Donald Trump criticizes Texas Governor Greg Abbott’s stance on data centers, arguing that the industry could surpass oil in economic significance as concerns about the state’s power grid grow.
DALLAS — The surge in artificial intelligence is driving a data center boom in Texas, creating an unexpected rift between President Donald Trump and one of his staunchest political allies, Republican Governor Greg Abbott. The influx of billions of dollars in investment into the state is accompanied by a significant increase in electricity demand, raising critical questions about who will bear the costs associated with potential impacts on the power grid.
In response to these concerns, Abbott has taken steps to ensure that data centers cover the infrastructure costs necessary to support their operations. He has urged developers to invest in their own power generation capabilities rather than passing the financial burden onto Texas residents. However, Trump has publicly disagreed with Abbott’s approach, labeling it a “mistake” and emphasizing the economic benefits that data centers can bring to communities willing to host them.
“For Texas to say no to data centers is a mistake in the sense that it could be bigger than oil,” Trump stated in an interview with Punchbowl News published on Friday. He expressed confidence that the data center industry has the potential to surpass the oil sector in economic impact.
Texas has emerged as a central player in this debate, as the demand for computing power driven by artificial intelligence and cloud services fuels a wave of data center development throughout the state. According to Cushman & Wakefield’s 2026 Global Data Center Market Comparison, Dallas has now secured its position as the world’s leading primary data center market. This ranking highlights Texas’s rapid growth as companies seek the necessary land and electricity to support their operations.
The state’s expansion is occurring at a pace that could rival or even exceed Virginia, which currently holds the title of the largest data center market by operating capacity. However, this rapid growth has intensified scrutiny regarding the strain that large-scale data facilities place on Texas’s power system.
Balaji Tammabattula, chief operating officer of BaRupOn, a company developing a data center campus in Texas, noted that Trump’s recent criticism of Abbott’s policies was “really helpful.” He pointed out that many companies have already made substantial investments in Texas, drawn by the state’s historically business-friendly environment. “A lot of companies made huge investments into Texas, and now all of a sudden he [Abbott] changed his stance,” Tammabattula remarked. “That, I think, could be a problematic situation going forward.”
BaRupOn’s 700-acre campus is somewhat insulated from the ongoing debate over grid access, as it is designed to generate its own power rather than relying on the state’s electric grid. Tammabattula explained that the company has been constructing its own infrastructure, including natural gas pipelines and turbines, to create what he refers to as an “islanded power campus.” He added, “Even if we want to connect it to the grid, we don’t have a pathway for the next three years.”
This limitation may work in BaRupOn’s favor as Texas encourages data centers to rely more heavily on their own power generation. Tammabattula noted that the company has been advocating for on-site power generation, known as behind-the-meter power, for over a year as a means to meet the substantial electricity demands of data centers without exacerbating the strain on the grid. “For us, it definitely is beneficial because it proves what we’ve been trying to say for the last one and a half, two years,” he said.
He also acknowledged the valid concerns driving opposition to the rapid expansion of the industry, particularly the fear that the costs of supplying massive amounts of electricity to new facilities could ultimately fall on residents. The challenge for Texas lies in accommodating an industry that is investing billions of dollars into the state while ensuring that residents do not bear the financial burden of the necessary infrastructure.
Tammabattula believes that the tension surrounding this issue is unlikely to dissipate as demand for data centers continues to rise. “These data centers have to be built,” he stated. “Until an actual solution comes up, this is going to continue for the long term. And in my opinion, that has to come from the government.”
As the debate unfolds, it remains to be seen how Texas will navigate the complexities of balancing economic growth with the need for sustainable energy solutions.
According to Fox News Digital.