Although Texas increased its power supply by 35% over the last four years, a recent report from ERCOT predicts that Texas’ energy demand will nearly double by 2030, with power supply projected to fall short of peak demand in a worst-case scenario beginning in summer 2026. There are many factors and variables that could either increase or decrease the grid’s stability.
Homebuilding in Texas
One of the most easily identifiable challenges is that the population of Texas is continuing to grow, which places greater demand on the state’s power grid. With its booming population, the state is now the second most populous in the country.
In 2024, Texas led the nation in homebuilding, issuing 15% of the country's new-home permits in 2024. Within the first two months of 2025, Houston alone saw more than 11,000 new building permits issued. The fact that Houston is the only major metro in the United States to lack zoning laws means it does not directly regulate density or separate communities by use type, which is advantageous for developers and homebuilders, who have far fewer restrictions to navigate when constructing new homes.
Large-scale computing facilities
Another main source of the growing demand for power is large-scale computing facilities such as data centers and cryptocurrency mining operations. These facilities consume large amounts of electricity to run and keep their computing equipment cool.
In 2022, in an effort to ensure grid reliability, ERCOT created a program to approve and monitor these large load (LFL) customers. The Large Flexible Load Task Force is a non-voting body that develops policy recommendations related to planning, markets, operations, and large load interconnection processes. LFL customers are those with an expected peak demand capacity of 75 megawatts or greater.
It is anticipated that electricity demand from customers identified by ERCOT as LFL will total 54 billion kilowatt-hours (kWh) in 2025, which is up almost 60% from the expected demand in 2024. If this comes to fruition, the demand from LFL customers would represent about 10% of the total forecast electricity consumption on the ERCOT grid this year. To accommodate the expected increase in power demand from large computing facilities, the state created the Texas Energy Fund, which provides grants and loans to finance the construction, maintenance, modernization, and operation of electric facilities in Texas. During this year’s 89th legislative session, lawmakers approved a major expansion of the Texas Energy Fund, allocating $5 billion more to help build new power plants and fund grid resilience projects.
Is solar power the key to stabilizing the grid?
The fastest-growing source of new electric generating capacity in the United States is solar power, and Texas stands as the second-highest producer of solar energy in the country.
On a regular day, solar power typically constitutes about 5% of the grid’s total energy output. However, during intense heat waves, when the demand for electricity spikes and solar conditions are optimal, the share of solar power can significantly increase. In such scenarios, solar energy’s contribution to the Texas grid can rise to as much as 20%, highlighting its potential to meet higher energy demands, especially during critical times of need.
While the benefits of solar power are numerous, such as reducing greenhouse gas emissions, lowering electricity bills, and promoting energy independence from the grid, it is important to acknowledge its barriers, such as:
- Sunlight is intermittent and variable. Cloudy days, nighttime, and seasonal changes can affect energy production, requiring backup or storage solutions. Extreme weather conditions, such as hailstorms, can damage solar panels, affecting their performance and lifespan.
- The upfront costs of purchasing and installing solar panels and associated equipment can be relatively high.
- Large-scale solar installations may require significant land area, potentially leading to concerns about land use, habitat disruption, and conflicts with agricultural activities.
- Integrating solar power into existing electricity grids can pose challenges due to its intermittent nature. Upgrading and modifying grids to handle distributed generation can be costly.
Although Texas has made progress in expanding its power supply, the rapid pace of population growth, homebuilding, and large-scale computing facilities presents challenges for grid stability. The gap between energy supply and demand needs to continue to be addressed with proactive planning. While solar power is a promising solution, there are realistic limitations to consider. A diversified approach that includes both renewable and traditional energy sources, along with ongoing legislative movement, is critical to ensuring a resilient energy future for Texas.
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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.
