ERCOT Interconnection Queue for Data Centers, Explained

Why Texas Passed Senate Bill 6

ERCOT is unusual among US grid operators for reasons our Texas guide covers in more depth: it's a deregulated, single-state grid, largely outside FERC's direct jurisdiction, which lets large buyers sign power purchase agreements straight with generators. That same structure created two problems as data center and crypto-mining demand grew fast. First, large loads were increasingly co-locating with existing power plants — a move that can look, from the grid's perspective, like removing that generation from serving everyone else. Second, ERCOT had limited formal authority to curtail large loads the way it can curtail other resources during an emergency, which matters a great deal in a state that lived through the February 2021 winter storm.

Signed by Governor Abbott on June 20, 2025, SB6 gave the PUCT and ERCOT a legislative mandate to fix both: build a real interconnection framework for large loads and strengthen curtailment authority over them, including co-located projects. What follows below is the rule the PUCT has been building since — not yet final, but far enough along that landowners and brokers with Texas parcels should understand the shape of it.

The Proposed 75 MW Rule

On March 12, 2026, the PUCT proposed 16 Texas Administrative Code §25.194, a rule establishing detailed interconnection standards for new and expanding electric loads of 75 MW or greater in ERCOT territory — the threshold that captures essentially every hyperscale or large colocation data center project. Public comments on the draft closed April 17, 2026, and the PUCT has committed to finalizing any resulting rule changes no later than December 31, 2026. Until that happens, a project moving through the queue today is doing so under rules still in motion, which is worth flagging to any buyer who cites a specific timeline as settled fact.

The draft's cost provisions are the part most likely to affect deal economics directly: a proposed $50,000-per-MW security deposit and interconnection fee, meaning a 300 MW data center request would carry a $15 million deposit under the terms as drafted. That's a meaningful change from how large-load interconnection has typically worked in ERCOT, where formal financial commitments at this scale, this early in the process, haven't been standard.

The New Gate Before a Study Even Starts

Perhaps the most consequential change for landowners specifically: under the draft rule, a customer has to execute an intermediate agreement with the relevant transmission provider before ERCOT will begin an interconnection study at all. That agreement requires demonstrating site control — a deed, a purchase option, or a signed lease, not a letter of intent — and disclosing whether the same company or its affiliates have filed parallel or similar interconnection requests elsewhere in ERCOT territory.

That second requirement is a direct response to a pattern regulators had flagged: developers filing duplicate or speculative requests across multiple sites to hold a place in line while they decided where to actually build, which inflates the reported queue and makes it harder for ERCOT to plan real capacity. For a landowner, the practical read is that a serious buyer now needs clean, demonstrable site control earlier in the process than before — which is one more reason a parcel with a single owner and no title complications moves faster through diligence. See our land due diligence checklist for what that documentation typically involves.

Curtailment and Co-Located Projects

SB6's curtailment mandate has already been tested. The PUCT has affirmed curtailment authority over co-located data centers in its first net-metering case decided under the new law, meaning a large load paired with onsite generation doesn't automatically sit outside ERCOT's emergency curtailment framework simply because it isn't drawing full grid power at all times. That matters for a specific kind of project — one that pairs a data center with dedicated gas or renewable generation on the same site — that had sometimes been pitched as a way to sidestep grid constraints entirely. See our behind-the-meter power guide for how that self-supply model generally works, and confirm current ERCOT curtailment terms with counsel before assuming a co-located project is exempt.

ERCOT vs. PJM and MISO on Large-Load Reform

Texas's approach stands apart from how other grid operators have handled the same underlying pressure. PJM's reforms came from its own Board of Managers and FERC-approved tariff filings — see our PJM interconnection guide — while ERCOT's changes are being driven directly by the Texas legislature and the PUCT, a state regulatory process rather than a FERC docket, since ERCOT sits mostly outside FERC's jurisdiction as a single-state grid. MISO, covering a dozen Midwest and Plains states, is pursuing its own separate large-load framework; see our MISO interconnection guide for how that compares.

The takeaway for anyone evaluating land across state lines: a rule or timeline you've heard about from one grid operator's territory does not transfer to another. ERCOT's site-control gate and security-deposit structure are Texas-specific responses to Texas-specific political and reliability pressure — useful context, but not a preview of what MISO or SPP will eventually adopt.

What This Means for Texas Landowners

None of this changes what makes a Texas parcel fundamentally attractive to a data center buyer — substation and transmission proximity, water access, and clean title still matter as much as they ever did. What's changed is when in the process a buyer needs to prove those things. Under the draft rule, site control has to be demonstrable before ERCOT will even open a study, which means a landowner who can offer a straightforward deed or option, with no competing claims or unresolved mineral rights or title issues, is a meaningfully easier yes for a developer trying to clear that gate quickly.

Water documentation is worth flagging separately given its place in the August 2026 audit requirements — see our water rights guide for what to have ready. A parcel that can answer the funding, water, and community-engagement questions the audit is asking of developers — even informally, before a specific buyer arrives — is better positioned once ERCOT's queue starts moving again.

Frequently Asked Questions