Data Centers

Aerial Vertical View: Massive Data Center Cooling Systems.

As data center development accelerates across Texas,[1] neighboring landowners are alleging property value losses based on noise, lighting, traffic, and sheer physical presence. Landowners may assume that they can simply point to a lower appraisal or a disappointed buyer to establish a viable claim against the developer. However, under Texas law, a decrease in market value, by itself, will not prevail, although it may provide evidence of damages if a separate legal wrong is proven.

Developers can take practical steps, from siting through operations, to reduce the likelihood that a landowner’s “diminished value” claim can succeed.

Large scale computing infrastructure, datacenter aerial drone overhead view. Telecommunication server infrastructure.

There is a lot of talk these days about how the artificial intelligence (AI) boom will revolutionize the economy. The electric power sector is no exception. All over the country, tech companies are developing hyperscale data centers to provide the computing power necessary for cloud-based services, large language model training, and other AI applications. These facilities consume an enormous amount of power—some even more than large cities or even entire states. In many areas, meeting this demand requires utilities to invest significant capital into new transmission lines and power plants.

The North American Electric Reliability Corporation (NERC) has determined that large computational loads connecting to the Bulk‑Power System (BPS) at an unprecedented speed and scale are reshaping demand profiles and exposing reliability gaps in both planning and operations.

Aerial Vertical View: Massive Data Center Cooling Systems.

While much attention has focused on the electricity demands of AI-driven data centers, a quieter crisis is emerging around water consumption. Modern hyperscale data centers can consume between one and five million gallons of water daily for cooling systems, with some facilities using significantly more during peak operations. As tech companies announce plans to build dozens of new AI-focused campuses, communities from Arizona to Virginia are questioning whether local water resources can sustain this growth alongside residential and agricultural needs.

The U.S. Department of Energy has released a $293 million funding opportunity (DE-FOA-0003612) under its Genesis Mission to accelerate AI deployment across 26+ national challenges in energy systems, grid infrastructure, data centers, advanced manufacturing, microelectronics, and biotechnology. The focus is on creating deployment-ready solutions, not exploratory research. Unlike traditional DOE research grants, Genesis Mission prioritizes speed, integration, and measurable performance gains in complex systems through cross-sector collaboration.

Winschoten Hyperscale Data Center: AI and Sustainable Energy

Texas presently sits at the center of the U.S. energy‑and‑digital‑infrastructure boom. As hyperscalers, AI platforms, crypto-currency miners, and cloud providers accelerate their build‑out of data‑center campuses, the demand for power in the Lone Star State has never been higher.

Federal Energy Regulatory Commission headquarters building exterior in Washington, DC

On January 14, 2026, the Federal Energy Regulatory Commission (FERC) accepted new rules proposed by Southwest Power Pool, Inc. (SPP) regarding the interconnection of High Impact Large Loads (HILLs) and the interconnection of new generation facilities that will be used to serve them, called High Impact Large Load Generation Assessment (HILLGA) in Docket No. ER26-247. This order, along with the recent order directing PJM Interconnection, L.L.C. (PJM) to propose rules for Co-Located generation and large loads, offer the first glimpse into how FERC will address the challenges facing the nation’s electricity grid. These include balancing resource adequacy, grid reliability, and fair cost allocation for any needed grid expansions to accommodate new AI-driven data centers.

Investment into data centers continues to increase significantly as the country builds out infrastructure to accommodate the digital economy and growth of artificial intelligence. Many states, including Texas, have now implemented various tax incentives to encourage investment in the state while simultaneously grappling with the taxable aspects of data center fuel. In November 2025, the…

Although the use of a shared facilities agreement (SFA) for co-located energy projects is not a new concept, their use has increased significantly in recent years due to the rise in co-located generation, storage, and load infrastructure, particularly in the case of data centers. In general, an SFA grants each party a co-tenancy ownership interest in certain shared facilities, subject to detailed management, operations, and cost-sharing provisions, among other considerations.

Given the increasing frequency of their use, owners, operators, financing parties, and developers should understand when, why, and how SFAs can (or should) be used to avoid potential regulatory, operational, or cost-allocation issues with co-located projects.