North Carolina has 91 data centers and roughly 6.3 gigawatts of planned load. Texas has 300 operating data centers, 142 under construction, and a Bloomberg Energy projection of 40 gigawatts of capacity by 2028. The gap is not an accident.
North Carolina’s data center market is real and growing. Amazon’s $10 billion Richmond County campus, Jabil’s Rowan County investment, Google’s long-standing presence — the state has genuine momentum. But momentum is not dominance. Nationally, North Carolina ranks ninth in data center count. Texas and Virginia compete for first.
The reasons Texas leads are worth examining carefully — not as a story of incentives alone, but as a story of systematic structural advantages that North Carolina has not replicated and is now, at the worst possible moment, actively undermining.
The policy decisions North Carolina makes in the next twelve months will determine whether the state consolidates its position as a serious data center market or cedes ground to states that have built more coherent frameworks for attracting, siting, powering, and governing large-scale digital infrastructure.
The ERCOT Advantage Is Structural, Not Incidental
Texas’s most durable advantage over North Carolina is not its tax incentives. It is ERCOT — the Electric Reliability Council of Texas, an independent grid operator covering roughly 90% of Texas’s electric load. ERCOT’s connect-and-manage interconnection process adds new generation and large loads faster than any other U.S. energy market by a significant margin, a finding documented consistently by independent researchers and regulators. When a developer brings a large load interconnection request to ERCOT, the process is designed around speed and flexibility rather than sequential study queues.
ERCOT’s protocols also establish Private Use Networks as the primary mechanism for behind-the-meter generation serving dedicated loads — arrangements that allow data centers to contract directly with generators, connect to the ERCOT grid at a single point for backup service, and avoid the Federal Energy Regulatory Commission’s (FERC) jurisdiction entirely. That last point matters enormously: the absence of federal regulatory risk simplifies financing, reduces timeline uncertainty, and gives developers a degree of structural flexibility that no PJM or SERC market — including Duke Energy’s service territory — can currently match.
North Carolina’s grid is served by Duke Energy under the SERC Reliability Corporation footprint, subject to FERC jurisdiction and regulated by the North Carolina Utilities Commission (NCUC). Duke’s interconnection process for large loads is more constrained, more sequential, and more exposed to the queue congestion that has slowed large load additions across PJM Interconnect and SERC markets. That does not make North Carolina uncompetitive — it makes it a different kind of market, with different timeline and risk profiles that serious developers understand and price accordingly.
But it is worth noting that Texas’s ERCOT advantage is now generating its own complications. ERCOT received more than 233 gigawatts of large load interconnection requests by the end of 2025 — a system being asked to absorb demand at a scale it was never designed for. Texas enacted SB 6 specifically because unconstrained data center load growth became a grid reliability and ratepayer issue. Texas is not retreating from its framework, but it is actively constraining it. The lesson for North Carolina is not to replicate what Texas built in 2015. It is to build what Texas wishes it had designed from the beginning — a framework with coherent standards and protections embedded at the outset.
Texas’s Incentive Structure Is More Sophisticated Than NC’s
North Carolina’s data center sales tax exemption was enacted in 2006 and expanded in 2015. At the time, a $75 million investment threshold was meaningful. At current hyperscale project scales — where a single campus can exceed $10 billion in capital investment — $75 million is effectively no threshold at all. The exemption has no expiration date, one of only seven in the country structured that way, and attaches only two conditions: the investment minimum and a health insurance requirement for employees. There is no transparency requirement, no energy reporting, no minimum job count, and no mechanism to evaluate whether the exemption is producing returns proportionate to its cost.
Texas’s exemption is more structured. It requires a minimum of 100,000 square feet of facility space, a $200 million minimum investment, at least 20 qualifying jobs paying at least 120% of the county’s average weekly wage, and Comptroller certification. The exemption has a defined term — 10 years for investments between $200 and $250 million, 15 years for investments above $250 million. That structure is not more generous than North Carolina’s in raw dollar terms. It is more defensible — and more durable — precisely because it is tied to conditions that create a public benefit case.
Texas’s Chapter 312 property tax abatement program allows local governments to provide up to 10-year abatements on new improvements, giving counties and cities a direct economic development tool that can be stacked with the state sales tax exemption. North Carolina has no equivalent statewide property tax abatement framework for data centers. Its incentive toolkit for this category is essentially a single instrument — the sales tax exemption — that is now under simultaneous pressure from the governor, five legislative bills, and a budget negotiation that has already moved to roll back the electricity portion.
Local Fragmentation Is North Carolina’s Self-Inflicted Wound
Texas does not have a statewide data center siting framework either. But Texas’s political environment has been consistently receptive to large-scale industrial investment, and local opposition has historically been limited. North Carolina’s situation in 2026 is materially different.
More than a dozen jurisdictions have enacted or are pursuing moratoriums. Charlotte is weighing a 150-day pause. Durham passed a 60-day moratorium with a longer one in active consideration. Northampton County authorized a 32-month pause. Apex moved toward a 12-month moratorium. Gates County, Chatham County, Canton, Harnett County, Spring Hope, and Wendell have all acted.
A developer evaluating North Carolina against Texas in 2026 is not simply comparing two states with different incentive packages. They are comparing a state with a coherent, stable, statewide framework — even if that framework is now under political pressure of its own — against a state where the local approval environment is fragmenting faster than the state legislature can respond to it. Texas’s Senate Bill 6, enacted in 2025, creates new large-load requirements for facilities above 75 megawatts — remote disconnect equipment, demand management participation, regulatory approval for co-location arrangements — but it does so through a unified statewide process. North Carolina’s response to data center growth is playing out jurisdiction by jurisdiction, with no statewide framework to coordinate it.
Water is adding another dimension to the fragmentation problem that receives less attention than power but is equally real. Gates County has been under its own water system moratorium since 2018 — one reason it moved early on data centers. Orange County explicitly cited water impacts as a rationale for its moratorium. Charlotte Water is already operating under Stage 2 drought restrictions while simultaneously pursuing expanded Catawba River diversion rights, drawing upstream concerns about long-term regional water security.
Large data centers can consume millions of gallons daily for cooling, depending on system design. In Texas, significant portions of the state’s primary data center markets face their own water constraints — the comparison between the two states on water is not straightforwardly in Texas’s favor. But North Carolina’s water debate is happening locally and reactively, without a statewide framework for evaluating water impacts from large-load industrial users any more than it has one for evaluating power impacts.
What North Carolina Would Actually Have to Change
Closing the gap with Texas is not impossible, but it requires changes more fundamental than adjusting an investment threshold or adding a transparency requirement to the existing exemption. And the model to build toward is not Texas circa 2015 — it is a framework that learns from where Texas is now struggling.
First, the state needs a modernized, stable incentive framework — one that ties exemptions to conditions developers can plan around: investment scale, energy and water reporting, clean energy commitments proportionate to load, and a defined term that gives both the state and the developer certainty. An incentive that is being actively questioned from every direction is not an incentive a developer can rely on in a ten-year capital plan. Critically, an incentive structure with embedded accountability conditions is also one that is far harder to attack politically — because it already answers the questions critics are asking.
Second, North Carolina needs a statewide siting framework for large-scale data center development — something that does not eliminate local input but provides consistent standards, defined timelines, and a clear process that prevents the kind of jurisdictional fragmentation currently making the state look ungovernable to outside investors. That framework should address power, water, and community impact in a coordinated way rather than leaving each dimension to be litigated jurisdiction by jurisdiction. A developer should not have to independently evaluate the political posture of every county commission and water authority within 50 miles of a candidate site.
Third, the Energy Policy Task Force’s recommendation to develop large-load tariff options needs to accelerate from exploration to implementation. The ratepayer protection argument is legitimate and important — but every month of regulatory uncertainty about how large loads will be priced is a month developers are looking harder at Texas.
North Carolina has the underlying assets to be a serious data center market for decades: growing population, available land, competitive baseline power costs, research university infrastructure, and a logistics network that connects the Southeast and mid-Atlantic. What it does not have — and what Texas built deliberately over years — is a coherent policy framework that lets a developer know what the rules are, believe they will hold, and move forward with confidence. That is the real gap. It is also the one most directly within the state’s control to close — and if North Carolina builds it thoughtfully, it can avoid inheriting the problems Texas is now trying to solve.