Texas Needs Energy Abundance, Not Energy Bureaucracy
Microgrids can lower costs, strengthen reliability, and keep Texas growing if lawmakers let them.
Hello friends,
Texas has a choice: build enough power for the future or regulate its way into energy scarcity.
Today, the Texas House Committee on State Affairs is holding a hearing on microgrids and distributed energy resources. That may sound technical, but it is really about whether Texas families get more reliable electricity at lower cost or whether government keeps slowing down the supply we need.
Energy Abundance, Not Scarcity
Texas became America’s energy leader because it trusted competition, private investment, property rights, and innovation more than central planning.
That should remain the North Star.
The goal should not be to manage scarcity through mandates, subsidies, and bureaucratic control. The goal should be energy abundance.
Electricity prices follow basic economics. When demand rises faster than reliable supply, prices rise and reliability weakens. When supply expands, competition works, and infrastructure keeps pace, price pressure falls.
This is not complicated. Texas needs more power, built faster, with less government in the way.
Families Feel The Pain
This is already a kitchen-table issue.
A University of Houston and Texas Southern University survey found that nearly 45% of Texas households pay more than $200 per month for summer electricity, and about one-third spend 7% or more of household income on energy.
That means higher electric bills are crowding out groceries, rent, medical care, savings, and opportunities for families.
Politicians often respond with rebates, subsidies, or temporary relief. That may sound compassionate, but it does not fix the problem. It often hides the problem.
The real answer is supply.
More generation. More storage. More transmission efficiency. More distributed energy. More private capital. More competition.
Growth Is Success
Texas is growing because people and businesses want to be here.
Families are moving here. Manufacturers are expanding here. Hospitals, logistics hubs, data centers, and energy-intensive industries need more electricity.
The Energy Information Administration expects U.S. electricity load to rise in 2026 and 2027, with ERCOT and PJM among the regions where growth pressures are especially important. EIA also estimates that data center load is emerging as a major driver of long-term U.S. electricity demand growth, though those estimates stew questionable given flawed projections.
That should not scare Texas lawmakers. It should focus them. Texas does not have a demand problem. Growth is success. Texas has an infrastructure, permitting, and regulatory alignment problem.
Microgrids Can Help
Microgrids and distributed energy resources can help meet this moment.
They allow large-load users, hospitals, campuses, rural communities, manufacturers, and data centers to bring their own power, manage their own risks, and reduce stress on the broader grid.
They can add supply closer to where power is needed. They can reduce congestion. They can improve resilience during outages. They can give customers more control over their energy costs.
This is economics at work. Let those who need power procure it, produce it, store it, and pay for it through voluntary contracts.
But microgrids will work only if Texas does not regulate them like monopoly utilities.
Don’t Regulate Innovation Like Monopoly Utilities
Texas should create a clear legal path for off-ERCOT, behind-the-meter, and islanded microgrids to generate, distribute, and sell power to defined customers without automatically triggering full public utility regulation.
If a system does not interconnect with ERCOT, does not use public transmission, and does not shift costs onto ratepayers, it should not be buried in utility-style red tape.
If that system later connects to ERCOT, imports power, exports power, or participates in wholesale markets, then appropriate oversight should apply.
That is the right balance: freedom first, regulation only when the broader grid is affected.
Other States Are Moving
Texas should lead, but other states are already moving.
New Hampshire’s HB 672 created a category for off-grid electricity providers and exempts them from certain public-utility regulations while they remain independent from the regulated grid.
Utah’s SB 132 created requirements for serving large-scale electric loads and helped clarify how large users can be served through new contractual and generation arrangements.
These reforms are not perfect, but they move in the right direction.
Private capital should be allowed to build energy infrastructure without being forced through a regulatory model designed for monopoly utilities.
Texas should do better.
Permitting Is The Bottleneck
America often takes longer to approve energy infrastructure than it should take to build it.
That is economic malpractice.
Permitting delays raise costs, slow investment, weaken reliability, and block markets from responding to real demand. When Texans need more power and private capital is ready to build, government should not stand in the way.
This is where economics and common sense meet. A market cannot solve scarcity when government blocks the supply response.
That is why microgrids matter. They can bypass some of the bottlenecks by allowing private users to bring their own power rather than waiting years for traditional infrastructure to catch up.
China Is A Warning, Not A Model
China’s centralized system is not a model Texas should copy. But its speed should be a warning.
Global Energy Monitor found that China began construction on 94.5 gigawatts of coal power capacity in 2024 after a major permitting surge in prior years.
The lesson is not to imitate China. The lesson is that energy abundance is economic strength. Texas can win the energy race the Texas way: with freedom, competition, private property, and private investment.
Don’t Single Out Data Centers
Data centers are becoming an easy political target. That is a mistake.
They should pay their electric bills like every other customer once they are operating. They should not get special subsidies. They should not shift costs to families. But they also should not be forced to pre-pay, self-finance, or shoulder special grid costs that no other building or industry must pay.
Office towers do not pre-pay the grid before opening. Hospitals do not pre-pay the grid before serving patients. Manufacturers do not pre-pay the grid before producing goods. Retail centers do not pre-pay the grid before hiring workers.
So why single out data centers?
Forcing one sector to meet special obligations that others do not face is not fairness. It is discrimination. It picks winners and losers. It punishes growth. It tells innovators that Texas welcomes investment until politicians decide their industry is too visible.
That is not the Texas model.
The right approach is simple: cost causation, not political targeting. If a customer imposes costs on the system, rates and contracts should reflect those costs. But government should not invent special rules for one industry because it is growing fast.
Four Principles For Texas
First, protect the right to build private power.
Off-ERCOT, islanded, and behind-the-meter microgrids should be allowed to serve defined customers without being regulated like public utilities.
Second, clarify interconnection rules.
Developers need certainty. If a project stays off the grid, it should face a light-touch framework. If it connects to ERCOT, then ERCOT rules and reliability protections should apply.
Third, apply equal treatment.
Data centers, manufacturers, hospitals, campuses, and other large-load users should pay for the electricity they use and the costs they impose. But government should not force one industry to carry special burdens no other customer carries.
Fourth, avoid subsidies and favoritism.
Public-private partnerships and subsidy-driven programs may sound appealing, but they often distort markets, shift costs to taxpayers or ratepayers, and invite government to choose winners and losers.
True resilience comes from competition, redundancy, price signals, and decentralized decision-making.
Let Private Capital Build
Texas does not need more government micromanagement of electricity.
It needs more supply. Faster permitting. Clearer rules. Stronger property rights. More private capital.
Microgrids and distributed energy resources are not a silver bullet, but they are an important part of an energy abundance agenda. They can help Texans add power where it is needed, reduce strain on the grid, strengthen reliability, and lower long-term costs.
The Legislature should resist turning this into another regulatory maze. Let entrepreneurs build. Let consumers contract. Let private capital solve problems. Let large users bring their own power without forcing families to pick up the tab.
More power, built faster, with less government in the way is how Texas can stay the energy capital of America and let people prosper.
Three Key Takeaways For Policymakers
Texas needs more supply, not more control. Rising electricity demand is a sign of growth and opportunity. The answer is energy abundance through private investment, faster permitting, and competitive markets.
Private microgrids should not be regulated like monopoly utilities. Off-ERCOT, behind-the-meter, and islanded systems that do not shift costs onto ratepayers should have a clear, light-touch path to build.
Government should not pick winners and losers. Singling out data centers or any fast-growing industry for special costs no other customer pays would punish investment and weaken Texas’ competitive advantage.
Get Involved
Texas can lead the next era of energy abundance, but only if lawmakers hear from Texans who want reliability, affordability, and freedom to build.
Contact your state legislators. Submit comments on energy policy. Share this newsletter with friends, business leaders, and policymakers who care about keeping Texas prosperous.
And subscribe to my Substack newsletter for more free-market analysis on energy, taxes, spending, regulation, and policies that let people prosper: vanceginn.com.
Vance Ginn, Ph.D.
President, Ginn Economic Consulting