Vultr Reported Out; Other Data Centers Applying for Electric Service

By Greg Ritchie

Messenger Reporter

HOUSTON COUNTY — The local data-center conversation has shifted again, with Vultr reportedly withdrawing from consideration while Houston County Electric Cooperative (HCEC) says several other applications remain active.

Kathi Calvert of HCEC said the cooperative is currently reviewing multiple data-center applications. Most involve smaller facilities rather than the massive centers being built to support artificial intelligence.

“We have several data center applications, most of them are the smaller data centers, not the big hyper-scale data centers for AI,” Calvert said.

The applications could still represent a major change for the cooperative and the region. HCEC serves approximately 23,000 meters, with a peak load of about 120 megawatts during periods of extreme demand.

“If you combine all the applications we have right now, it could easily double or triple our load that we serve today,” Calvert said.

The proposed Vultr facility previously discussed in Houston County was described as a possible 100,000-square-foot data center requiring many megawatts of electricity. The project was also associated with an estimated $3 billion in equipment, approximately 15 to 20 permanent jobs and a closed-loop cooling system.

Sources familiar with the project have said Vultr is no longer pursuing the site. The company’s withdrawal has not been publicly confirmed, and it remains unclear whether the project has been formally canceled or simply removed from the current development process.

Some elected officials have privately acknowledged that a data center could bring substantial economic benefits if the right conditions were negotiated and legally enforceable. Those potential benefits could include new revenue for the county, local school districts and the hospital district. Officials have described the possible impact as large enough to potentially double the county’s current budget.

The questions surrounding data centers have included not only economic development, but also the effect on local electricity customers. Calvert said HCEC does not intend for the cost or risk associated with data centers to be shifted to traditional residential and commercial members.

“Absolutely not,” Calvert said. “Our board is elected by our membership. They live here locally. They own land, they own property. They are on the same electrical lines as our members, and it is very important for them to protect the residential rural rate base.”

Calvert said HCEC uses cost-of-service studies to make sure expenses are assigned to the appropriate rate class.

“We would not want any of the risk or the cost shifted to our traditional residential and commercial members that we’ve served for 80-plus years now,” she said.

The same principle applies to infrastructure required to connect a data center to the electric system.

“The data center applicant would pay for all required upgrades,” Calvert said. “There are no cost shifts to any other consumer classes.”

That does not mean every proposed project will automatically be connected. Calvert said utilities are required to evaluate applications and complete extensive studies before determining whether the electric system can safely serve the requested load.

The studies examine transmission capacity, generation capacity, the thermal limits of power lines, voltage fluctuations and system stability. They also consider what could happen if a piece of equipment fails or if frequency changes occur on the grid.

“There are numerous studies,” Calvert said. “It is a lengthy process to ensure there’s not any negative implications to reliability.”

Calvert said HCEC has enough electricity available at this time, with additional generation expected to come online. However, each proposed data center must still demonstrate that adequate transmission and generation capacity will be available.

HCEC’s role in the process has also raised questions about why the cooperative allows data centers to apply for service in the first place.

“We have to allow data centers to apply,” Calvert said. “We cannot discriminate. We are a utility. Anybody who wants electric service and applies for electric service, we have to do our best to serve them.”

That requirement does not mean the service is free or that the cooperative must accept every request without review.

“They have to pay the cost of whatever that interconnection is,” Calvert said.

The statewide environment for data-center development also changed this week. On Monday, Aug. 3, Gov. Greg Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to conduct a comprehensive audit of data centers advancing through ERCOT’s interconnection process.

The audit must be completed before any affected data-center project moves forward. Projects that fail to comply with state requirements may be denied connection to the Texas electric grid.

The governor’s order calls for information about public incentives and tax abatements, the amount of electricity a project expects to use, whether it will provide its own power, water consumption and sources, cooling technology, noise and lighting controls, traffic improvements, setbacks, emergency-response coordination and ownership.

The directive does not specifically confirm the status of the Vultr proposal in Houston County. It does, however, establish a more extensive statewide review process for projects seeking access to the ERCOT grid.

Calvert said the governor’s action appears to have slowed the data-center market, but she does not believe it has ended the development push.

“It is uncertain at this time,” she said. “I think some will move forward and we will see more data centers. I don’t know specifically if they will be in our service territory or others. But I think it has definitely slowed down at this point.”

“I don’t think it’s stopped by any means,” Calvert added. “It’s just slowed down.”

For Houston County, that leaves the future of data-center development tied to more than the fate of a single company. Any project that moves forward will have to address the cost of new infrastructure, electric reliability, water use, neighboring property owners and the public benefits promised to the community.

Greg Ritchie can be reached at [email protected]