In the sweltering heat of Texas summers and the bone-chilling depths of its winters, the state’s power grid has long been a point of vulnerability. Now, a new law is reshaping how the Electric Reliability Council of Texas, or ERCOT, manages emergencies by granting it explicit authority to disconnect large data centers and other high-energy consumers during crises. Signed into effect in June 2025, this measure aims to prevent the kind of widespread blackouts that paralyzed the state in 2021, when Winter Storm Uri left millions without power and claimed hundreds of lives.

The legislation, known as Senate Bill 6, targets facilities with loads of 75 megawatts or more—think sprawling data centers powering AI computations and cloud services. Under the law, ERCOT can mandate curtailment of these non-critical loads during “firm load shed events,” essentially forcing them offline to preserve electricity for essential services like hospitals and homes. This mandatory power is balanced by a voluntary demand response program, where participants can bid to reduce usage in exchange for compensation, according to reporting in Utility Dive.

The Shadow of 2021 Looms Large

The impetus for this law traces back to the deadly 2021 storm, when ERCOT’s grid teetered on the brink of total collapse. Natural gas supplies froze, wind turbines iced over, and demand skyrocketed, leading to rolling blackouts that exposed the fragility of Texas’ isolated grid. Data centers, with their relentless energy appetites, emerged as a flashpoint; some operators kept running on backup generators while residential customers suffered.

Lawmakers, drawing lessons from that debacle, crafted SB 6 to prioritize grid stability. As ZeroHedge noted in its coverage, the bill received bipartisan support, reflecting a consensus that unchecked growth in energy-intensive industries like crypto mining and AI data processing could exacerbate future risks. ERCOT forecasts demand surging to 138 gigawatts by 2030, up from 87 GW in 2023, largely driven by these facilities.

Data Centers in the Crosshairs

For the booming data center sector, the law introduces new operational hurdles. Operators must now disclose backup power capabilities and prepare for sudden disconnections, potentially disrupting services for clients reliant on uninterrupted computing. Industry insiders worry about the financial fallout—lost revenue from downtime could run into millions per hour for major players like those supporting hyperscale cloud providers.

Yet, proponents argue it’s a necessary safeguard. David Penny, director of reliability services for Texas RE, highlighted in Utility Dive that AI data centers exhibit “very fast, very large ramps” in power usage, akin to steel mills, straining the grid’s responsiveness. The voluntary program offers a carrot alongside the stick, allowing data centers to monetize flexibility by curtailing on demand.

Balancing Growth and Reliability

Stakeholders are already debating implementation. Clif Lange of the South Texas Electric Cooperative emphasized in another Utility Dive piece that all loads, including those with on-site generation, should share transmission costs to avoid stranded assets. This could lead to higher fees for data centers, prompting some to explore co-location with renewables or off-grid solutions.

As Texas navigates this high-stakes balancing act, the law sets a precedent for other states grappling with data center proliferation. With AI’s energy demands only escalating, ERCOT’s new powers may become a model—or a cautionary tale—for integrating tech’s voracious appetite into fragile power systems. Recent heatwaves, as covered by Reuters, underscore the urgency: reserves dipped critically low in 2023, hinting at more disconnections ahead if growth outpaces infrastructure.

Looking Ahead: Challenges and Opportunities

Critics, including some data center advocates, fear the law could stifle investment in Texas, a hub for tech expansion due to cheap land and energy. But supporters point to built-in reviews by the Public Utility Commission, ensuring the measures evolve with technology. Voluntary participation has already seen uptake, with ERCOT procuring demand response to bolster reserves.

Ultimately, SB 6 reflects a broader reckoning with how digital innovation intersects with physical infrastructure. As one energy analyst told Data Center Frontier, it’s a “bellwether” for regulatory approaches nationwide, forcing operators to innovate in efficiency and resilience. In a state where independence is prized, this law underscores that even data empires must yield to the grid’s greater good during crises.