Google announced in November a $40-billion plan to dramatically expand its data center footprint in Texas. The trio of projects, which will accelerate energy demand in the renewable-rich West region, represent the tech giant’s largest-single investment in any state.

The investments, to be made through 2027, aim to boost cloud and artificial intelligence infrastructure through the development of two data centers in Haskell County and a single facility in Armstrong County, all located in ERCOT’s West load zone.

Google said it was committed to “responsibly” building out its data centers by helping offset the load with new generating capacity. This includes the pairing of a new solar and BESS project with one of the Haskell County facilities and a new $30 million Energy Impact Fund for “energy initiatives.” Google also said to-date it has PPA contracts for over 6.2 GW of new energy generation and capacity.

The investments underscore the Lone Star State’s enduring appeal for tech giants, which has made it among the fastest growing of all the competitive wholesale power markets in the U.S. It also gives further credence to forecasts showing exponential load growth on the state’s power grid, even in the wake of new stringent siting regulations that threaten to stifle the development of new large load projects. With over 400 data centers, Texas is second only to Virginia in its number of facilities.

“Texas is the epicenter of AI development, where companies can pair innovation with expanding energy,” Texas Governor Abbott said in a statement. “Google’s $40 billion investment makes Texas Google’s largest investment in any state in the country.”

Located in the West load zone, the data centers are positioned to tap into a region with the most wind generating capacity and among the most solar generating capacity in ERCOT. The zone also recorded the market’s fastest load growth, rising by 15.7% in 2024 from the prior year, according to Potomac Economics, the market monitor. While much of the load growth has historically been from oil and gas production, increasingly its coming from crypto-currency mining operations and now data centers.

As a source of stable, around-the-clock demand, these data center expansions are expected to drive higher forward power prices. This will ultimately accelerate the convergence between the West load zone’s renewable contract values and the ERCOT-wide composite value.

As evidence of this trend, the fair market value for a 7-year, as-generated solar contract in the West load zone starting in 2027 reached $50.87/MWh on November 19, a jump of 19% from the same time a year earlier, according to Pexapark data. This rally has narrowed the price gap with the broader composite value by 63% over the same period.

Google’s investment is part of a much larger trend that is reshaping the state’s energy landscape. ERCOT is tracking about 205 GW of large loads seeking interconnection, a dramatic increase from just 56 GW a year earlier. Data centers account for about 70% of these new requests. About 2.3 GW is approved to be energized by 2029, representing nearly half of the capacity of the existing large load projects currently in operation, according to data from ERCOT.