Interconnection requests amount to 200 GW, as stated by representatives from Oncor.
Oncor Electric Delivery, a leading Texas-based power transmission company, is revising its capital expansion plan to accommodate an unprecedented surge in interconnection requests, particularly from data centers and diverse industrial sectors. The company's original plan, which stood at $36.1 billion for the period 2025-2029, is expected to increase by more than $12 billion.
The surge in demand is evident in Oncor's interconnection queue, which now includes approximately 200 GW of requests. About 1,100 new large load customers are in the queue, with 9 GW already signed for interconnection agreements. The requests span various sectors, with data centers accounting for 186 GW, followed by traditional commercial and industrial customers (7 GW), crypto currency facilities (5 GW), oil and gas operations (4 GW), and significant amounts of storage (49%), solar (40%), wind (7%), and gas (4%) generation projects.
This growth is a direct result of the massive demand for electric power in Oncor's service territory, a trend the company has termed as 'the pivot'. Approximately 20% of the potential demand from the interconnection requests has signed contracts or is considered "high-confidence load".
Oncor's parent company, Sempra, is leveraging asset sales to finance this multibillion-dollar expansion. The sales of Sempra's Ecogas Mexico business and stakes in Sempra Infrastructure are attracting interest from buyers and financiers, with the intent to raise capital for Oncor’s grid expansion projects. The Ecogas sale and the sale of Sempra Infrastructure's stake are expected to close in mid-2026.
Sempra is also pivoting to a more utility-focused business model. San Diego Gas & Electric, another Sempra subsidiary, has been awarded a $600 million contract for new transmission by the California Independent System Operator. The company has also hardened 100% of its highest-risk transmission systems against wildfire.
Meanwhile, Oncor's earnings are expected to increase from Sempra's regulated utilities, specifically from Oncor and Texas. In the second quarter, Oncor initiated service to 20,000 new properties, a testament to its growing service area.
However, Oncor faces regulatory challenges related to recovering the costs of this rapid growth. The company has proposed interim rate increases due to “regulatory lag” in the traditional rate-setting process in Texas. This interim rate proposal is aimed at allowing Oncor to start collecting revenue more promptly to fund ongoing infrastructure investments while waiting for final rate approvals, which are expected by late 2025 or early 2026.
In summary, Oncor's expansion plan involves revising and increasing its 2025-2029 capital plan by more than $12 billion over the original $36.1 billion to accommodate accelerated timelines for critical transmission projects. The company is responding to a 38% year-over-year increase in its interconnection queue dominated by data centers and diverse industrial demand sources. Leveraging asset sales by parent company Sempra and seeking regulatory mechanisms, such as interim rate adjustments, to manage the financial impact of these infrastructure investments during rapid growth phases are key strategies in this expansion.
- The surge in demand for interconnection requests, primarily from data centers and diverse industries, is driving the finance sector to take interest in Sempra's asset sales, including Ecogas Mexico and stakes in Sempra Infrastructure, as a means to finance Oncor's multibillion-dollar expansion in the energy industry.
- Oncor's expansion plan includes a $12 billion increase in its capital plan for the period 2025-2029, and the company is seeking interim rate adjustments in the regulatory process to efficiently manage the financial impact of infrastructure investments associated with the growing energy demands in the industry.
