San Antonio’s Data Center Boom Spurs Policy Debate Over Power, Water, Zoning, and Neighborhood Buffers

A fast-growing footprint meets infrastructure limits

San Antonio’s expanding data center industry is prompting city leaders to weigh new rules for where facilities can locate and how their resource needs are managed. Local officials say the region already hosts more than 20 data centers, with additional projects proposed or under early planning.

The issue moved to the forefront during a recent City Council B Session after District 6 Councilmember Ric Galvan requested a closer look at data center development and its impacts. District 6 on the far West and Northwest sides has become a focal point, with residents raising concerns tied to proximity, construction activity and the cumulative demands these facilities place on utilities.

Utilities describe rising demand and long-term planning challenges

Data centers are among the fastest-growing “large load” customers—facilities that can draw tens to hundreds of megawatts to run servers and cooling systems. CPS Energy executives have described a planning environment in which new large-load inquiries are increasingly common and can be substantial in scale. The utility has said it currently serves power to 21 data centers and that those contracts generate about $110 million in revenue. CPS Energy officials have also noted dozens of future projects in various stages of discussion, while cautioning that not all proposals ultimately proceed to construction.

San Antonio Water System has reported that data centers remain a relatively small share of overall drinking-water demand today, but their cooling needs still require forward planning—especially as more facilities request access to the city’s recycled-water system. SAWS officials have said the share of data center water supplied through recycled water has increased over time and that the recycled system has finite capacity without upgrades.

Zoning gaps and the question of setbacks from neighborhoods

City development officials have acknowledged that existing zoning rules do not specifically address data centers, leaving policymakers to consider whether to define and regulate them more directly in land-use rules. One approach discussed by council members is categorizing data centers in industrial terms and establishing separation requirements from residential areas and other sensitive land uses.

The city’s Unified Development Code is typically updated on a five-year cycle, with the next amendment cycle scheduled to begin in January 2027. Some council members have pressed for earlier changes focused on data centers, while others have argued for handling the issue within the regular update timeline.

Key policy options under discussion

• Defining data centers within zoning rules to clarify where they are permitted.
• Considering buffers or minimum distance requirements between facilities and homes, parks, or schools.
• Expanding utility planning tools for large-load growth, including cost recovery and long-range capacity investments.
• Encouraging greater use of recycled water and more water-efficient cooling designs.

Statewide grid signals add context to local decisions

San Antonio’s debate is unfolding as Texas grid planners track a rapid increase in large-load interconnection requests, many tied to data centers. That statewide trend has intensified scrutiny of how quickly generation, transmission and local distribution systems can expand, and how costs and reliability risks are managed as demand rises.

City officials have framed the challenge as balancing economic development with clear siting standards and infrastructure safeguards, particularly in areas where facilities cluster near neighborhoods.