for shaping how energy systems evolve globally. In order for Texas to lead both locally and globally, we need to focus on performance through smarter infrastructure, thoughtful policy and informed consumers.

Because true energy leadership isn’t just about how much we produce, it’s about performance, access and impact from Texas communities to the global stage, which is an imperative that goes far beyond Earth Day.

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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.

Conversations rarely focus on what keeps electricity moving: transmission infrastructure. Photo by REVTLProjects on Unsplash

Expert: Why Texas must make energy transmission a top priority in 2026

guest column

Texas takes pride in running one of the most dynamic and deregulated energy markets in the world, but conversations about electricity rarely focus on what keeps it moving: transmission infrastructure.

As ERCOT projects unprecedented electricity demand growth and grid operators update their forecasts for 2026, it’s becoming increasingly clear that generation, whether renewable or fossil, is only part of the solution. Transmission buildout and sound governing policy now stand as the linchpin for reliability, cost containment, and long-term resilience in a grid under unprecedented stress.

At the heart of this urgency is one simple thing: demand. Over 2024 and 2025, ERCOT has been breaking records at a pace we haven’t seen before. From January through September of 2025 alone, electricity use jumped more than 5% over the year before, the fastest growth of any major U.S. grid. And it’s not slowing down.

The Energy Information Administration expects demand to climb another 14% in 2026, pushing total consumption to roughly 425 terawatt-hours in just the first nine months. That surge isn’t just about more people moving to Texas or running their homes differently; it’s being driven by massive industrial and technology loads that simply weren’t part of the equation ten years ago.

The most dramatic contributor to that rising demand is large-scale infrastructure such as data centers, cloud computing campuses, crypto mining facilities, and electrified industrial sectors. In the latest ERCOT planning update, more than 233 gigawatts of total “large load” interconnection requests were being tracked, an almost 300% jump over just a year earlier, with more than 70% of those requests tied to data centers.

Imagine hundreds of new power plants requesting to connect to the grid, all demanding uninterrupted power 24/7. That’s the scale of the transition Texas is facing, and it’s one of the major reasons transmission planning is no longer back-of-house policy talk but a central grid imperative.

Yet transmission is complicated, costly, and inherently long-lead. It takes three to six years to build new transmission infrastructure, compared with six to twelve months to add a new load or generation project.

This is where Texas will feel the most tension. Current infrastructure can add customers and power plants quickly, but the lines to connect them reliably take time, money, permitting, and political will.

To address these impending needs, ERCOT wrapped up its 2024 Regional Transmission Plan (RTP) at the end of last year, and the message was pretty clear: we’ve got work to do. The plan calls for 274 transmission projects and about 6,000 miles of new, rebuilt, or upgraded lines just to handle the growth coming our way and keep the lights on.

The plan also suggests upgrading to 765-kilovolt transmission lines, a big step beyond the standard 345-kV system. When you start talking about 765-kilovolt transmission lines, that’s a big leap from what Texas normally uses. Those lines are built to move a massive amount of power over long distances, but they’re expensive and complicated, so they’re only considered when planners expect demand to grow far beyond normal levels. Recommending them is a clear signal that incremental upgrades won’t be enough to keep up with where electricity demand is headed.

There’s a reason transmission is suddenly getting so much attention. ERCOT and just about every industry analyst watching Texas are projecting that electricity demand could climb as high as 218 gigawatts by 2031 if even a portion of the massive queue of large-load projects actually comes online. When you focus only on what’s likely to get built, the takeaway is the same: demand is going to stay well above anything we’ve seen before, driven largely by the steady expansion of data centers, cloud computing, and digital infrastructure across the state.

Ultimately, the decisions Texas makes on transmission investment and the policies that determine how those costs are allocated will shape whether 2026 and the years ahead bring greater stability or continued volatility to the grid. Thoughtful planning can support growth while protecting reliability and affordability, but falling short risks making volatility a lasting feature of Texas’s energy landscape.

Transmission Policy: The Other Half of the Equation

Infrastructure investment delivers results only when paired with policies that allow it to operate efficiently and at scale. Recognizing that markets alone won’t solve these challenges, Texas lawmakers and regulators have started creating guardrails.

For example, Senate Bill 6, now part of state law, aims to improve how large energy consumers are managed on the grid, including new rules for data center operations during emergencies and requirements around interconnection. Data centers may even be required to disconnect under extreme conditions to protect overall system reliability, a novel and necessary rule given their scale.

Similarly, House Bill 5066 changed how load forecasting occurs by requiring ERCOT to include utility-reported projections in its planning processes, ensuring transmission planning incorporates real-world expectations. These policy updates matter because grid planning isn’t just a technical checklist. It’s about making sure investment incentives, permitting decisions, and cost-sharing rules are aligned so Texas can grow its economy without putting unnecessary pressure on consumers.

Without thoughtful policy, we risk repeating past grid management mistakes. For example, if transmission projects are delayed or underfunded while new high-demand loads come online, we could see congestion worsen. If that happens, affordable electricity would be located farther from where it’s needed, limiting access to low-cost power for consumers and slowing overall economic growth. That’s especially critical in regions like Houston, where energy costs are already a hot topic for households and businesses alike.

A 2026 View: Strategy Over Shortage

As we look toward 2026, here are the transmission and policy trends that matter most:

  • Pipeline of Projects Must Stay on Track: ERCOT’s RTP is ambitious, and keeping those 274 projects, thousands of circuit miles, and next-generation 765-kV lines moving is crucial for reliability and cost containment.
  • Large Load Forecasting Must Be Nuanced: The explosion in large-load interconnection requests, whether or not every project materializes, signals demand pressure that transmission planners cannot ignore. Building lines ahead of realized demand is not wasteful planning; it’s insurance against cost and reliability breakdowns.
  • Policy Frameworks Must Evolve: Laws like SB 6 and HB 5066 are just the beginning. Texas needs transparent rules for cost allocation, interconnection standards, and emergency protocols that keep consumers protected while supporting innovation and economic growth.
  • Coordination Among Stakeholders Is Critical: Transmission doesn’t stop at one utility’s borders. Regional cooperation among utilities, ERCOT, and local stakeholders is essential to manage congestion and develop systemwide reliability solutions.

Here’s the bottom line: Generation gets the headlines, but transmission makes the grid work. Without a robust transmission buildout and thoughtful governance, even the most advanced generation mix that includes wind, solar, gas, and storage will struggle to deliver the reliability Texans expect at a price they can afford.

In 2026, Texas is not merely testing its grid’s capacity to produce power; it’s testing its ability to move that power where it’s needed most. How we rise to meet that challenge will define the next decade of energy in the Lone Star State.

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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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CultureMap Emails are Awesome

Houston AI startup rolls out platform to reshape oil and gas workflows

AI for energy

Houston-based Collide is looking to solve AI issues in the energy industry from within.

Co-founded by former oil roughneck Collin McLelland, the company has developed AI software for operators and field teams, shaped by firsthand oilfield experience. Its AI-native platform “retrieves and synthesizes data from authoritative sources to deliver accurate, cited, and energy-focused insights to oil and gas professionals,” according to the company.

“Oil and gas has a graveyard full of technology that was technically impressive and operationally useless,” McLelland tells Energy Capital. “The reason is almost always the same: the people who built it didn't understand what they were actually solving for. When you're an outsider, you see workflows and try to automate them. When you're an insider, you understand why those workflows exist—the regulatory constraints, the physical realities, the liability concerns, the trust dynamics between operators and service companies.”

Collide’s large language model, known as RIGGS, performed well in recent benchmarking results when taking a standardized petroleum engineering (SPE) exam, the company reports. The exam assesses understanding from conceptual terminology to complex mathematical problem-solving.

According to Collide, RIGGS achieved a score of 67.5 percent on a 40-question subset of the SPE petroleum engineering exam, outperforming other large language models like Grok 4 (62.5 percent), Claude Sonnet 4.5 (52.5 percent) and GPT 5.1 (4 percent).

RIGGS completed the test in 15 minutes, while Grok took two hours. Collide hopes over the next few months, RIGGS will receive a score between 75 percent to 80 percent accuracy.

The software could potentially help oil and gas companies produce accurate outputs and automate trivial workflows, which can open up valuable time for engineers and teams to work on other pressing matters, according to McLelland.

“Collide exists because we sat in those seats — we were the engineers, the operators, the field guys,” he says. ”RIGGS scoring higher on the PE exam versus the frontier labs isn't a party trick. It's evidence that the model understands petroleum engineering the way a petroleum engineer does, because it was built by people who do.”

RIGGS was trained on Collide’s Spindletop hardware and is supported by a vast library of information, as well as a reasoning engine and validation layer that uses logic to solve problems.

“Longer term, we see RIGGS as the intelligence layer that sits underneath every operator's workflow — not a chatbot you open in a browser, but something embedded in the tools engineers already use,” McLelland says. “The goal is to give every engineer the knowledge and pattern recognition of a 30-year veteran, on demand."

According to McLelland, Collide is already building toward reservoir analysis and production optimization, automated regulatory compliance (Railroad Commission filings, W-10s, G-10s), workover report generation, and engineering decision support in the field for near-term use cases. In March, Collide and Texas-based oil and gas operator Winn Resources announced a collaboration to automate the time-intensive process of filing monthly W-10 and G-10 forms with the Texas Railroad Commission, completing what’s normally a multi-hour task in under 30 minutes. Collide reports that Winn’s infrastructure now automates regulatory filings and provides real-time visibility into data gaps, which has reduced processing time by over 95 percent.

“Before Collide, I'd spend hours manually keying in filings,” Buck Crum, director of operations, said in a news release. “(In March), we had 50 wells to file and I was done in 20 minutes. It does the majority of the heavy lifting while keeping me in control. That human-in-the-loop approach saves meaningful time and gives us greater confidence in our compliance and reporting.”

Collide was originally launched by Houston media organization Digital Wildcatters as “a professional network and digital community for technical discussions and knowledge sharing.” After raising $5 million in seed funding led by Houston’s Mercury Fund last year, the company said it would shift its focus to rolling out its enterprise-level, AI-enabled solution.

Oxy officially announces CEO transition, names successor

new leader

Houston-based Occidental (Oxy) has officially announced its longtime CEO's retirement and her successor.

Oxy shared last week that Vicki Hollub will retire June 1. Reuters first reported Hollub's plan to retire in March, but a firm date had not been set. Hollub will remain on Oxy's board of directors.

Richard Jackson, who currently serves as Oxy's COO, will replace Hollub in the CEO role.

“It has been a privilege to lead Occidental and work alongside such a talented team for more than 40 years," Hollub shared in a news release. "Following the recently completed decade-long transformation of the company, we now have the best portfolio and the best technical expertise in Occidental’s history. With this strong foundation in place, a clear path forward and a leader like Richard, who has the experience and vision to elevate Occidental, now is the right time for this transition. “I look forward to supporting Richard and the Board through my continued role as a director.”

Hollub has held the top leadership position at Oxy since 2016 and has been with the energy giant for more than 40 years. Before being named CEO, she served as COO and senior executive vice president at the company. She led strategic acquisitions of Anadarko Petroleum in 2019 and CrownRock in 2024, and was the first woman selected to lead a major U.S. oil and gas company.

Hollub also played a key role in leading Oxy's future as a "carbon management company."

Jackson has been with Oxy since 2003. He has held numerous leadership positions, including president of U.S. onshore oil and gas, president of low carbon integrated technologies, general manager of the Permian Delaware Basin and enhanced oil recovery oil and gas, vice president of investor relations, and vice president of drilling Americas.

He was instrumental in launching Oxy Low Carbon Ventures, which focuses DAC, carbon sequestration and low-carbon fuels through businesses like 1PointFive, TerraLithium and others, according to the company. He also serves on the Oil and Gas Climate Initiative’s Climate Investment Board and the American Petroleum Institute’s Upstream Committee. He holds a bachelor's degree in petroleum engineering from Texas A&M University.

Jackson was named COO of Oxy in October 2025. In his new role as CEO, he will also join the board of directors, effective June 1.

“I am grateful to be appointed President and CEO of Occidental and excited about the opportunity to execute from the strong position and capabilities that we built under Vicki’s leadership,” Jackson added in the release. “It means a lot to me personally to be a part of our Occidental team. I am committed to delivering value from our significant and high-quality resource base. We have a tremendous opportunity to focus on organic improvement and execution to deliver meaningful value for our employees, shareholders and partners.”

Texas data center proposed by U.S. Army could use more power than El Paso

Big Data

The U.S. Army is proposing developing a gargantuan, 3-gigawatt data center complex on Fort Bliss property that within a few years would consume more electricity than all of El Paso Electric’s 460,000 customers combined – even as questions about its development, water usage and air pollution remain unanswered.

If built, it would be the third major data center project in the El Paso region, along with Meta Platform’s $10 billion facility in Northeast and the $165 billion Project Jupiter campus that Oracle and OpenAI are building in Santa Teresa, New Mexico. The combined scale and size of the three facilities could quickly transform the Borderland into one of the nation’s core hubs of power generation and AI infrastructure.

The publicly-traded investment firm Carlyle Group would pay to build and operate the Fort Bliss data center – one of several planned in a national rollout under President Donald Trump’s administration to rapidly increase artificial intelligence technology for the Department of Defense.

At Fort Bliss, the Army is “targeting an initial operating capacity of about 100 megawatts on the compute side” by next year, David Fitzgerald, deputy undersecretary of the Army, said during a meeting with reporters April 22. An official estimated cost for the project has yet to be released.

By 2029, the complex on military land in far East El Paso would require 3 gigawatts of electricity, Fitzgerald said. By comparison, El Paso Electric currently maintains about 2.9 gigawatts of generation capacity across its entire system that spans from Hatch, New Mexico, to Van Horn, Texas. The highest customer demand the power company has ever seen was just over 2.3 gigawatts during the summer of 2023.

And whether most El Pasoans are on board with the rapid buildout of another data center here is not a question that Army leadership is asking at this point.

“What we’re trying to do is find where are the common interests, common ground that we can solve for?” Fitzgerald said, referring to coordinating with El Paso city leaders on the data center project.

“The state of modern warfare and future warfare is largely going to depend on the ability to capture, process and utilize massive amounts of data,” he said. “So, the reality is, this is a strategic priority, not just for the Army, but for the entire Department of War. So, we need these capabilities, and we need to put them somewhere.”

Combined-cycle natural gas turbines are the “most likely” source of electricity generation for the facility, said Jeff Waksman, an assistant secretary of the Army and former member of Trump’s first administration.

Waksman said the facility would undergo environmental review before construction starts.

Still, there are far more outstanding questions than answers about the proposed Fort Bliss data center.

It’s unclear if the facility would connect to El Paso Water’s water system. The city-owned water utility pointed out that Fort Bliss Water provides water service for the installation. However, El Paso Water can provide “backup” service to the base, according to the project solicitation documents.

“EPWater was just recently brought into the discussion, and we only have preliminary information,” El Paso Water said in a statement. “The construction and water use would be entirely on federal property.”

El Paso Electric said it’s also uncertain whether the data center will connect to the utility’s power grid and will figure that out in the future. To date, the Army hasn’t made a formal request for service from El Paso Electric.

Officials from the U.S. Army “confirmed that questions regarding the power source and whether it will be connected to the regional grid remain under review and have plans to establish a data center with a projected demand of 3 gigawatts,” El Paso Electric said in a statement. “Ultimately, decisions about these matters will be made by Fort Bliss leadership, and we defer to them for further comment.”

A representative with Carlyle Group at a recent community meeting didn’t answer questions or provide details about the proposed data center facility and the related power generation source.

Carlyle Group did not respond to a request for comment.

Army officials said they don’t yet have a definitive agreement in place with Carlyle, which was conditionally selected to enter into exclusive negotiations, so few details are finalized.

However, the Army has set a short timeline to start operating by late 2027. That means construction will have to start soon, Fitzgerald said.

“The ideal endstate is that we would be at least (operational) by the end of ’27, which is moving pretty quick,” Fitzgerald said. “That would mean construction would need to begin in the not-so-distant future.”

Water, electricity concerns

Meeting three gigawatts of electricity demand with natural gas-fired turbines – cited by Army officials as the most likely power source – would likely produce huge amounts of greenhouse gases in a central area of El Paso, such as carbon dioxide, as well as other harmful pollutants including particulate matter.

And even if the data center doesn’t take service from El Paso Water and instead receives water from wells managed by Fort Bliss, it would rely on groundwater pumped out of the Hueco Bolson aquifer, the city’s main source of water.

The solicitation issued by the Army cites water risk for El Paso as “extremely high” and notes that most of Fort Bliss’ water supply comes from wells within the installation.

Fitzgerald said the Army is aware of the public’s concern that the data center could unsustainably guzzle El Paso’s groundwater to cool the data center’s computer servers. He said the facility will be “water neutral.”

It’s also not clear how the project could replace the same amount of water that it consumes.

It’s possible the Kay Bailey Hutchison Desalination Plant – co-owned by El Paso Water and the U.S. Army – could play a role in making the data center water neutral. But El Paso Water said it has no details about how the data center facility could achieve water neutrality.

El Paso Water is “more than willing to continue to share ideas for best practices in sustainability to help protect our regional water resources,” the utility said in its statement.

As far as electricity generation, Army officials said they don’t know if El Paso Electric would build a new power plant to serve the data center. It’s also possible that Carlyle Group or another private company could build its own power generation source for the data center that’s isolated from the power grid El Pasoans use every day.

“We have to decide whether El Paso Electric is going to be the ones building whatever is coming, or if this is going to be some independent power producer,” Waksman said.

El Paso Electric is planning to develop a 366 megawatt power plant made up of over 800 small gas generators to power Meta’s data center. The utility will build more generation in the coming years to meet 1 gigawatt of total demand from Meta’s facility. Meanwhile, as the technology giant Oracle develops Project Jupiter, the company said Monday it is seeking to power the campus using 2.45 gigawatts of fuel cell power systems provided by the company Bloom Energy.

For perspective, 3.45 gigawatts – the combined projected demand of those two major data centers – is enough electricity to power as many as a million homes, depending on the time of day and weather.

The Fort Bliss project would have to meet environmental regulatory requirements, and the developer needs to include a plan for providing utilities and infrastructure needs such as access to the facility, according to a request for proposals issued by the Army in December 2025. Army officials emphasized the project would not impact El Pasoans’ water or electric bills.

Who is Carlyle Group?

Carlyle Group is a global investment management firm that oversees $477 billion of assets from entities such as pension funds.

The company invests that money by buying businesses ranging from wine producers to Asian telecommunications companies, or by developing infrastructure projects such as renewable energy generation and data centers. The company in 2025 posted distributable earnings of nearly $1.7 billion on $4.8 billion in revenue.

The Army wants to build the facility at Fort Bliss in partnership with Carlyle because the installation has a large amount of available, unused land and because of the water and electricity infrastructure already in place in El Paso, Fitzgerald said.

The Carlyle data center planned for El Paso is part of a wider U.S. military effort to quickly build infrastructure that supports the use of artificial intelligence — both on the battlefield and in running its day-to-day operations, according to government documents.

Army officials nodded to the use of AI in drone warfare and targeting systems. And a hyperscale data center facility can also securely house information such as the military’s cloud database that details pay and entitlements for every U.S. soldier, said Maj. Gen. Curtis Taylor, commanding general of the 1st Armored Division and Fort Bliss.

Data centers are “essential parts of power projection,” Taylor said. “But we have to protect those servers. And that’s why there’s great utility in building that infrastructure on military installations.”

The Fort Bliss facility would be located on a plot of land near the intersection of Loop 375 and Montana Avenue. The site is just east of the Camp East Montana immigrant detention facility, and near El Paso Electric’s gas-fired Montana power station.

The plan is for Carlyle to utilize the majority of the data center’s capacity for its business needs, and the military would have access to a more secure portion of the data center for its own uses.

The Army is developing another similar data center project in Dugway, Utah. Other Army bases identified as potential sites include Fort Hood in Texas and Fort Bragg in North Carolina.

The U.S. Air Force in October issued a solicitation saying it is “accepting proposals for the development of Artificial Intelligence data centers,” on unused land at different bases, including in California, Georgia, Arizona and Tennessee. The push was enabled by executive orders signed by Trump that seek to speed up permitting and development timelines for AI data centers.

Would the Fort Bliss data center pay taxes?

A privately-financed data center on Fort Bliss would likely have to pay some taxes – unlike on-base government facilities – but there’s a lot of uncertainty.

Carlyle Group is leasing the land for the data center under an “enhanced use lease” that allows branches of the military to rent under-used land on bases.

Land on federal installations is not subject to state or local taxes. However, the statute that authorizes the U.S. military to lease excess land to private entities says that “the interest of a lessee of property leased under this section may be taxed by State or local governments.”

So, while the land the data center is built on would not be subject to taxation, the structures housing the data center could be subject to local property taxes.

But it depends on how the deal is structured, including factors such as whether Carlyle or the Army ultimately takes ownership of the buildings.

The Army in January awarded a contract to Korean-owned Hanwha Defense USA, which will invest $1.3 billion to develop a munitions factory at a base in Pine Bluff, Arkansas, using an enhanced use lease.

Fitzgerald, the Army undersecretary, acknowledged the public pushback to other data centers such as Meta and Project Jupiter. But he said the Army wants to ensure the project is developed “the right way.”

“There are always elements that will kind of make this an ‘us versus them’ sort of a construct, but I don’t think we view it that way from the Army,” he said. “I think there’s a path here that will benefit not just the installation, but the community as well.”