Texas Data Center Site Selection: Why Operators Choose Texas

Artificial intelligence is reshaping data center development, and with it, the way operators evaluate where to build.

According to the JLL North America Data Center Report, Texas has roughly 26 gigawatts (GW) of data center capacity under construction, officially overtaking Virigina {at 13 GW) as the world’s largest data center market by 2030. As hyperscale computing, cloud services, and AI workloads continue to increase demand for digital infrastructure, operators are increasingly choosing Texas because it combines large-scale power availability, competitive energy procurement, abundant land, robust fiber connectivity, and one of the nation’s strongest business climates.

For developers, investors, and site selectors, today’s question is no longer simply where can we build? It’s where can we secure enough power, connect to resilient infrastructure, scale over time, and reduce long-term operational risk?

Increasingly, the answer is Texas.

Rather than relying on a single competitive advantage, Texas aligns the core factors that drive modern data center site selection, from electricity and transmission infrastructure to workforce, connectivity, and long-term development certainty.

Texas Data Center Site Selection Scorecard

Each of these factors influences whether a project moves from concept to construction—and together they help explain why Texas continues to attract some of the world’s largest data center investments.

Power Availability Is the First Site Selection Filter

Power has become the defining variable in modern data center development.

As AI workloads grow more computationally intensive, electricity requirements have increased dramatically. A 2025 geospatial suitability study from The University of Texas at Austin’s Bureau of Economic Geology found that today’s hyperscale facilities typically consume 50 to 100 megawatts (MW) of electricity, while leading-edge campuses now exceed 300 MW. Future facilities may require more than 1 gigawatt (GW) as AI adoption continues to accelerate.

Those requirements have fundamentally changed the site selection process.

Using a machine learning model that analyzed 800 existing Texas data center locations, the University of Texas study concluded that energy access, infrastructure, environmental hazards and workforce availability all play significant roles in determining site suitability.

• That finding aligns with Nixon Peabody’s 2026 Data Center Site Selection Strategy Update, which identifies power availability as the first screening criterion for many hyperscale developments, often before land acquisition, permitting, or incentive discussions.

For operators planning multi-billion-dollar investments, securing sufficient power capacity has become the starting point for nearly every site selection decision.

Why ERCOT Changes the Economics of Data Center Development

For many operators, Texas’ electric market is more than an infrastructure advantage. It’s a strategic business advantage.

Unlike most U.S. markets, the Electric Reliability Council of Texas (ERCOT) operates an independent electric grid with a competitive wholesale market. According to the 2025 geospatial suitability study from The University of Texas at Austin’s Bureau of Economic Geology, ERCOT manages approximately 91% of Texas’ 151 gigawatts (GW) of generating capacity while serving roughly 27 million Texans.

ERCOT’s market structure does not eliminate grid constraints, interconnection challenges or local transmission needs. But it gives large users more tools to manage procurement, pricing and long-term energy strategy than they may find in more vertically integrated markets.

For large energy users, the market structure creates additional flexibility. Many operators can negotiate directly with retail electric providers and power generators through customized electricity contracts and bilateral power purchase agreements (PPAs). Some developers are also evaluating opportunities to collocate facilities near generation assets to reduce interconnection timelines and support future expansion.

As AI continues driving electricity demand, the ability to align power procurement with long-term operating strategies has become an increasingly important differentiator during site selection.

Infrastructure Means More Than Electricity

Power may be the first screening criterion, but it is only one component of digital infrastructure.

Data centers require dense fiber connectivity, redundant network paths, transportation access, and scalable utility infrastructure to support cloud computing, enterprise applications, and AI workloads.

The University of Texas geospatial suitability study identified proximity to fiber infrastructure as one of the highest-weighted variables influencing successful site selection, reinforcing that low-latency connectivity remains essential alongside electricity access.

Texas benefits from extensive long-haul and metro fiber networks connecting Dallas-Fort Worth, Austin, Houston, San Antonio, and major international gateways. This digital backbone complements the state’s growing Texas technology sector, creating an ecosystem that supports hyperscale cloud providers, enterprise technology companies, semiconductor manufacturers, and advanced computing applications.

For operators, that means infrastructure extends well beyond the electric grid. It encompasses the physical and digital assets required to support decades of continuous operations.

The Data Shows Workforce Still Matters

While power dominates today’s headlines, workforce remains one of the strongest predictors of successful data center development.

The University of Texas study found that workforce availability received the highest feature importance score in its machine learning model, ranking ahead of current power capacity, transmission infrastructure, fiber connectivity, and land availability.

That finding reinforces an important reality: data centers are highly technical facilities that require engineers, electricians, network specialists, operations professionals, and construction trades throughout their lifecycle.

Texas continues to attract these talent pools through its growing technology economy, major research universities, engineering programs, and one of the nation’s largest labor markets. Combined with competitive operating costs and a favorable business environment, that workforce depth helps operators support both initial construction and long-term operations.

Why Dallas-Fort Worth Continues to Lead—And Why Other Texas Markets Are Growing

Dallas-Fort Worth has emerged as one of North America’s most significant data center markets because it brings together nearly every factor operators prioritize.

The DFW region for business combines dense fiber infrastructure, enterprise demand, transportation connectivity, available industrial land, and access to skilled talent within one of the country’s fastest-growing metropolitan economies.

But growth is no longer limited to North Texas. According to Blackridge Research’s Texas Data Centers 2026 report, announced projects such as Stargate and other hyperscale developments illustrate how investment is expanding across multiple regions of the state as operators pursue additional power capacity and campus-scale development opportunities. Proposals such as Comanche Circle also show why community acceptance, infrastructure planning and local approvals are becoming central to project viability.

This broader geographic expansion reflects a larger trend identified throughout the research: operators are no longer searching for a single available site—they are evaluating entire regional ecosystems capable of supporting long-term digital infrastructure investment.

Modern Site Selection Is About Managing Risk, Not Just Finding Power

As AI drives unprecedented demand for digital infrastructure, successful site selection requires more than identifying available electricity. Operators are increasingly evaluating how power availability intersects with permitting, regulatory certainty, infrastructure readiness, workforce access, and long-term operational resilience.

Developers now assess a broader range of factors, including community acceptance, environmental considerations, and regulatory risk, before committing capital. As projects become larger and more complex, minimizing development risk has become just as important as securing power. After evaluating multiple site selection models, including energy optimization, hazard minimization, and balanced development, research consistently identifies Dallas, Austin, Houston, and San Antonio as Texas’ most suitable locations because they combine energy infrastructure, transmission capacity, skilled labor, fiber connectivity, and lower overall development risk.

For operators investing billions of dollars into hyperscale campuses, that combination provides greater confidence that projects can move from planning to operation with fewer constraints.

Sustainable Infrastructure Is Becoming a Competitive Advantage

As data center demand accelerates, long-term competitiveness will depend not only on access to electricity, but also on how efficiently that infrastructure is developed and operated.

Research from the University of Texas Bureau of Economic Geology highlights the growing importance of integrating energy planning, water management, advanced cooling technologies, and resilient infrastructure into future data center development. As AI workloads continue to increase electricity demand, these considerations are becoming integral to long-term site selection strategies.

Many operators are incorporating sustainability objectives alongside traditional site selection criteria to improve operational efficiency, strengthen resilience, and support long-term business performance.

These investments also strengthen how data centers benefit Texas communities by creating high-value construction activity, supporting skilled employment, expanding critical infrastructure, and generating long-term capital investment across the state.

Why Texas Continues to Set the Standard

The requirements for data center site selection have fundamentally changed.

Operators are no longer evaluating locations based on a single factor. They are balancing power availability, transmission infrastructure, fiber connectivity, workforce depth, land availability, regulatory certainty, operating costs, and long-term scalability—all while planning for rapidly growing AI workloads.

Across the research, one conclusion consistently emerges: successful data center development increasingly depends on locations that can deliver power, infrastructure, connectivity, workforce, and long-term development certainty at scale.

Texas brings those advantages together in one of the world’s fastest-growing digital infrastructure markets.

The state’s competitive business climate, including:

• no state personal income tax
• reasonable regulations
• and continued investment in infrastructure

further strengthens its position for companies making long-term capital investments. Texas’ data center growth also intersects with the state’s broader technology and advanced manufacturing ecosystem. Federal opportunities available through the CHIPS and Science Act primarily support semiconductor manufacturing, research and development, and related technology investments—not data center development directly. But as semiconductor manufacturing and other advanced technology industries expand, so does the need for the computing capacity, cloud infrastructure and digital connectivity that data centers provide.

That connection is particularly relevant in Texas, which ranks No. 1 in the U.S. for theoretical semiconductor manufacturing capacity and has the nation’s second-largest semiconductor workforce. As operators plan the next generation of AI, cloud and enterprise computing facilities, they are entering an ecosystem where semiconductor manufacturing, advanced technology and digital infrastructure can grow alongside one another.

Texas offers more than favorable conditions for individual projects—it offers an interconnected technology ecosystem built to support long-term investment and growth.

Reach Out for More Information, Resources, and Contacts

Texas is not winning data center investment because of one advantage. It is winning because power, land, fiber, workforce, business climate and long-term scalability converge here. For operators evaluating where to build next, the Texas Economic Development Corporation (TxEDC) can help connect companies with the regional and state partners needed to assess opportunities across Texas.

JLL’s newer 2026 reporting says Texas now has 26 GW of existing and under-construction capacity, compared with Virginia at 13 GW.