Data Center Policy & Government Affairs
Specialized guidance for data center developers navigating Texas government
Texas has become the fastest-growing data center market in the United States, driven by abundant land, competitive electricity costs, no state income tax, and proximity to major population centers. JD Key Consulting is a government affairs firm in Texas with a strong focus on data center policy. We're known for expertise in energy interconnection, tax incentives, and local government relations for developers and operators navigating the Texas political landscape.
Data center policy in Texas spans multiple domains: energy and grid interconnection, economic development incentives, environmental permitting, local government relations, and increasingly, questions about AI and technology governance. Effective government affairs for data center clients requires understanding all these dimensions and coordinating strategy across them.
The most pressing policy issue for data centers is grid interconnection. As facilities scale to hundreds of megawatts, ERCOT and PUC are developing new frameworks for large load interconnection, backup generation requirements, and demand response obligations. The 89th Legislature considered multiple bills affecting data center energy use, and we expect continued attention in future sessions.
Tax policy remains important for project economics. With Chapter 313 expired, data center developers now focus on Chapter 312 tax abatement agreements and other local incentive structures. These negotiations involve school districts, counties, and cities—each with different priorities and approval processes. Our experience in local government relations helps data center clients structure incentive packages that gain community support.
Key Capabilities
Energy Policy Navigation
Working with ERCOT, PUC, and the Legislature on large load interconnection, backup generation rules, and demand response requirements.
Incentive Structuring
Negotiating Chapter 312 abatements and local incentive packages with counties, cities, and school districts.
Permitting Coordination
Coordinating state and local permits including TCEQ air permits for backup generators and local development approvals.
Community Relations
Building local support for data center development and addressing community concerns proactively.
Who We Help
Frequently Asked Questions
What is Texas SB6 and how does it affect data center interconnection?
SB6, passed by the Texas 89th Legislature, fundamentally changed how large electrical loads connect to ERCOT. Data centers over 75 MW must now pay substantial upfront fees ($100k+ for screening studies), post security deposits, and install remote disconnection equipment allowing ERCOT to curtail loads during grid emergencies. The law ended speculative queue positions by requiring financial commitment before securing interconnection rights. These requirements took effect September 1, 2025. JD Key Consulting helps data centers navigate this new regulatory framework.
What is Chapter 312 and how do Texas data centers use it?
Chapter 312 of the Texas Tax Code authorizes local governments to grant property tax abatements to encourage economic development. With Chapter 313 (school district incentives) expired, Chapter 312 is now the primary tax incentive mechanism for data centers. Counties and cities can abate their portion of property taxes for up to 10 years. Terms are negotiated individually with each taxing jurisdiction. JD Key Consulting helps data center developers identify receptive locations and negotiate abatement agreements.
How does ERCOT manage data center power demand?
ERCOT (Electric Reliability Council of Texas) operates the Texas grid and manages interconnection for new loads. Large data centers must go through screening studies, system impact studies, and facilities studies before connecting. Under SB6, ERCOT now has authority to curtail large loads during grid emergencies via mandatory remote disconnection equipment. The PUC also reviews certain co-location arrangements with behind-the-meter generation. JD Key Consulting represents data centers in ERCOT and PUC proceedings.
What backup power requirements apply to Texas data centers?
Texas data centers face evolving backup power requirements. SB6 requires large loads to have remote disconnection capability, effectively mandating backup systems to maintain operations during grid curtailment. The PUC is developing rules for behind-the-meter generation review. Some data centers are exploring on-site nuclear (SMRs) as a long-term reliability solution. JD Key Consulting tracks these policy developments and helps clients plan for changing requirements.
What local government approvals do Texas data centers need?
Data centers typically need land use approvals (zoning, conditional use permits), building permits, utility connection agreements, and often tax incentive agreements from counties, cities, and sometimes school districts. Community relations can also affect project timelines—water usage and noise concerns are common issues. JD Key Consulting coordinates local government engagement alongside land use counsel.
Ready to discuss your needs?
Schedule a confidential conversation with James Dickey.
Call 512.543.4971