LandBridge Co. and NRG Energy have taken a significant step towards addressing the burgeoning energy demands of hyperscale data centers in Texas. The strategic agreement, announced on Sept. 23, outlines plans for a potential 1,100 MW natural gas-fired generation facility in Reeves County, Texas, strategically located adjacent to the Waha natural gas hub. This development, if realized, could mark a pivotal moment in the evolution of energy infrastructure in the region, particularly as the Electric Reliability Council of Texas (ERCOT) grapples with a surge in large-load interconnection requests.
The proposed facility is designed to support a hyperscale data center, a sector that has seen explosive growth and is expected to continue its rapid expansion. According to Enerdatics’ August 2025 U.S. Data Center Overview, data center demand in ERCOT has surpassed 20 GW of potential load, representing roughly one-third of the interconnection queue’s 60 GW backlog. This concentration around Dallas, Houston, and San Antonio is straining system planning and transmission timelines, highlighting the urgent need for reliable and scalable energy solutions.
Wholesale prices in ERCOT’s West and South zones have averaged $45–$65/MWh year-to-date, with peak spikes topping $200/MWh during summer heat waves. This volatility underscores the value of dispatchable gas generation to firm intermittent renewables, a role that NRG’s proposed facility could potentially fill. If the project advances, commercial operation could begin by year-end 2029, aligning with ERCOT’s growing demand from data centers and other large loads.
The agreement between LandBridge and NRG is contingent on securing a long-term power purchase agreement (PPA), as well as regulatory approvals and financing. The filing of air permit applications and interconnection requests signals an early step toward development, but the project may not proceed as described. Nonetheless, the potential implications for the sector are substantial.
The Delaware Basin, which spans West Texas and southeastern New Mexico, has become an attractive location for hyperscale data center developers due to its extensive oil-and-gas pipelines, abundant low-cost natural gas at the Waha market hub, and existing high-voltage transmission corridors. LandBridge, with its 277,000 surface acres in the Delaware sub-region, is well-positioned to support such developments. Jason Long, Chief Executive Officer of LandBridge, noted that NRG’s selection of this site for potential development marks an exciting step forward for both LandBridge and the entire Delaware Basin.
For NRG, the prospective 1.1-GW plant underscores a broader push to align dispatchable gas capacity with the explosive growth of digital infrastructure in ERCOT. The company has been actively packaging its generation development and merchant expertise around ERCOT’s fast-growing data center load. In its Q2 2025 earnings call, NRG announced long-term retail power agreements totaling 295 MW—expandable to 1 GW over a 10-year initial term, with options to extend to 20 years. Pricing is above the company’s midpoint target and structured with protected margins and hedges designed to secure returns.
NRG has also bolstered its portfolio through acquisitions and state-backed financing designed to expand dispatchable capacity in ERCOT and beyond. In August 2025, the company closed on LS Power’s 13-GW natural gas portfolio and 6-GW Commercial & Industrial Virtual Power Plant platform, extending its reach across both ERCOT and PJM. Robert J. Gaudette, executive vice president and president of NRG Business and Wholesale Operations, emphasized the potential for the site to foster innovation and support data center growth, economic resilience, and grid stability in the region.
The strategic agreement between LandBridge and NRG could set a precedent for future developments in the sector, particularly as the demand for reliable and scalable energy solutions continues to grow. The project, if realized, could help alleviate capacity shortages and reduce volatility in ERCOT, while also supporting the economic development of the Delaware Basin. However, the success of this project will depend on the ability to secure a long-term PPA, navigate regulatory approvals, and secure financing, all of which are subject to market conditions and other customary factors.
As the energy sector continues to evolve, the collaboration between LandBridge and NRG serves as a testament to the growing importance of strategic partnerships in addressing the complex challenges and opportunities presented by the rapid expansion of digital infrastructure. The potential implications for the sector are substantial, and the outcome of this agreement could shape the future of energy development in Texas and beyond.