CyrusOne’s Castroville Data Center Expansion Raises Questions Over Power, Water And Environmental Impact
A planned $500 million data center near Castroville is adding another major development to the rapidly expanding technology corridor west of San Antonio as Texas officials confront growing questions over how artificial intelligence infrastructure will affect electricity, water and surrounding communities.
Dallas-based CyrusOne is developing the facility, known as SAT14A, at 3397 U.S. Highway 90 West in Medina County, according to records filed with the Texas Department of Licensing and Regulation.
The privately funded project calls for construction of a 460,000-square-foot, one-story facility with completion scheduled for June 2027.
The development is part of a much larger data-center boom spreading across the San Antonio region and Texas as companies race to build the computing infrastructure required for artificial intelligence, cloud computing and other digital services.
ERCOT reported in late July that it was tracking approximately 474 gigawatts of proposed large-load projects seeking to connect to the Texas grid, roughly 90% of them data centers.
That figure represents proposed projects rather than electricity demand that will necessarily materialize. ERCOT has begun subjecting projects to tighter eligibility requirements designed to determine which developments are sufficiently advanced to warrant inclusion in grid planning.
Still, the scale of the requests has dramatically changed the state’s energy discussion.
Data centers can consume enormous amounts of electricity because thousands of servers must operate and be cooled around the clock.
Texas’ expanding pipeline has therefore raised questions about whether new generation and transmission infrastructure can be built quickly enough to serve large industrial customers without shifting costs or reliability risks onto existing households and businesses.
CyrusOne already operates facilities in the broader San Antonio market, while Microsoft and other technology companies have invested heavily in data-center development across western Bexar and Medina counties. State records show CyrusOne’s Castroville facility alone represents a half-billion-dollar private construction project.
It is not the only large data-center development planned west of San Antonio.
A 265-acre Medina Technology Park being developed nearby advertises potential capacity of 500 megawatts and says the property will be served by Medina Electric Cooperative.
Those projects underscore how quickly the region is evolving into a major technology-infrastructure hub.
For San Antonio, the development comes as local officials and residents are also debating the cost of serving large power users.
Although projects outside the city are not necessarily served by CPS Energy, the expansion around San Antonio raises broader questions about transmission capacity, regional generation needs and whether the area’s infrastructure can keep pace with the scale of proposed development.
The issue has also become politically significant statewide.
Gov. Greg Abbott has suddenly called for greater scrutiny of major data-center projects as state officials examine whether speculative developments are crowding Texas’ grid-planning pipeline and creating unrealistic forecasts of future electricity demand.
ERCOT’s new review process is intended in part to separate viable developments from proposals that lack sufficient evidence that they will actually be built.
Of the roughly 474 gigawatts of large-load requests ERCOT was tracking as of June, approximately 205 gigawatts initially qualified for potential inclusion in its first “Batch Zero” interconnection study, according to the grid operator’s July presentation. Projects must meet additional documentation and modeling requirements to remain eligible.
State Scrutiny Grows Over Texas Data Centers
The Castroville debate comes as Texas leaders face growing pressure over the rapid expansion of data centers statewide.
Gov. Greg Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to conduct a comprehensive review of data centers seeking connections to the state’s power grid, effectively pausing approvals while regulators examine proposed projects.
Abbott directed regulators to collect information on developers’ expected tax incentives, electricity demand and generation, water use and cooling systems, efforts to limit impacts on surrounding communities and facility ownership. Projects that fail to comply with the review requirements should be denied access to the Texas grid, Abbott said.
“Our top priority is to protect Texans’ safety and quality of life,” Abbott said. “Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid. Simply put, Texans must come first.”
State Rep. Gina Hinojosa, an Austin Democrat running against Abbott, criticized the move as insufficient and argued the governor had allowed the industry to expand without stronger safeguards.
“So nice to see another strongly worded letter from Abbott after he proudly made Texas the wild west of data centers,” Hinojosa said. “Abbott’s call for a ‘pause’ could be for one day – and no one buys it. He’s taken millions from data center CEOs while giving Texans lip service to non-existent restrictions.”
Related: Abbott Pushes to Dismantle CPS Energy’s Monopoly in San Antonio
CyrusOne, meanwhile, has publicly sought to distinguish its projects from more speculative developments.
The company says it invests in the electrical infrastructure required to connect its facilities and uses closed-loop cooling technology intended to reduce water consumption compared with traditional data-center cooling systems. Those details about the Castroville project and the company’s operating plans are particularly relevant as residents and regulators increasingly demand more transparency from developers.
The expansion also comes as CyrusOne increases its electricity footprint elsewhere in Texas.
Earlier this year, Constellation Energy announced that its Calpine subsidiary had reached a 380-megawatt power agreement with CyrusOne for another Texas data center, with plans for an additional 380-megawatt phase. Combined with an earlier 400-megawatt agreement, CyrusOne had contracted for more than 1,100 megawatts for those Texas developments.
That power demand is separate from the Castroville project, but it demonstrates the scale at which individual data-center companies are now operating.
For communities west of San Antonio, the issue is likely to become increasingly difficult to separate from broader debates over economic development.
Data centers can bring hundreds of millions of dollars in investment, construction work and additions to the local tax base. But unlike many large employment centers, completed data centers typically require relatively small permanent workforces compared with their construction cost and physical footprint.
Beyond their strain on the electric grid, data centers have also raised broader environmental concerns. Large facilities can require enormous amounts of electricity and, depending on their cooling systems, significant water use. Communities across the country have also raised questions about noise, backup-generator emissions, land use and the long-term infrastructure required to support rapidly expanding AI and cloud-computing facilities.
CyrusOne has said its closed-loop cooling systems are designed to reduce water consumption, but the broader environmental footprint of Texas’ accelerating data center boom is likely to remain part of the debate as regulators consider how — and where — the industry grows.
