Published on Wednesday, April 16, 2025 by Nicole Cornett, Managing Editor of Expansion Solutions Magazine

By Texas Economic Development Corporation

Due to factors such as a growing population and a greater reliance on power-hungry data centers, generation of electricity in the U.S. is projected to rise nearly 2.3% per year from 2025 to 2029. Energy sources like natural gas, oil, solar, wind and hydrogen will help fuel this growth.

Today, Texas plays a critical role in meeting the nation’s energy needs. In fact, it sits at the center of our nation’s energy economy.

The Lone Star State outpaces all other states for energy generation by a long shot, responsible for about one-fourth of the country’s energy production. It could easily be argued that Texas and Houston share the title of Energy Capital of the World. As the Lone Star State continues to dominate production of traditional and renewable energy, and continues to offer an array of economic benefits, you might say Texas represents our country’s economic future — at least in terms of business formations, relocations and expansions in energy and an array of other industries.

“Simply put, Texas gets energy, and companies want to be where the action is,” said Gilberto Salinas, executive director and CEO of the Greater Brownsville Incentives Corp.

“Texas isn’t just an energy leader; it’s an energy innovator,” he added. “We’re seeing massive investments in renewables, hydrogen, battery storage and carbon capture on top of our existing strength in oil and gas.”

To highlight Texas’ position as an energy pioneer, the Texas Economic Development Corp. (TxEDC) on April 16 will host an event in Austin titled “Powering the Future: Texas Energy Summit.” Panelists will address energy innovations in Texas and the future of the state’s energy sector.

“With a combination of strategic investments, policy support and technological advancements, Texas is well-positioned to meet the energy demands of its growing population while maintaining its leadership in the evolving energy landscape. The Lone Star State is proving that a robust and diversified energy strategy is key to a sustainable future,” said Aaron Demerson, president and CEO of TxEDC.

Texas: The ‘Undisputed Energy Leader’

Governor Greg Abbott frequently touts Texas’ status as the No. 1 state for oil and gas production, wind-powered generation and utility-scale solar generation. But Texas’ wealth of assets in the state’s $172 billion energy sector go deeper. For example:

• The Texas Energy Fund provides $5 billion in low-interest loans to build more at-the-ready natural gas plants. Abbott and Lieutenant Governor Dan Patrick seek to expand the fund to $10 billion.
• The Lower Colorado River Authority is building two power plants that will add 380 megawatts of power to the Texas electric grid. Since a massive winter storm in 2021 that caused statewide power outages, Texas has worked to fortify and modernize the grid.
• Funded by Natura Resources, NEXT Lab at Abilene Christian University in Abilene, Texas is leading a national consortium to design, license, and build the first university-based nuclear reactor cooled by molten salt, with a long-term strategy to commercialize this technology for clean energy solutions. Holding one of only two construction permits in the United States approved by the Nuclear Regulatory Commission, NEXT Lab is positioned to fast-track commercial nuclear reactors to support the growing energy sector and grid demands.
• The state is investing in more battery storage for excess energy generated by wind and solar facilities. This surplus energy will help ensure the state enjoys a consistent supply of energy.

Energy Industry Growth Throughout the State

In Texas, the mantle of “undisputed” leadership in energy extends beyond Houston, the state’s energy hub.

For example, the Port of Brownsville, located along the Mexican border, is home to two energy terminals operated by San Antonio-based midstream energy company Motus Energy. The terminals can receive, store, blend, and deliver 450,000 barrels of fuel oil, 215,000 barrels of clean products, 130,000 barrels of refined paraffin waxes and 95,000 barrels of lubricants.

Salinas said Brownsville is becoming a hotspot for liquified natural gas (LNG) and clean energy.

“Oil and gas will always be a big part of the [Texas] economy,” he said, “but we’re also seeing a huge shift toward renewables, hydrogen, and carbon management. … Companies aren’t just coming to Texas to produce energy; they’re coming here to innovate and define the future of energy.”

In fact, a key part of that future — renewable energy — isn’t just about sustainability. It’s about economic growth. The renewable energy sector in Texas has created thousands of high-paying jobs in urban and rural areas. For instance, more than 27,300 wind and electric power jobs were generated in 2023 in Texas. The average wage for these roles: $109,826.

“Texas would not be the energy capital of the world without the hard work of the men and women of the energy industry,” Governor Abbott said.

About 370 miles north of Brownsville, a company in the Austin suburb of Cedar Park is among the players defining the future of energy. Hyliion produces generators that draw power from a variety of sources, mostly natural gas. Just as so many Texas communities do, Cedar Park rolls out the welcome mat for energy companies like Hyliion.

“Texas represents the future for companies seeking to relocate or expand — especially in the energy sector — due to our unmatched combination of resources, infrastructure, and business-friendly policies,” said Arthur Jackson, chief economic officer for the City of Cedar Park.

California’s Role in Texas’ Surge in the Energy Sector

While communities like Brownsville and Cedar Park are drawing their share of energy-related business, it’s the state’s major metro areas that are the strongest energy magnets. As the self-proclaimed Energy Capital of the World, Houston attracts more business activity in the energy sector than any other metro in Texas. Twenty of the 24 Fortune 500 companies that maintain headquarters in the Houston area are involved in the energy industry, with energy giants ExxonMobil and Chevron topping the regional ranking.

In 2023, ExxonMobil shifted its headquarters to the Houston suburb of Spring from the Dallas-Fort Worth suburb of Irving. A year later, Chevron moved its headquarters from San Ramon, California, to Houston.

John Boyd Jr., principal of corporate site selection firm The Boyd Co., said companies such as Chevron escape California and head to Houston and other Texas spots to take advantage of economic, regulatory, and market benefits. Among them, he said, are:

• Lower operating costs
• No personal income tax
• No corporate income tax
• Business-friendlier courts
• Lower cost of living

Given these and other advantages, it’s no wonder that Texas has secured Site Selection magazine’s Governor’s Cup for the 13th consecutive year and 21st time overall. This award recognizes Texas as the top state for attracting new and expanded business facilities — an accolade that California can’t claim.

“Our clients that have left California cite the taxes and the regulations, of course, but more than that they cite a disconnect — and almost arrogant disconnect — between Sacramento politicians and job creators,” Boyd said. “This is especially felt in the energy industry, with its strict regulations and mandates against fossil fuels.”

For example, a new state law in California requires more burdensome oversight of refineries in the state, according to Boyd.

“Whether it’s oil, gas, renewables or emerging energy technologies, Texas gives companies the freedom to grow and scale operations,” Brownsville’s Salinas said.

Indeed, the most recent survey of business executives and site selection consultants by Development Counsellors International (DCI), a corporate site selection firm, found Texas to be the state with the best business climate.

That’s due, in part, to access to graduates from highly rated schools such as the University of Texas, Texas A&M University, Texas Tech University, Rice University, the University of Houston and Southern Methodist University. In a study by DCI and the Site Selectors Guild, a trade organization, more than three-fourths (76%) of guild members singled out access to talent and skilled workers as the No. 1 factor in their location choices.

Boyd said that another factor favoring corporate expansion in Texas is a lower level of NIMBY pushback in Texas compared with states like California, Oregon, and Washington.

“While NIMBY doesn’t always kill a project,” he said, “it may delay it and cause friction in a community, as well as reveal the identity of the company during the confidentiality phase.”

Abundance of Business Advantages in Texas

Aside from Texas’ deep talent pool and relatively small presence of NIMBYism, Boyd cited the state’s central location and its transportation connectivity, thanks to places like the Port of Houston, Dallas/Fort Worth International Airport, and Perot Field Fort Worth Alliance Airport, as pluses for businesses looking at setting up operations in the Lone Star State.

Experts mentioned these additional advantages for businesses seeking to plant roots in Texas:

• An independent power grid and deregulated electricity markets.
• Abundant natural resources.
• A robust infrastructure for pipelines and refineries.
• Economic development tools like the Texas Enterprise Fund.
• Continued expansion of the state’s workforce due to population growth. Texas added almost 563,000 residents from 2023 to 2024, according to the U.S. Census Bureau.
• Over 300 data centers around the state.

All of those factors bode well for the future of the energy sector in Texas and for the economic future of the state as a whole, according to Cedar Park’s Jackson.

“The future of the energy sector in Texas is incredibly promising, and I see the state solidifying its position as the nation’s energy powerhouse for decades to come,” Jackson said.

“Texas has long been the leader in oil and gas production, and that dominance isn’t going away,” he added. “But what’s even more compelling is the way the state is embracing the future. Texas is not just about traditional energy anymore. It’s rapidly becoming the epicenter of innovation in renewables, energy storage, and next-generation technologies like hydrogen and carbon capture.”

Jackson said features such as affordable real estate, major shipping ports, and a pipeline of engineering talent “create a perfect storm for long-term growth” of Texas’ energy industry.

“What excites me most is how Texas is positioning itself as the leader in the energy transition while still leveraging its strengths in oil and gas,” he said. “Wind and solar are already booming here, and with advances in energy storage and grid modernization, Texas is proving that it can lead the way in both reliability and sustainability.”

“Companies that want to be at the forefront of the energy future — whether in fossil fuels, renewables or cutting-edge energy tech — need to be in Texas,” Jackson added. “This is where the next generation of energy leadership is being built.”