This program is supported by Texas Mutual Workers Compensation Insurance.

We're very, very pleased to be able to welcome Doctor Francine Romero and Sara Rush to this program.

These are two distinguished women of our community, and they have major responsibilities on the very subject that we're talking about data centers.

Francine is a PhD professor from the University of California who teaches now at UTSA and has had a reputation in our community as an avid and informed environmentalist.

In fact, was named to the CPS board.

In fact, to kind of fill a gap that we'd had from someone that the environmental community would think of as a representative of environmental issues.

And now she's the chairman of the board.

So a great position in which to see both sides of the issue we're going to discuss today.

And Sara is the head of greater SAT after having spent 20 years or so in economic development generally, most recently at the Dallas Regional Chamber of Commerce.

But now in year what fourth year here as head of the principal economic development entity for our region.

And that includes data centers, both because we want the data centers and because we want the additional industry that sometimes comes where data centers are.

There are 87 active data centers in Texas at the moment.

Pending approvals indicate up to 250 large scale facilities in the pipeline.

That would include something like 113 active or planned in Dallas, 48 active or planned in Austin, 42 in Houston and San Antonio, 27 data centers.

The significance of that is that data center presence in Texas, as those are built out, build out the largest conglomeration of data centers, which is in Virginia, in Northern Virginia, which is a very technology oriented area.

We know that there are issues related to power and the grid.

They're very power hungry.

And in fact, someone told me the other day, Francine, that the original data center we got some years ago, which was Microsoft, uses more power in San Antonio than the Toyota plant that produces 240,000 tundras and sequoias.

Just to give you the scale of what how much power they use.

Let's begin, Sara, with you, because I'd like to establish for our audience who may not no data centers.

What is the data center?

What does it what role does it play in our economy, and why do municipalities have municipalities for the last decade been panting to get data centers?

Sure.

Great questions.

Well, the opportunity to visit with you about this.

And you know this a data center is is super important to us, but you don't realize it is every single time you log on to your phone and, you know, maybe you scroll past to 3000 photos that you have stored there on your phone because you, like me, probably never delete the photos that you take.

All of that is being sent and stored in a data center someplace.

Every time you check your 14 to 40,000 emails again because you never delete those are being sent to a data center.

Every company that you're engaging with right that information, those data sets have to be stored somewhere.

And AI has accelerated the use.

That's right, that's right.

And because of the transactions involved in an AI.

Correct transaction.

Correct.

And actually one of the conversation points that a lot of communities are now having is our data centers as they stand today, sort of storage warehouses for data going to be the future path right for these facilities, or is this really going to become AI factories?

The difference being that an AI facility, an AI data storage, has to process the information, right?

And it has to do something with the information versus send and receive.

So is it possible that the data centers as we know them right this minute will be obsolete at some point?

Absolutely, yes.

But for the moment, they're absolutely essential to the the moving of information when people, you know, attack data centers, but they but they still want to access their phone or their device depending on a data center.

Correct.

That's correct.

And that's why this issue is so complicated, right?

We all need and want the information at hand.

But you know, the businesses that are utilizing them are doing that to serve their customers at the end of the day.

If you look at the data center footprint here in San Antonio, there's about 20 to 25 data centers today already already in place in this market.

You won't hear about most of them because most of them are serving our national security infrastructure.

We are not only Military City USA, but we are Cyber City USA.

And a lot of the cybersecurity activity that is happening here depends on a data center.

Is that throughput to to be able to again, process information, store information?

Is there a connection between having data centers and more data centers and the ability to attract?

Does industry want to be where data centers are or does it matter?

They serve the the cloud.

The.

Entire universe?

Yeah.

You know, it's interesting.

It's both.

So when you think about it, I actually think of data centers a bit more like a retail facility.

They're going to follow the customer.

Retail store isn't going to go someplace where they don't have the buyers.

A data center operates very much the same way they're going to follow their customer need.

And in some cases, that customer is using that facility for global purposes.

And in some cases, they're using that facility for something that is very proximate.

The way we think about it here.

Again, given the industry makeup in this region, data centers are an important asset that allows those industries to grow here.

Francine, you're at CPS in that position, responsible for the grid, the power delivery in San Antonio.

Again, many San Antonio's may not know.

San Antonio is one of the few utilities in the country that both generates its power.

We have nuclear, solar, wind and coal, but also distributes in many places.

The municipality may own the grid within the city, but buys the power at the city gate from some private producer.

We produce our own power.

What does CPS think today about data centers?

Well, and thank you so much for being here.

I love to talk about this.

I guess in a way it sounds funny, but we're not really allowed to think about it a whole lot.

The state law says that we have to provide power to any customer who comes into our service area.

So I know a lot of people will say, why don't you just say, no, you're not going to hook them up?

Well, that's against state law.

So that's our first thing is we have to we have to hook people up for this.

In the meantime, we have been trying to control the the hooking up of data centers so that we don't strain the grid so that we don't undermine reliability to our other customers.

So we have always had that measured approach to it.

Just because we have to say yes doesn't mean we have to say yes right now, but.

Or yes to something you can't do.

Correct?

Right.

Like strain the grid.

Right.

But that we cannot do now.

I mean, we're always working towards some solution with everybody for the future.

And constantly working to add power.

Yes, constantly.

On your watch.

We've added some power stations in South Texas that we bought.

And we've added a whole lot of renewables in the last few.

Years, solar and and.

Wind, solar and wind and battery as well, which is really growing in importance.

And we'll be doing our generation plan refresh at the end of this month, which is the same basic proportion of power, but we'll be getting more of renewables in particular, again, trying to get more carbon based but more efficient carbon based, not the giant plants, but more efficient, dispatchable.

Ercot is playing a much bigger role now in controlling how data centers get connected in communities.

So we have the first line of defense, but then they're put into an aircraft queue.

So that slows things down even more.

Even if we wanted to try and speed up the process, we can't do that.

Ercot has taken that over.

Now, okay.

We have about 10,000MW of power that we generate for our entire use region capable of, and the data centers use about 500 now.

So something like 5%.

Or somewhere 5 to 9.

Percent percent depending on how, what measures that you use.

So it's a very manageable at this point.

Yes.

But the data center, some of the data centers are really, really getting big.

There's a data center in Abilene that plans to use the grid in that region, as well as onsite gas power and batteries, but it would produce 1200MW or require 1200MW, which is about a 10th of what San Antonio would have.

And then there's one in Amarillo planned, which would need 11,000MW of power.

That's more than the entire power that CPS produces today.

It's enough power to provide energy for 2.75 million homes, which is more homes than Houston, Dallas, Austin and San Antonio combined.

That's how much power that data center in Amarillo will use.

Just talk a little bit about what you see as the coming demand.

I was going to use the word crisis, but I'll just say the coming demand.

Yeah, I don't think it's a crisis.

There's a lot of projections.

You know, companies want to tell what they're building.

There's there's an article in the about a company is bringing three in to the San Antonio area.

That doesn't mean they are permitted.

It doesn't mean they're even in the batch zero process yet.

So batch zero is going on right now, and it's where Ercot is looking at all these proposals and applications.

And they're saying, no, we're only going to take one group in.

It's almost like I think of it like people auditioning for a Broadway show.

It's like, okay, you're in the first group, you know, and we're going to put you through a whole bunch of tests.

And at the end, only some of you are going to come out, because we can only hook up the data centers that we can reliably provide power to.

And they they analyze this.

Actually, they use a lot of AI to analyze this.

They look over a full year period to say, you know, if we put you in, all of you in.

So instead of just doing one at a time, now they're looking at a whole bunch.

It's going to be, I think, 100GW to say, we're going to permit these, but we're going to make sure they're spread out.

We're going to make sure they're not going to crash the grid or, or tax the grid in any different in any particular area.

So I feel really good about that, that we already have these protections in place, that we can't get you up and running until we can reliably do it.

So we've always had that safety net in there, but now we have this even bigger one with the state.

And honestly, there are some developers and data centers that are very unhappy because they're, you know, if they're not in batches their way down the road.

No, sir.

As an economic development prospect, and your job is to get as many jobs to San Antonio as possible, and you have annual goals for how many jobs are going to be created.

And I saw the recent announcement of Toyota that they're considering a $2 billion expansion to the Toyota plant here and several thousand more jobs.

So congratulations on that.

It's critical to San Antonio's well-being.

Our families, they're they're they're incomes, their budgets, family budgets that we continue to grow the jobs.

But data centers are not big job producers, right?

They do require jobs in the construction.

But what is the real economic benefit?

Sure, of having data centers.

A community that is looking to drive tax revenues is thinking about, particularly in Texas, because property taxes and sales taxes are the two ways that we generate revenue for the state.

So, you know, a community might be interested in attracting a data center to drive revenues into their school district.

Right to drive revenues.

In this would be property tax revenue.

Property tax revenue.

That's the actual property and the personal property of equipment as well.

All the equipment is included in that.

Right.

So it's billions of dollars of investment that drives those dollars back into the community.

But jobs, my recollection from the Microsoft experience was that they invested something like $1.5 billion to build it, but only required 150 people to run it.

That's correct.

Is that kind of the ratio?

Yes, I would say generally, again, there's the contractor, you know, element of that.

But for for direct jobs FTEs.

So that's not that's not the benefit.

The benefit comes from the property taxes from that valuable a plant.

Correct.

Correct.

Yes.

Correct.

They were exempted from sales taxes in Texas, but the governor is now proposing in his latest statement that they no longer be exempted from sales taxes.

So that would be an additional benefit that would come to community.

Correct.

Let's talk a little bit about the things that bothers people in communities.

And there's no outright revolutions in some localities that are just saying, no, not here because of the scale and because of the what they used to be, the impact on their grid as well as water.

It's my understanding that data centers today used about 1% of the water supply of Texas, but that's growing toward something more like maybe 9%.

All the manufacturing in Texas uses 7%.

So that gives you a sense of how big the water usage of data centers, although there's new technology.

Can you talk a little bit about about the water issues?

Yeah, water.

Water is huge.

There's a there's a quote from Lincoln Institute of Land Policy paper that talked about data centers being like vampires because they're they're pallid, thirsty and immortal.

Really.

The focus has turned to water a lot now.

I would say in Texas, probably more than than anywhere.

Yes, we're water short, right.

And there are different systems.

There's a closed loop system which uses less water, but there's a trade off between water and power.

So the more water you use, the less power and the.

More water is a coolant.

Yes, yes.

No.

The other thing, though, is when you use less water and more power, you're still using water to generate that power in the first place.

So it's a bit of a false trade off.

Either way, there's a lot of water being used.

It is being pulled out of the systems, and some of it in the open loop system is evaporated, so it doesn't go back into the wastewater system evenly so it can get out of balance.

You can't reuse it as we do some of our waste.

Water, right.

And some data centers.

And I think this might be part of the governor's letter, was that data centers have to use wastewater, recycled water.

But in San Antonio, I know a source was saying there recycled water is very much in demand.

They don't have that much and not everybody can hook up to it.

Rural communities are very concerned about water.

They often don't know how much a company will use when they come in.

Google just pledged to invest $10 million, which I thought was for each town where they were going, but it's 10 million total to help develop new water supplies, which is nothing.

Nothing, right.

Yeah.

So but also, you know, people are very concerned about the loss of open land.

So, Francine, the governor has stepped in in a kind of a surprising position because the governor is a stalwart economic development governor for Texas.

But he said the following require new facilities to add power generation to the power grid.

They add power, not take power required data centers to pay for new grid interconnections and infrastructure pay, mandating closed loop water systems to the best practices on matters, for example, as noise in communities and repealing the data center, sales tax exemption, and other outdated and unnecessary incentives for data centers.

What does this say to you about where we are?

Sure.

Well, I think the community has been leading this conversation for some time.

Right.

And needing it, you say.

Needing and and leading.

And leading.

And I think that, you know, as we think about the idea that, you know, any investment is a good investment for a community, which I think has been the mindset for a long time for for folks in this industry, we just have to get nuanced in the way that we think about what is best for our community.

And I think that's been happening at the local.

Level.

For a long time.

Some yes, some no.

Sure.

Some characteristics based on location, based on water usage, power usage.

Right.

And what that local communities ability to to supply that right, what their needs are as a community.

I mean, certain parts of our community may, may say, absolutely, we want to see these investments come in because we know what it's going to do for our school system.

And then there will be others that say, absolutely not.

We don't have the water infrastructure to serve this need, and so we need to balance that.

And that's why I think our elected leaders leaning in on these conversations are so important, because it is nuanced.

And, you know, we we will see this growth.

It is coming.

I mean, AI and data centers are not going to disappear tomorrow.

We want access to our data and our information.

So it's not going to change.

But we do have to be very thoughtful about how we manage these investments.

And again, I think that's where CPS and Saws and our and our partners here locally have done an incredible job at trying to balance the speed that we're delivering these, but also getting really thoughtful about if we do need to build a new transmission line with connection capability, how do we leverage that as a way to then say, let's increase power capacity into this part of our community more broadly and open up opportunity and capacity in that way?

Francine, I respect the position that you're in because I've always respected your very, very coherent and rational environmental stance.

And now you've run the power system for the seventh largest, a sixth largest city in the country.

Where do you come out?

Bottom line on this debate?

Well, I think the state, you know, as you said, it's surprising the state is not surprising, but a little bit surprising.

The state is doing such a good job of coming up with new regulations on it.

And I think they are leading the local utilities in a really good way.

My only concern, based on what the governor said, is that I'm not sure how interested he is in bringing more discretion to the local level, because it is nuanced at the local level for for example, in one of the questions would be county land use authority.

You know, there's counties trying to put moratorium on these, and they're quickly struck down in court because they don't have that power.

It seems like everything the governor wants to do is coming from the state level.

So we'll see how much discretion is given to local governments.

But I think we're doing fine, I think in San Antonio.

But in terms of Bear County in other counties and smaller cities, I would like to see them have a little bit more discretion, the ability to get more information and have a little bit more power in how they control data centers coming into their area.

The issue of power and the need for more power is not just data centers, obviously.

Yes, I've read pieces on how the entire society is, quote, electrifying.

People think that if they have an electric car, they're not inverting the environment because they're not using a fossil fuel gasoline, but they need to plug it in somewhere, and that is to an energy source that is frequently powered by by coal, for example, in our area.

The larger question of adequate power for the electrification going on across the society.

What's your stance or thoughts?

I think we're making good progress on it now.

We are phasing out coal in our generation plan and most cities are as well.

So it's not coal, but it is moving to renewables.

The market is supporting renewables despite getting rid of incentives to develop renewables.

The market is still doing it.

So I'm.

Very come a long way on the technology and the pricing.

The pricing is amazing.

And and it's and now it's batteries for storing solar for example.

And transmission a percentage of CPS is is renewables the total generation.

Well it's more if you look at the grid some days during the day it can be up to 80% renewables.

Now in the evening that drops down.

It depends on what we're getting at any given time.

Renewables, meaning just for the public's sense of it, are solar and.

Wind and wind?

Yes.

Although battery power now at the peak times of the day, like on hot summer days around sunset, batteries are maybe 10% of our power in the state.

So yeah, if you look at the app, it's amazing.

You can see even in coal, sometimes it's down below 5%.

This has been a very informative conversation.

Thank you for being present with your particular expertise.

I know that you've just done a book on the subject of public policy and land use, so you're well primed to to think about these questions.

And Sarah, thank you for your work bringing jobs to our community, jobs at the beginning of all the good things that we want to do for people.

Thank you for your professional contributions to our community, and thank you for informing the public today.

Thank you.

Thank you.

We're fortunate today to have Bobby Levinsky from Austin, senior staff attorney for the Save Our Springs alliance.

Bobby, you've been active across the state expressing concerns about the explosion of data centers and their implications for communities.

What is the core of your concern?

My organization, Save our Springs Alliance for very active right now on this data center issue, because of the water scarcity that exists in Texas.

We're being reached out to by residents largely in the central Texas area, and there's a lot of concern about the overall water demands coming from these data centers, as well as other issues such as air pollution, noise, vibration.

What happens to the rivers and the creeks when the water is used by the data centers and it gets discharged?

And then also just the overall sense that a lot of our agricultural lands are being taken.

Now, there's a number of issues that you raised.

Is it your position that we should have a moratorium on data centers, or are there nuanced things that can be done to improve data centers as we know them and make them compatible with some of the concerns you've raised?

I think we should acknowledge that data centers are not a new use.

They've been around in Texas for quite a long time.

What's changed is the size of the data centers, and then the number of them that are coming into our system.

I think right now the estimates are they collectively represent about 8000MW of energy across the state.

And if you look at what's in the queue, there's another 480 data centers that are proposed in Texas.

All of them are very large scale, and that's about a tenfold increase in the amount of energy that will be required.

And with that additional energy use comes the additional water use, which is also about a tenfold increase in the amount of water it's projected to be by 2030, that about 6% of Texas water would be used by these data centers.

So I don't think it's an issue where we can say that our future won't have them think what we're at.

The situation we're in right now is that we don't have the planning in place to take into account the rapid increase in the demand.

Given what's been described as the electrification of the society.

And it's not just data centers, but electric cars and virtually every other human appliance.

Do we see a place for data centers reined in somehow in specific terms?

Should we have a moratorium or we get a handle on this?

Or how do we deal with the water issues through closed water systems?

What is your recommendation?

I think we have to ask ourselves the question, who are these data centers that are coming and serving?

I mean, right now?

So you've mentioned things like electric cars and our streaming services, like those are things that we're currently already using.

That's with the existing data center supply that we already have.

I think the second part of that question is, does Texas need to be the epicenter or the world's supply of data centers?

All of these data centers get proposed, get built in Texas.

It's more of a question of where do they get located?

Where does it make sense for them to locate?

And then based off of where those locations are, how should they operate?

There are data centers in other parts of the world that use very little water, because they might have Seabreeze, for example.

They're able to cool in different with different technologies.

The reality for Texas is that we are a drought prone area.

And if you're putting a data center that's reliant on water in these drought prone areas, it's going to strain our local.

Where should they locate?

And maybe Texas is not the right place for the entire world supply of data.

Bobby, thank you very much.

This has been very helpful and it certainly adds balance to the conversation.

What's usually is about adequacy of power or job creation or economic development aspects.

But the issues you raise, our environmental and particularly water important part of the conversation.

Thank you for bringing that balance to this discussion.

Thank you for being with us.

I hope we've given you some information you can use about data centers in Texas.

It's an issue that will be with us for a long time, and one we will continue to discuss here on clear.

For business of business, I'm Henry Cisneros.

This program is supported by Texas Workers Compensation Insurance.