Texas SB 6: managing the data-center load boom

For a decade the hard problem on the Texas grid was supply — could ERCOT build enough generation to keep up. A new problem has arrived alongside it: demand, growing faster than at any point in the grid's history. A single modern data center can draw as much power as a small city, and they are being proposed across Texas by the dozen, alongside crypto-mining operations, electrified oil-and-gas facilities, and new manufacturing. ERCOT projects total system peak demand could climb more than 65% by 2031. That's not a forecast a grid absorbs passively.

Texas's response is Senate Bill 6, signed by Governor Abbott and in effect since June 20, 2025. It's one of the most consequential pieces of grid legislation the state has passed in years, because it rewrites the rules of engagement for the very largest electricity users — how they connect, how they share costs, and, critically, whether the grid can lean on them when it's under stress. For anyone building generation and storage in ERCOT, SB 6 reshapes the demand landscape they're building into.

01What SB 6 actually does

SB 6 targets large loads — defined as any load with peak demand of 75 MW or more, a threshold the Public Utility Commission can lower. That sweeps in data centers, crypto miners, large industrial and oil-and-gas facilities, and similar giant users. The law's central worry is that uncoordinated interconnection of these loads — each one the size of a power plant in reverse — could outrun the grid's ability to serve them reliably and fairly. So it gives the PUCT and ERCOT new tools across three areas: reliability, cost allocation, and co-location.

02Loads that can be told to power down

The most striking provision concerns curtailment. For large loads interconnecting after December 31, 2025, SB 6 directs utilities to develop protocols — and requires the loads to install the equipment — that let ERCOT directly curtail them during firm load-shed events and emergencies. In plain terms: a giant new user must be able to be powered down, on the grid operator's command, when the system is genuinely short. The logic is that it's far better to pause a data center for a few hours than to shed power to homes and hospitals.

Alongside that, ERCOT is directed to create a new, competitively procured demand-management service, letting large loads bid to provide flexibility and be paid for it. That turns curtailment from a pure obligation into a market: a big, flexible load becomes a grid resource, compensated for its willingness to back off at the right moments.

SB 6's bet is that the grid's biggest new users can be part of the solution — flexible loads that step back when the system is short, rather than fixed burdens that only ever add to the peak.

03Co-location and cost-sharing

SB 6 also tackles co-location — the increasingly common arrangement where a large load sits directly alongside its own generation, partly or wholly behind the meter. Under the law, existing generation must go through an ERCOT study and Commission approval before co-locating with a large load, and co-location arrangements entered after September 1, 2025 must comply with the new requirements. The aim is to make sure a big user pairing up with a power plant doesn't quietly lean on the shared grid for backup without paying its fair share.

That fairness theme runs through the cost provisions too. SB 6 directs the Commission to study the "four coincident peak" methodology used to allocate wholesale transmission costs, and to amend its rules so those charges are appropriate — a response to the concern that existing customers could end up subsidizing the transmission build-out driven by enormous new loads. Who pays for the grid the boom requires is, in the end, one of the central questions SB 6 is trying to answer.

SB 6 — what changes for large loads in ERCOT

Area	What SB 6 does
Who's covered	Loads ≥75 MW (PUCT may set lower) — data centers, crypto, industrial
Emergency curtailment	Post-2025 large loads must be remotely curtailable by ERCOT in emergencies
Demand management	New competitively procured service paying loads for flexibility
Co-location	ERCOT study + Commission approval before generation co-locates with a large load
Cost allocation	Review of transmission cost methodology to protect existing customers

04What it means for generation and storage

SB 6 is fundamentally a demand-side law, but it reshapes the world that generation and storage developers build into. The headline takeaway is the one underneath all the rules: ERCOT is bracing for staggering load growth, and the grid will need an enormous amount of new capacity — and the flexibility to balance it — to keep up. That's the demand backdrop behind everything we build in Texas.

Storage sits in a particularly interesting spot under this regime. Co-located storage can help a large load meet its own curtailment and flexibility obligations — riding through an emergency on stored energy, or shifting consumption to relieve the grid — turning SB 6's requirements from a burden into a manageable design problem. And on the supply side, the flexible, dispatchable capacity that a hybrid solar-and-storage campus provides is exactly what a grid managing volatile, fast-growing peaks needs more of. SB 6 is, in effect, the state acknowledging that the Texas grid is entering a new era of scale — and that era needs both more clean generation and far more flexibility to hold it together.