Building the physical backbone of artificial intelligence in Texas has become a very expensive hobby. According to a Bloomberg analysis, a single data center project in the state can now carry development costs in the tens of billions of dollars.
The numbers behind the build-out
Texas leads US data center development, with a project pipeline that has passed $50 billion. Annual investment in the state is projected to reach $66.2 billion in 2026.
Consider the 1 GW data center complex announced by Meta and BlackRock in Texas. It is expected to cost about $14 billion to develop and is planned to come online in 2028.
At a more granular level, shell and core construction for Texas data centers runs between $190 and $340 per square foot. That works out to about $11.3 million per megawatt of capacity.
“Shell and core” means the basic structure: walls, roof, foundation and core building systems. It does not include the servers, chips and networking gear that make the building useful.
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Why everything costs more
The Bloomberg analysis points to several pressures stacking on top of each other. Labor shortages are one. Material prices are another.
Steel prices have climbed 22% year-over-year. Aluminum is up 40%.
Copper wire, a staple input for data centers given how much power they move around, has risen 17.9% year-over-year. Across the broader US construction sector, input costs have been rising 9% annually.
The result, per Bloomberg’s analysis, is that average construction costs for new data center projects have doubled compared with previous years. The typical project now runs about $1 billion.
The uncomfortable detail is that these projects have not grown much in physical size. Developers are paying roughly twice as much for buildings that are not meaningfully larger.
Grid politics add another layer
Texas Governor Greg Abbott called for a halt on new grid connections for data centers while an audit of the ERCOT interconnection queue is carried out.
BloombergNEF has estimated that the pause could delay roughly 49.8 gigawatts of data center load. That amounts to nearly 20% of the entire US data center pipeline.
The research firm estimates the delay could put up to $15 billion in costs and revenue at risk for affected projects.
What this means for investors and builders
Investors may need to recalibrate expectations on both project timelines and budgets. A plan that penciled out two years ago at half the current cost could look very different today.
The ERCOT audit is the near-term variable to watch. How long the pause lasts, and what the audit concludes about the queue, will shape whether that 49.8 gigawatts of delayed load gets connected or gets rethought.
Large, well-capitalized players like Meta and BlackRock can absorb a $14 billion price tag. Smaller developers working at the $1 billion scale have less room for error when costs and delays move against them.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.