Texas, a multi-faceted giant

At 696,241 km², Texas is the second largest state in the United States, just behind Alaska. Its surface area exceeds that of metropolitan France, and its impressive dimensions - some 1,300 km from north to south and 1,400 km from east to west - give it a remarkable geographical diversity. Texas is also the second most populous state in the U.S., with a population of 30.5 million in 2023, according to the U.S. Census Bureau.

The majority of Texans, around 80%, are urban, and almost half live in the Dallas-Fort Worth or Houston metropolitan areas. San Antonio and Austin complete the picture of Texan metropolises, each with over two million inhabitants.

Source: Wikipedia

In economic terms, Texas is an undisputed powerhouse. It's the second richest state in the United States, with a gross GDP of $2389 billion in 2023 (just behind California at $3579 billion). Its economy is diversified, ranging from livestock farming to aerospace, biotechnology and a dominant energy sector. Texas is America's leading producer of crude oil and natural gas, thanks to its vast mineral reserves. It also boasts an extensive pipeline network, with nearly 770,000 kilometers criss-crossing the state.

Texas, nicknamed "The Lone Star State", is one of a kind. It is the only state to have joined the Union by treaty, marking its independence from 1836 to 1845. This historical uniqueness is reflected in its cultural identity, political choices and economic decision-making, all of which are discussed in this article.

An attractive environment

The state attracts businesses thanks to a favorable tax environment, with no corporate or personal income tax, a skilled workforce and easy access to global markets. These advantages have convinced tech giants like Tesla, Oracle and Hewlett Packard Enterprise to move their headquarters and factories to Texas, away from California's high rents and strict regulations.

The state is also a leader in renewable energies, accounting for nearly 30% of its energy mix. It benefits from the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, which support the development of clean energy and infrastructure projects.

Turning the corner in 2021

Texas has fallen on hard times, most notably during the February 2021 cold snap that led to massive power outages, hundreds of deaths and considerable economic losses. The crisis highlighted the vulnerabilities of a deregulated, independent energy system managed by the Electric Reliability Council of Texas (ERCOT). The crisis also revealed the limits of a liberalized, private electricity market, where competition and deregulation were unable to guarantee grid reliability and fluidity in extreme conditions.

In response, Texas - under the leadership of Ercot manager Brad Jones - took steps to strengthen its energy infrastructure and avoid a repeat of such a disaster. The authorities have maintained market liberalization while emphasizing the need to improve the resilience of the power grid. Massive investments are needed to modernize and protect energy installations against bad weather. They have modernized power generation plants and developed power farms on the Ercot network. The latter are able to clear their consumption if necessary to avoid saturating the networks.

Data centers and power farms

Texas is facing challenges related to the rapid expansion of data centers, which are putting increasing pressure on energy and land resources. Data center managers must now consider generating their own power to meet growing demand and environmental concerns. Flexible data centers are one answer to keeping pressure off the grid and freeing up availability in extreme weather conditions, for example.

Texas has thus entered a virtuous circle. They are investing in renewable energies, gas and nuclear power, and attracting technology companies thanks to their tax advantages. This economy finances the development of clean or semi-clean energy sources. The effect of scale reduces electricity costs. They encourage the emergence of power farms. This improves grid resilience, further reducing electricity prices and attracting even more business. In the event of a "winter storm", as in 2021, the Ercot network can be adjusted by starting up a gas-fired power plant or asking power farms to shut down in return for a fee (which costs less). In short, a virtuous circle that reduces the price of electricity, finances the energy transition and attracts capital and business. (Why don't we do this in France?).

If for over a century, California was the place where everyone wanted to move, the Lone Star State seems to be stealing the show. A rapidly growing population and the arrival of numerous technological and industrial giants are concrete proof of the region's attractiveness.