After Donald Trump and Elon Musk’s public breakup, Sam Altman replaced Musk as the president’s new favorite tech guy. Altman, the CEO of OpenAI, has become something like Musk’s archnemesis on the rapidly developing stage of artificial intelligence in Texas.
Just over a year ago, Altman broke into the clay and sand of Abilene, Texas, to begin building the biggest data center in the world. The Stargate campus, when completed, would be about 60 acres larger than New York City’s Central Park. Construction of the campus’ first two buildings is scheduled to finish this summer.
The Stargate Project – a joint venture by OpenAI, Oracle, and SoftBank – is a $500 billion investment announced by Trump in January toward building, ultimately, 20 such massive OpenAI data centers across the U.S., with Stargate Texas being the first. During the press conference unveiling the plan, Trump pressed Altman, who took the stand next, to speak about how Stargate will cure cancer. It’s not clear what Stargate will actually accomplish as a massive data center, outside of a vague stated mission to “elevate humanity.”
“I’m going to help a lot through emergency declarations. We have an emergency, we have to get this stuff built,” Trump told the press room on Jan. 21, the day after releasing a declaration that the U.S. must generate more energy to be able to sustain tech projects like Stargate.
Stargate is the highest-profile case, but it’s part of a larger phenomenon: a surge of AI and cloud storage data centers to Texas, attracted by the only independent energy grid in the country. Texas has always taken a business-friendly approach to the grid, offering cheap energy and often loose regulations on groundwater pumping. Energy and water are what make data centers run, usually 24/7 once they’re turned on. Data centers need water to cool their processing servers, which is actually a more difficult task in hotter states like Texas. They could use air conditioning to do this, but energy is generally a more expensive commodity than water.
When operational, Stargate will use enough energy to power 750,000 homes. To sustain such a huge demand, OpenAI is building its own natural gas power plant to power Stargate. The emergence of these mega data centers that require their own power plants have become another concern for experts on water resources.
More companies and more people are moving to Texas, with a projected 10% increase in population every 10 years. That growth raises questions about whether the state’s grid and water resources can handle a simultaneous influx of people and AI. The grid, after all, has failed before – fatally so during 2021’s Winter Storm Uri.
By 2030, data centers are projected to multiply roughly tenfold across Texas. ERCOT projects that by 2031, the grid will need to double the energy it produced in 2024, from 85 gigawatts to up to 218 GW, largely thanks to this boom of data centers.
“Communities that are allowing data centers in their community are gambling against being able to get new water from future State Water Plans.” –Houston Advanced Research Center’s Margaret Cook
To protect grid reliability even as more big energy users go online, Senate Bill 6 was passed bipartisanly last month, effectively giving ERCOT the authority to cut off power for data centers and other customers using over 75 megawatts and redirect that energy during emergencies and periods of high demand. It’s not clear what the parameters will be for declaring an emergency.
Nonetheless, no equivalent bill was passed this session to regulate data centers’ water use in Texas.
“Water lags energy, in how we address concerns,” said Margaret Cook, vice president of Water and Community Resilience at the Houston Advanced Research Center. “There are policies that have caught on for large [energy] loads that we don’t have on the water side.”
The average, midsized data center uses 300,000 gallons of water a day, roughly the use of a thousand homes. Larger data centers might use 4.5 million gallons a day, depending on their type of water cooling system. Austin has 47 such data centers, while the Dallas-Fort Worth area hosts the majority in Texas at 189.
It’s been difficult for HARC and experts like Robert Mace, executive director of the Meadows Center for Water and the Environment at Texas State University, to extract transparent water usage reports from data centers. “Their use could be horrific relative to local use, or it could be extremely minimal,” Mace said.
In a white paper to be released this month, HARC estimates that data centers in Texas will consume 49 billion gallons of water in 2025. They also project that by 2030, that number could rise up to 399 billion gallons, or 6.6% of total water use in Texas.
Most data centers use an evaporative cooling system, in which the servers’ heat is absorbed by water. The heat is then removed from the water through evaporation, causing the water to be lost as vapor in the air. The cooler water then goes back through the machines, and this loop is regularly topped off with fresh water. After all, evaporation renders the water saltier and unusable after four or five cycles. “Then they dump the water, and it goes down the sewer,” Mace said.
This water loss is significant when, even after the devastating flooding earlier this month, nearly a quarter of the state remains in drought conditions.
The Texas Water Development Board, the governor-appointed board in charge of drafting the State Water Plan every five years, will release their next plan in 2027. But according to Cook, data centers are not being taken into account when calculating projected state water use for the 2027 plan, and thus in calculating how much additional water we need to conserve and produce to have enough for Texans.
“So, any of these communities that are allowing data centers in their community are gambling against being able to get new water from future State Water Plans, from future funding cycles.” Cook said. “They’re using up the water that was allocated to their population for the future.”
The Abilene Stargate campus will reportedly use a closed-loop, non-evaporative liquid cooling system that requires an initial refill of around 1 million gallons of water, with “minor” maintenance refills. Cook is skeptical that such closed-loop systems will use as little water as they suggest. It’s not possible, Cook says, to use the same water over and over again, recycled infinitely, to cool servers.
“Everything always gets warmer. There’s always some amount of energy lost,” Cook said. “So it would be impossible for you to constantly be able to use the same water and still get the cooling potential that you’re getting now.”
The water-scarce cities of Tempe and Phoenix, Arizona, have already taken steps to limit the water-cooling capabilities for data centers within their jurisdictions, meeting in early July to set regulation guidelines. Cook believes that cities like Austin could benefit from establishing block water rates for data centers, or conservation ordinances that set guidelines for developers.
“That would probably deter a data center from using the municipal supply, but if it doesn’t, it would have them pay a decent amount for the water. It could have them pay enough that they provide a good deal of revenue for the municipality,” Cook said.
It seems the sudden rise of data centers in Texas is too fast for the State Water Plan to catch up in a timely manner. “The world just moves faster and faster,” Mace said. “And suddenly, there’s all of these new demands for water.”
This article appears in July 25 • 2025.