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The Texas Advantage – The Energy Market

The Texas Advantage – The Energy Market
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Choosing a data center location is a vital decision for all organizations. Data center markets offering competitive options, low hazard risk, tax incentives, and business friendly environments are highly attractive to companies with infrastructure requirements. These factors have led to increased demand in areas like Northern Virginia, Chicago and Silicon Valley. While data center markets in Texas (Dallas, Austin, Houston and San Antonio) have seen significant growth for many of the same reasons, the Texas market also attracts data center users because of its unique energy market.

TexasIndependent Power Grid
The largest differentiator for Texas is its own, independent power grid. The grid is managed by the Electric Reliability Council of Texas (ERCOT) and is completely contained inside the state. This grid independence allows it to be free from most government regulations and fees on interstate electricity sales, a benefit of being outside the Federal Power Act, which was established in 1920.

Deregulated Energy Sector
In 2002, Texas deregulated its energy industry and established ERCOT as the state’s power authority. Deregulation is advantageous to power consumers because it prevents unfair buyer and seller advantages and also provides grid reliability. Data center users in Texas benefit from a competitive market, often finding electricity costs lower than areas like Northern Virginia, Chicago or Silicon Valley. Deregulation also provides increased flexibility for users as it relates to their power provider, contract term and fuel generation mix.

Increasing Focus on Improvements
The state of Texas is the largest power consumer in the US, with over 71 GW of consumption at peak demand. If Texas was its own country, it would rank between Great Britain (62 GW) and France (92 GW) at peak demand. ERCOT has focused on improving the state’s power infrastructure and increasing renewable energy generation as demand has grown over the last several years. In 2016, over $2 billion worth of investments were made to the ERCOT ecosystem, which included overall improvements and new transmission lines. ERCOT is also investing in smarter metering systems, which will provide greater accuracy relating to power load analytics. Renewable energy generation is a continual for ERCOT, and Texas currently leads the US in wind energy generation, with turbines producing over 19,000 MW of power. As of June 2017, 787 MW of solar capacity were generated, with plans to install over 1,000 MW over the next year.

Other benefits we’ve seen are innovation of products. Users in ERCOT can select not just retailer, but a variety of features and contract structures that are possible (and encouraged) via a competitive market.

These improvements make Texas increasingly more sustainable.

While Texas features many of the benefits found in other major data center markets, the unique energy market distinctly benefits the state’s data center users. Organizations with infrastructure requirements in Texas can take advantage of the improving, independent power grid and flexibility it provides, all which have contributed to data center growth in areas like Dallas, Austin, Houston, and San Antonio.

About Stream Data Centers

Stream Data Centers has provided premium data center services since 1999, with 90% of its inventory leased to Fortune 100 customers. To date, the company has acquired, developed and managed more than two dozen data centers nationally, while leadership has remained consistent for all 24 years.

From site selection to data center construction and operations, Stream develops wholesale colocation capacity and build-to-suit solutions for hyperscale and enterprise users. Additionally, Stream sources and develops low-risk land sites for optimum data center development and provides energy procurement services with a focus on reducing market risk and providing low-cost renewable energy options.  All of Stream’s facilities feature carrier-neutral, low latency connectivity to network and public cloud providers.

Stream Data Centers is the technical real estate affiliate of Stream Realty Partners, a full service commercial real estate investment, development and services company. With $5.8 billion in annual transactions and over 294 million+ square feet of leased or managed commercial space in active markets coast to coast, Stream Realty Partners is one of the most successful commercial real estate firms in the country.

About Our Contributor

Brian Frazier

Senior Vice President, Energy Strategy
Brian draws upon his extensive experience in the energy sector to guide Stream customers through the complex nuances of commodity electricity procurement, demand response, discussions with regulated utilities and more. Read More