Encinal Texas is a town of 540 people sitting on Interstate 35, about 40 miles north of Laredo. The 2020 census counted 540 residents. Most of the storefronts on the main street are closed. And South Korea has just picked it as the site of a $22.3 billion power plant.
On September 7, Korea’s Ministry of Trade, Industry and Energy briefed ruling-party lawmakers that a gas-fired combined-cycle complex in Encinal had been selected as the first project under the $350 billion investment package Seoul committed to in exchange for lower US tariffs. The plant would run at 6.3 gigawatts — roughly the output of four or five large nuclear reactors. (The ministry has since said press reports of a final number are premature and that talks with Washington are still open, so treat the figure as a working one.)
The obvious question is: why a town with no traffic light?
The easy half of the answer is fuel. Lewis Energy Group, named as the project owner, has drilled around Encinal for more than 40 years and operates over 2,500 wells across the surrounding counties. Gas arrives without anyone building a pipeline first.
The harder half is the line outside the door.
Everything in Texas that wants to run on electricity — a factory, a warehouse, a data center — has to ask the state’s grid operator, ERCOT, for permission to plug in. That request goes into a queue while engineers check whether the local wires can actually carry the load. In January, the queue held 233 gigawatts of requests. By August it had more than doubled. On August 3, Governor Greg Abbott wrote to ERCOT saying it was now sitting on roughly 474 gigawatts of connection requests — over five times the state’s all-time peak demand — spread across more than 1,800 projects, about 90% of them data centers. He ordered an audit of every one of them and said no new data center could advance until it was done. ERCOT paused its review process the same day.
Nobody thinks 474 gigawatts is real. A queue with no cost to entry fills up with duplicates and placeholders. But an audit doesn’t sort the real from the imaginary quickly, and while it runs, the line doesn’t move.
This is where the Encinal Texas project stops looking like an energy investment and starts looking like a scheduling one. A plant that makes its own power and sells it directly to a data center next door isn’t asking ERCOT for anything. It doesn’t join the line. Texas has been openly friendly to projects built this way, and the state’s own review is what makes that friendliness worth money right now.
So the site was chosen for what it doesn’t need: no pipeline, no queue, no neighbors to negotiate with. Data centers have spent the past two years discovering how expensive neighbors can be, and 540 people is a small negotiation.
What’s missing is the customer. No hyperscaler has signed on to buy the electricity. The Encinal Texas plant is designed to be built in stages for exactly that reason — about 1.4 gigawatts of straightforward gas turbines first, the remaining 4.9 gigawatts of combined-cycle capacity only if demand holds up. The price tag tells the same story from the other side: it started near $16.8 billion, rose to $19.8 billion as the details firmed up, and landed at $22.3 billion after Washington asked late in talks for another $5 billion, citing water infrastructure among other costs.
Which is a lot of money to spend on a place chosen for being empty.
My take: Instead of standing in line for the grid, they bought a spot where there is no line.
Not advice. Just how I see it.