Why Willacy County’s first $50M data center project will be powered by wind

On a lonely stretch of highway in Willacy County, hundreds of wind turbines move in the breeze as crops are still growing on the farmland below. 

The rural Rio Grande Valley county’s newest industry is data centers, leveraging all that wind power, which often produces more electricity than the grid demands. 

“I guess we’re blessed to have these windmills because that’s what allowed this to happen,” Willacy County Judge Auerlio “Keter” Guerra said in an interview with the Rio Grande Valley Business Journal. “I’ve driven out there several times, and the construction is on its way; there’s a lot of heavy equipment out there, and so we’re looking forward to having that project completed.” 

Out there, in a remote southeast corner of the community, just north of County Line Road and east of Farm-to-Market Road 1420, the first data center is under construction. 

Soluna Holdings, the Albany, New York-based publicly traded company building and operating these data centers, expects the first cluster to be powered by the end of 2026. 

It will be the company’s largest project so far. It already uses 2.8 gigawatts of renewable energy to power data centers across Texas. 

“Converting sustainable energy that’s stranded into compute, you have to rethink the data center, how you manage it, how it integrates with the power, and that’s what we’ve done,” Soluna Holdings CEO John Belizaire said in a recent interview. 

In Willacy County, the first phase is expected to cost $50 million and will comprise several modular buildings rather than a single giant facility. It is under contract with a publicly traded cryptocurrency mining company, Galaxy Digital. To create digital coins, computer servers run complex mathematical equations that require significant power. 

Soluna expects to spend at least $30 million in construction by the end of next year, according to its tax abatement agreement with Willacy County, records show. 

The data centers cost the company between $500,000 and $600,000 per megawatt of power needed to operate, according to Soluna. 

The second phase of the project would be another cluster of cryptocurrency mining data centers. 

“Bitcoin..needs a lot of energy, needs low-cost energy, and it’s very resilient to power loss,” Belizaire said. “The key difference with our facilities is that they’re flexible data centers. Our data centers are not always on (100% of the time). They’re on about 95% to 98% of the time. In those cases where the grid doesn’t have enough power, we can actually ramp down the data center very fast.” 

The third phase, which would be for generative artificial intelligence, could cost up to $1 billion but isn’t expected until at least 2028 and would require additional infrastructure investment – such as extending fiber-optic cable networks to the rural county. 

To help Soluna secure investor financing, Willacy County approved a 15-year tax abatement worth about 63.2% of the project improvement value, with the remainder subject to taxes. It’s a payment-in-lieu-of-taxes agreement that is expected to generate roughly $160,000 in tax revenue for the county during the first phase of the project. A similar tax abatement deal was proposed for Lyford Independent School District property taxes. 

Soluna expects to create 18 permanent jobs within the first three years, and the construction will support 75 jobs. 

“It helps our tax base. What I tend to compare it to is how many homes it would take to build to offset that much value? That’s the way I see it, and it would take hundreds of homes,” Guerra said. “Even though the number of jobs is not considerably high, we were told they are high-paying jobs.” 

Guerra is hopeful that local schools and the community college will be able to educate students who could eventually work in those data centers. 

Soluna promised on-the-job training to 12 Willacy County residents to become data center technicians within the cryptocurrency mining operation, records show. 

The first two phases of the data center clusters would require 83 megawatts each, for a total of 166 megawatts. The Las Majadas Wind Farm, owned by EDF Renewables North America, generates 273 megawatts of electricity, which could power roughly 100,000 homes. 

Soluna and EDF hashed out a deal under which Soluna purchases the majority of the electricity generated by its turbines. 

EDF Renewables said the wind turbine farm was built in an area where seven other wind farms also operate, and was connected to the grid in 2021. 

“In Texas, in these really windy areas, wind has historically been the cheapest form of power generation,” said Gabe Messercola, director of data center solutions for EDF Power Solutions, a subsidiary of EDF Renewables North America. “When this project went online, the economics were solid. Then a bunch of other projects developed in the area.” 

As such, the price at which it sold power into the Electric Reliability Council of Texas (ERCOT) market was, at times, negative about 30% of the time due to competition. 

“That’s a lot of wasted energy,” Messercola said. “There has been a lot of congestion and negative pricing where power production costs us money, or we even have to turn off the project because it’s not economical. So we were looking at creative ways to utilize that power.” 

That’s in part because there aren’t enough electric transmission lines to send the power anywhere in Texas where it’s needed the most, and because the grid relies on power being produced during peak demand, which could be at night when there’s less wind blowing. 

One issue with transmission lines is that the approval process can take years, and a project that could be coming in five years, “that solves all your problems,” could be canceled at any time, he said. 

While EDF and Soluna have a power purchase agreement, EDF is still permitted to sell any power to the grid, and Soluna can purchase from the grid, too. 

“We want to be very conscious about this, like we’re not taking this power plant off the system,” Messercola said. 

Soluna also described that its plan does not “put undue strain on the power plants that are downstream..servicing actual people in their homes to support this new growth.” 

The company dedicates all of its data center names to women scientists who have struggled in their careers to be recognized for their accomplishments.  

The Willacy County project, Kati, is named in honor of Nobel Prize-winning Hungarian researcher Katalin Karikó, whose work on mRNA contributed to the development of the COVID-19 vaccine. 

“We name all our projects after these badass catalyzers because that’s what we want to be like,” Belizaire said. 

That’s because in the company’s early stages, it was challenging to raise investor capital for the idea. But now it’s sold enough to keep expanding to meet the demand. 

“Eight years ago, when we said we were going to build data centers connected to renewables, everybody looked at us cross-eyed. Like, what are you talking about? Data centers need continuous power,” Belizaire said. “AI is not going anywhere. And it is going to need a lot of power. We have a responsibility to ensure that it gets done in a sustainable fashion.”