Texas HyperGrid: Hope Or Hype?

Former Texas governor and former Secretary of Energy Rick Perry, now a co-founder of Fermi America, has emphasized the importance of competing with China in energy-intensive technological advancement as a motivation for the HyperGrid project. (Photo by Mark Wilson/Getty Images)

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The Texas power grid, long isolated from the rest of the country’s interconnections to avoid federal oversight, has its share of long and near-term problems, such as a projected 8.3% shortfall by 2027 as demand increases, and limited weatherproofing.

Though the Texas legislature and the Electric Reliability Council of Texas, the independent state grid operator, have taken important steps to more consistently inspect plants and transmission stations as well as plan for increased demand, challenges remain. For instance, severe storms this past May led to widespread outages. Resolving these issues is not easy. The path forward is slow and expensive, with no easy solutions or shortcuts in the offing. This web of problems is why Texas-based Fermi America’s announcement of its HyperGrid project this past June led to an outburst of optimism.

So is the Texas HyperGrid hope or hype? The answer is nuanced; the HyperGrid project has very significant potential, but it is not likely to become a substitute for the need to upgrade and modernize the grid overall – not in Texas, or in the other 49 states.

What Is the HyperGrid?

If successful, the HyperGrid aims to provide 11 GW of power from the “world’s largest data energy complex with nuclear, gas, solar” to help meet projected demand driven by the state’s rapid construction of data centers used to power AI and other critical technologies. The HyperGrid aims to combine nuclear, natural gas, solar, grid-scale batteries, and conventional utility grid power at its Amarillo campus to engage with the frontiers of energy development and both supply and leverage AI.

During his remarks at the launch announcement of the HyperGrid, Fermi America co-founder, former Texas Governor and former Energy Secretary Rick Perry cited the emerging technological race between the United States and China as motivating the project.

The HyperGrid is a direct attempt to meet rising demand by combining new nuclear and gas capacity with renewables on one campus to power data centers. The hope is that by creating a mostly autonomous area of self-sufficient energy consumption and utilization, a model for the Texan grid reform can be propagated. Rather than attempt to upgrade the grid as a whole, a “distributed generation grid model” of upgraded generation and new consumption can be layered on top of the existing grid.

This has several immediate advantages. Notably, it allows for innovation, experimentation, and leading by example. Companies ancillary to energy utilities tend to like this model since it simplifies their corporate responsibilities and adds new capacity quickly. It is a model of delivery that easily allows additional decentralized forms of energy generation to be employed en masse, such as residential solar panels and other home-scale renewables.

HyperGrid Roadblocks

Yet, HyperGrid and the distributed generation grid model have serious challenges. On the whole, it is less efficient in the long term to employ at scale for an entire region, even if it is helpful for quickly adding capacity for specific projects. Furthermore, it can create problems with grid compatibility, uneven capacity, and desynchronization that ERCOT already struggles with.

In response to Forbes’ inquiry, a Fermi America spokesperson said in an email:

Each new AI facility demands 500 megawatts or more. To put that in perspective, it’s like dropping a small city onto the grid overnight. Now multiply that by hundreds of planned facilities. The assumption that our existing infrastructure that is currently experiencing brownouts, could handle this surge wasn’t just optimistic—it was the oceanfront property in Arizona that George Strait warned us about.

Recognizing this challenge months ago, Fermi America chose to build a private grid, giving Texas the energy it needs to continue its growth and innovation trajectory, without taking power away from our local communities.

According to the National Renewable Energy Laboratory, the current U.S. transmission system is likely to need to double or more in size by 2050. However, the country is headed in the wrong direction. A report from Americans for a Clean Energy Grid found that the rate at which new transmission lines are being added has slowed dramatically over the past decade, despite increases in transmission funding during the same period. With much of the budget allocated to reliability upgrades and the replacement of aging hardware, money is being invested in keeping old lines operational. At the same time, next-generation smart grid technology that is needed to address intermittency is often overlooked.

Independent utilities, such as ERCOT, have acknowledged this issue and proposed a plan to upgrade a substantial portion of the state’s transmission lines. It is a promising start for Texas and a necessary upgrade to integrate projects like the HyperGrid. The paradox is that the likely localized success of HyperGrid may dissuade utilities from necessary grid upgrades at scale, with U.S. utilities paying more at the end of the day or being unable to handle the load challenge that is coming up fast, ending up paying the pound a cure, rather than a penny of prevention.

American Grid Reform

ERCOT’s efforts will set a nationwide precedent. After years of reform, ERCOT has drastically improved and is now one of the best-ranked utilities in the country. This means, thankfully, the paradox and challenges the HyperGrid creates are occurring in an area that is well-suited to test the project’s approach.

Coordinating between multiple levels of authority and navigating different jurisdictions will come with its challenges as well. According to the Niskanen Center and Clean Air Task Force, federal entities like the Department of Energy and the Federal Permitting Improvement Steering Council are not taking the lead in upgrading transmission infrastructure at sufficient speed, nor are they prioritizing transmission agendas or providing adequate support to inter-agency cooperation.

Another major issue at present is the growing number of projects looking to connect to the grid that are stuck in interconnection queues, the testing and study phase before grid connection. The Lawrence Berkeley National Laboratory found last year that nearly 269.2 GW of combined production and storage capacity looking to connect to ERCOT is held up in these queues.

One thing Secretary Perry is right about: Washington cannot take its eyes off the prize. The growing competition with the People’s Republic of China in the energy sphere is a race that America needs to win. China unveiled a new national energy law at the beginning of 2025 to coordinate its many energy-centric efforts. Beijing has fully committed to revitalizing its nuclear industry to meet increasing energy demands in conventional areas as well as the rapidly growing AI sector. China is already a world leader in renewable technology production and clean energy, and the U.S. has ground to make up if it wants to keep up with China. That requires a modern grid.

To advance grid infrastructure and compete globally, the Department of Energy published the Distributed Energy Resource Interconnection Roadmap this January, a plan to bring together smaller grids, modernize hardware, and improve access. The Trump Administration has issued executive orders aimed at promoting the development of American AI and plans to issue additional orders to streamline the grid connection process and provide federal land for new data centers. In concert, these moves can help bring together a national strategy for the electrical grid, but practical and efficient actions to follow through will be key to success.

Energy demand across the country is expected to rise in the coming years, and the past two administrations have been adamant that the U.S. needs to be a leader in AI and other technological innovations. Revamping the energy transmission system will be crucial for maximizing American technology in the interest of competing with China abroad and ensuring energy access and security at home. However, projects like the HyperGrid in and of themselves are not the solution to America’s grid woes. Policymakers cannot kick the can of responsibility for grid upgrades down the road or hope for a savior from the private sector. Only concerted, coordinated efforts that involve privately and publicly owned utilities and are aimed at nationwide upgrades for the AI-driven 21^st century will rescue America’s grid.