AI Load Meets ERCOT Reality

AMARILLO, Texas — On a 5,800-acre swath of dusty plains outside the barbed-wire fence of the Pantex nuclear weapons plant, crews are piling up mounds of dirt for a colossal monument to Donald Trump’s presidency — possibly the biggest he won’t own.

It’s here that Fermi America — a startup led by former Texas governor and U.S. Energy Secretary Rick Perry and Dallas billionaire Toby Neugebauer — is developing what would be the world’s largest private energy grid and AI campus. It includes the most ambitious build-out of legacy nuclear reactors in half a century. Canals for power lines and chain-link fences for an electricity substation are the first tangible signs of Fermi’s Donald J. Trump Advanced Energy and Intelligence Campus.

The project was hatched near the start of Trump’s second term and is riding the political and policy trends the White House has created to encourage energy and artificial intelligence “dominance.” Almost a year later, the AI bonanza has reshaped the U.S. economy. Tech investors are speculating and trading on debt for projects of enormous scale, complexity and cost. States eager for economic development dollars are fast-tracking electricity expansions that could raise household costs.

The venture Fermi named Project Matador would host more than 18 million square feet of data centers packed with supercomputers and powered with nuclear, gas and solar plants generating more electricity than 15 states use at their peak. Neugebauer and Perry say it would also place Fermi on the front lines of a U.S. national security priority: dominating China for AI supremacy.

“A real superpower has nuclear submarines, nuclear-powered aircraft carriers and nuclear-powered AI,” said Neugebauer.

“This is a war,” he added, “and I intend to do my part.”

But to deliver on the most grandiose of the country’s myriad data center projects, Fermi has to do what no American company has done in decades: build nuclear reactors on time and on budget. The company must also pull in tech companies amid crowded competition from other energy providers. Fermi hasn’t reported any revenue, and its structure as a tax-advantaged real estate venture means it is dependent on leasing space to tech giants.

The quest for an anchor tenant in Amarillo has left investors reeling. Fermi disclosed in early December that a deal with an unnamed company had fallen through, and the stock price collapsed. It was cut nearly in half by publication time. A story in December named Amazon as the anchor tenant negotiating a long-term, multibillion-dollar deal with Fermi. Amazon and Fermi wouldn’t confirm the report.

And yet, the company still has a multibillion-dollar valuation for a simple reason, said Timm Schneider, founder of the energy consulting firm Schneider Capital Group.

“They check a lot of buzzwords,” Schneider said. “AI, data centers, nuclear energy, power. This is the kind of project that attracts a wide band of interest right now. But there have been some market concerns around the financing and timing of these mega-projects.”

Neugebauer has limited experience with nuclear energy and says he quickly discovered that dealing with global tech companies is more complex than even his past dealings with Chevron or Exxon. But he knows how to get things done in Texas, and the company has financial and political ties to the Trump administration.

Firms linked to Commerce Secretary Howard Lutnick have helped Fermi raise cash, according to Securities and Exchange Commission filings, and Fermi is partnered with a nuclear fuel company backed by Trump’s two eldest sons. Fermi is purchasing reactors from Westinghouse, the nuclear giant that entered a “strategic partnership” with the Trump administration in October. Fermi’s model even aligns with Trump’s vision for off-grid power and computing campuses.

“We’re going to let these geniuses build their own electric generation,” Trump said at a November speech in Miami, referring to AI companies.

Still, Neugebauer insists that he’s on the outside looking in.

“I would not put us in the ‘political insiders’ in any way, shape or form,” he said. “I think we’re being warmly received because we’re actually delivering.”

When Fermi launched in June, Perry was its front man. At 75 years old, Perry has long harbored nuclear ambitions.

As a three-and-a-half-term governor and two-time presidential candidate, Perry touted Texas’ “all of the above” approach to energy, which included nuclear power. Harold Simmons, the billionaire owner of a Dallas-based nuclear waste disposal company, was a top donor in his Texas years.

As Trump’s first Energy secretary, Perry became the point person for a failed administration effort to restructure electricity markets to subsidize nuclear power and coal. He also pitched U.S. energy expertise abroad, with the House Oversight Committee reporting in 2019 that Perry had met with a firm tied to former Trump national security adviser Michael Flynn in an effort to sell civil nuclear technology to Saudi Arabia.

Today, it comes back to China, which has more than 30 nuclear reactors under construction.

“America has none. We’re behind, and it’s all hands on deck,” Perry said when Fermi launched in June.

The idea for Fermi came from Neugebauer, a chatty and confident 54-year-old investor from Dallas. He made his fortune as the co-founder of private equity firm Quantum Energy Partners, which invested heavily in Texas oil and gas.

He grew up around politics and the energy industry in Lubbock. His father Randy, a former congressman, was brash — once yelling “baby killer” at a Democratic House member during a floor debate on abortion.

When an arsonist attacked the governor’s mansion in 2008 during Perry’s second term there, Neugebauer donated to the rebuilding fund. Both avid walkers, the two became friendly while ambling around Austin, and Neugebauer stayed engaged with Republican politics.

He shoveled millions of dollars into a super political action committee for the short-lived 2016 presidential campaign of Texas Sen. Ted Cruz — who is now pushing alongside the Trump White House to restrain state regulation of AI.

In 2021, Neugebauer launched the “anti-woke” fintech startup GloriFi. It pitched products like credit cards made from bullet shell casings, shunned green investing and promised not to discriminate against conservative clients — an appealing pitch after Trump family members had been barred from some banks.

Neugebauer raised $50 million from conservative tech investors. But the company failed almost as soon as it started. When GloriFi filed for bankruptcy in 2023, it pitted Neugebauer against investors that include Trump allies Peter Thiel, Ken Griffin, Vivek Ramaswamy, Joe Lonsdale, talk show host Candace Owens and former Mike Pence adviser Nick Ayers.

In ongoing bankruptcy proceedings in Texas, investors have accused Neugebauer of mismanagement, self-dealing and pushing out other voices. Neugebauer’s countersuits in Georgia and Delaware accuse other investors of stealing trade secrets. In a January Texas bankruptcy proceeding, Judge Michelle Larson said evidence showed that Neugebauer was “a very charming, intelligent, big picture thinker” who is also “extremely energetic and impetuous.” (In a response to POLITICO’s E&E News, Neugebauer’s attorney said, “Toby’s a driving force and has high expectations,” noting that some GloriFi employees have followed him to Fermi.)

Trump’s reelection sparked a new business opportunity for Neugebauer.

On his first full day in office, Trump stood alongside OpenAI CEO Sam Altman, SoftBank CEO Masayoshi Son and Oracle Chair Larry Ellison in the Roosevelt Room of the White House. They announced a $500 billion-plus campaign of data center construction across the country. The first Stargate Project site would be in Abilene, Texas.

Neugebauer says he was skeptical that Abilene could support a site where developers planned to use more power than Dallas. There wasn’t enough groundwater or pipeline capacity to support gas generation. It could disrupt the Texas power grid, he thought.

Through his family’s real estate connections, he knew of a parcel of land in Carson County owned by Texas Tech University. The prairie land about 20 miles outside of Amarillo, in the heart of Texas’ northern Panhandle, was used for cattle research and still hosted prefabricated homes for workers at the Department of Energy’s Pantex plant, where the government assembles and dismantles nuclear weapons. Rattlesnakes slithered across the land.

To Neugebauer, it was “the best spot on planet Earth to manufacture electrons.” It sits at a nexus of natural gas pipelines and is near the gas-rich Permian Basin. The presence of Pantex means the site is secure and has nuclear safety infrastructure.

Neugebauer pitched Perry’s son, Griffin, on an investment on a stroll through Dallas. Soon the former governor signed on and the team secured a 99-year lease agreement with Texas Tech. Rick Perry has since stepped back as the face of the company, although he remains on Fermi’s board. (He is also on the board of nuclear startup NANO.)

Construction starts with gas-powered turbines. The first gigawatt — enough energy to power about 250,000 Texas homes during periods of high demand — is scheduled to start operating before the end of 2026, allowing its first tenants to move in quickly and offer financial backing for future construction. A mix of grid power, solar panels, battery storage and another 5 gigawatts of gas will bolster the private grid. The centerpiece will be four AP1000 nuclear reactors — Westinghouse’s next-generation nuclear infrastructure. Fermi has told shareholders its first reactor will produce power by 2032.

Less than a year after the lease signing, remediation crews took down the few remaining homes in “Pantex City.” Construction trucks move thousands of yards of dirt a day. Along one edge of the site, a field of bunkers that once held nuclear warheads are being repurposed to now take racks of computer chips.

Trent Sisemore, a former Amarillo mayor who now works as a community liaison for Fermi, cites two avatars for the company’s pace: Trump and the biblical prophet Nehemiah.

Trump has promised expedited permitting for AI energy infrastructure to match the speed of AI and of China. Nehemiah, Sisemore told his former constituents at a recent Amarillo City Council meeting, rebuilt the walls of Jerusalem in just 52 days after they were torn down.

“And that’s the kind of speed this company is using,” he said, “because we’re in a war.”

Fermi’s single campus would dwarf OpenAI’s Stargate in Abilene, which this fall powered up its first phase. At 11 gigawatts of electricity, Fermi estimates its costs could top $60 billion. That could rise; the last two reactors to come online in the U.S. ultimately cost twice their original budget.

AI companies are spending that money, though. Tech-heavy stock indices were fueled in 2025 by the racing share prices of Nvidia, Microsoft, Meta, Google, Amazon and Oracle. Analysts at Goldman Sachs estimate the tech giants will spend over $500 billion next year on AI infrastructure, including chips and data centers. The tide has boosted electric utilities and power equipment manufacturers as data center projects have tripled and quadrupled in size.

Neugebauer and Perry entered the AI money chase as it ramped up this spring. OpenAI, Anthropic and other AI giants were securing private financing for computing infrastructure. In public markets, owners of nuclear plants that had sealed deals to power data centers were seeing their shares hit new highs. Even nuclear startups with no working energy assets soared, in apparent anticipation that they too would benefit from the data center boom.

Fermi took itself public on Oct. 1 as a real estate investment trust. The initial public offering raised $682 million with a $19 billion market capitalization at the end of the first trading day — before any major tech company had signed on to use the power that Fermi would generate.

The IPO netted Rick Perry $540 million for a 2.5 percent stake. His son Griffin had a $2.3 billion stake. Neugebauer and his family’s stake at the time was worth about $6 billion.

Now skeptics are waiting for Fermi to turn that enthusiasm into results on its aggressive timeline. Amory Lovins, a physicist, activist and writer who has criticized the nuclear industry, said the company’s valuation reflected a “frothiness” in the market. The appeal of nuclear energy as a 24-7, nonemitting resource is obvious, but Lovins said it “doesn’t have anywhere near a good business case” compared to wind and solar power.

As for Fermi, he said: “It will certainly enrich some shareholders, but whether it will ultimately pencil out is much more doubtful.”

Billionaire investor John Arnold, a prominent former gas trader, mocked a Fermi announcement in late October that it had secured certain nuclear parts without disclosing the cost. “What will it cost to build 4 AP1000s in West Texas? Nobody knows,” Arnold posted in a meme on X.

But Project Matador is flying with tailwinds from the Trump administration, which has said it wants to redirect federal loan programs for nuclear energy and has pressured regulators to swiftly approve reactors.

Fermi wants that assist.

Already administration officials gave their approval to the project in discussions with Siemens Energy, helping Fermi secure large gas turbines. In an ad buy over Thanksgiving in the Fox News market serving Trump’s Mar-a-Lago resort in Florida, Fermi pitched Trump and his allies on investing money pledged as part of a U.S.-South Korean trade deal.

“We have driven our 11-GW project all the way to the goal line. But not without resistance from the swamp,” one ad said. “We need a presidential ‘tush push’ to score for America and start nuclear construction in 2026, delivering on President Trump’s promise of a nuclear renaissance.”

That “tush push” — a reference to a Philadelphia Eagles goal-line play in which players shove their way to a touchdown — could mean a massive windfall for Fermi. Shortly before Trump left for trade talks in Asia in October, Fermi announced it would work with South Korean engineering giants Doosan and Hyundai Engineering and Construction.

The government of South Korea agreed to invest $350 billion in the United States. Korean officials still haven’t said where the money would be spent. A separate White House deal with Japan led to an $80 billion pledge to help finance 10 nuclear reactors built by Westinghouse for the U.S. market.

With cameras rolling during a Cabinet meeting in December, Lutnick, the Commerce secretary, assured Trump that the nuclear industry would benefit from the two deals. But Fermi wasn’t included in the administration’s business deal with Japan, according to Westinghouse spokesperson Brian McCrone.

Fermi has entered into a nonbinding agreement with ASP Isotopes and its subsidiary Quantum Leap Energy to research and develop nuclear fuel. With an office on Pennsylvania Avenue in Washington, ASP Isotopes in November made a private investment offering to Eric Trump and Donald Trump Jr. through a company called American Ventures.

American Ventures is controlled by Dominari Holdings, a New York boutique firm the Trump sons use to make deals.

The real estate firm Newmark Group and Cantor Fitzgerald, the Wall Street brokerage that Lutnick ran and transformed before entering government, advised Fermi on a $350 million financing round that closed in August. Kyle Lutnick, the son of Trump’s Commerce secretary, holds top management positions at both firms.

The private debt fueling today’s AI infrastructure building boom reminds financial observers of past tech bubbles. Companies building fiber-optic cables in the late 1990s unraveled and left stranded infrastructure. Small oil and gas producers took on massive debt during the 2010s to enter the shale patches of Texas and Pennsylvania, only to face bankruptcy when oil prices collapsed.

For data centers, there’s pressure because of the four-to-six-year shelf life of computer chips.

“You have a shotgun race against the depreciation cycle of technology,” said Paulo Carvão, a former IBM executive and a senior fellow studying AI at Harvard University’s Kennedy School of Government.

Texas’ hands-off regulatory approach makes it especially easy to build power infrastructure there, creating a rush to place data centers in central and western Texas — long dominated by national security sites like Pantex, gas, meatpacking and the manic Friday Night Lights devotion to football.

The Electric Reliability Council of Texas, the state’s main power grid operator, tracks data center and industrial projects along with power plants queuing up for a grid connection. (Some ultimately go unbuilt.) As of December, it reported 164 gigawatts’ worth of data centers had applied — enough to triple demand.

Among those are Stargate and a $40 billion project from Google that would deploy three data centers in the state, including one just south of Amarillo.

As AI-oriented developers are pushing outside of traditional data center hubs like northern Virginia, into exurban and rural markets across the country, projects are facing opposition. Voters are concerned about rising electricity prices, water use and noise. Resistance is already forming in Amarillo, centered around what the project would do to the Ogallala Aquifer, the multistate groundwater reserve that supports farmers across the Great Plains.

Fermi has proposed using a dry cooling system for its nuclear reactors, using air to condense steam from the turbine rather than a large amount of water. (It’s a less energy-efficient and more costly alternative, according to the Energy Information Administration.) But the company will still need lots of water to cool its power equipment and computer servers, a potentially huge ask in a region where the federal government predicts drought conditions will worsen.

“They do need to address the water issue,” said Dale Klein, a former NRC chair. “As someone who spent a fair amount of time in Amarillo, it’s kind of dry up there, and I don’t think you can pump all that water out of the Ogallala Aquifer without having an environmental impact.”

Kendra Kay, a tattoo artist in Amarillo, grew up in West Texas and says she can remember times in her childhood when wells in her community would run dry. She doesn’t want her children to have the same experience because a data center is soaking up valuable supplies.

“It can be done in another way, surely, without exploiting farmers and exploiting these communities, without taking our resources, just so billionaires can profit off of it,” Kay said.

On the other side of Kay is Sisemore. As mayor from 2001 to 2005, Sisemore helped purchase water rights from nearby ranchers and farmers for the city’s long-term use. Now with Fermi, Sisemore hands out his cellphone number and offers to tell anyone who will listen that AI developers deserve a share of that water. The company requested 2.5 million gallons a day to support the power plants and cool the data centers, offering to pay three times its market value.

At an October meeting of a small-business group in Amarillo, attendees fingered raffle tickets and hoped to win a cowboy hat from Fermi. Sisemore paced in front of a site map and touted how it would continue Amarillo’s history of military investment, from the Pantex plant to the Bell Helicopters factory.

“We’re not ever going to waste water. But 2.5 million gallons a day, that’s not going to affect it,” Sisemore said, saying that’s a small fraction of what the region’s farmers use.

In the end, the City Council voted 4-1 to award Fermi the water, with the potential to increase the contract.

“You’re telling me you have billions for a data center but not for anything else in the community?” Kay said. “Who is this for? It’s not for any of us.”

The country’s energy history is littered with proposed nuclear projects that bowed to high costs, regulatory hurdles, safety concerns and budget overruns and were eventually abandoned. Neugebauer is one of several new entrants to the market hoping to ride the Trump administration’s enthusiasm for nuclear energy.

Even some nuclear advocates worry that the rush from outsiders like Neugebauer and a hands-off regulatory approach could set the industry back; a single slip-up, they say, could turn the public off.

Neugebauer, however, says he’ll succeed by breaking norms. He has frequently criticized the country’s nuclear industry for being too slow, too cautious. Entrenched industry skeptics, he said, are “like a bunch of eighth graders who have never kissed anyone giving out marital advice.”

His “radically different” approach? “I went out and found people who have actually built reactors,” he said.

Fermi has hired Mesut Uzman and Sezin Uzman, a husband-and-wife team who have developed reactors in China and the Middle East, including working with Westinghouse and the Emirates Nuclear Energy Corp. in Abu Dhabi, United Arab Emirates, to lead its nuclear program.

Using AP1000 reactors, which already have federal approval, will help expedite permitting, although regulators still need to approve site-specific details. Texas regulators have given preliminary approval for air permits for the gas plants. And the company is continuing talks with potential tenants, including the initial partner with whom a deal fell through in December (that company had already committed $150 million for construction).

Fermi acknowledges that its unique business as, essentially, a private utility is a tough road: building and operating multiple power plants simultaneously while managing tech clients. Its IPO filing in October states that failing to secure leases or meet “aggressive milestones” could hurt its financing plans — to say nothing of what a downturn in the AI market could do.

But Neugebauer remains confident that Amarillo — which he calls the “epicenter of the United States” for energy purposes — is where the country’s AI future lies.

“There is no other site in the country that has what we have,” he said. “That’s irrefutable.”

https://www.politico.com/news/2025/12/23/fermi-america-data-center-amarillo-texas-00701800