Texas halts power grid connections for new data centers over energy, water supply concerns

AUSTIN, Texas - Gov. Greg Abbott on Monday ordered state energy regulators to halt approvals for all new data center projects seeking to connect to the Texas power grid until a comprehensive audit and verification process is completed.

In a directive to Public Utility Commission of Texas (PUCT) Chairman Thomas Gleeson and Electric Reliability Council of Texas (ERCOT) CEO Pablo Vegas, Abbott said projects that fail to comply with new audit requirements, state standards or state law must be denied connection to the grid.

What they're saying:

"Our top priority is to protect Texans' safety and quality of life," Abbott said in a statement. "Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid. Simply put, Texans must come first."

Massive demand threatens grid stability

The order builds on Abbott's announcement last month that the state would use ERCOT and the PUCT to regulate data centers as Texas prepares for rapidly growing electricity demand driven largely by artificial intelligence and other computing facilities.

ERCOT is evaluating roughly 474 gigawatts in grid connection requests, more than five times the state's current record peak electricity demand. State officials say about 90% of those requests come from energy-intensive data centers. Recent ERCOT forecasts show demand on the Texas grid is expected to roughly double over the next five years, with data centers accounting for a significant share of that increase.

Under Abbott's directive, developers with pending projects must disclose whether they plan to generate their own electricity or rely on the Texas grid. The audit also requires information on projected power consumption, water use, cooling technology, neighborhood impacts such as noise, lighting and traffic, emergency coordination, tax incentives and subsidies, and the ownership structure of each project.

Audit timeline remains unknown

In his letter, Abbott said the audit was prompted in part by several data center operators failing to comply with a state survey on water and electricity use required under the General Appropriations Act. He also cited legislative hearings that raised concerns about the impact of large-scale data centers on local utilities and surrounding communities.

The governor's latest action marks a shift in tone from comments he made last year promoting the industry's growth in Texas. At the time, Abbott said data centers "will be net positive to the power grid."

Under the executive directive, the PUCT and ERCOT must collect detailed disclosures from every pending data center project, including:

• Tax Incentives and Subsidies: Documentation of all state and local tax abatements, grants, and public financial assistance requested or received.
• Power Generation: Annual and peak electricity consumption projections, along with progress on building or procuring on-site power generation to reduce grid load.
• Water Usage and Cooling Tech: Projected peak water consumption, supply sources, and details on cooling systems, such as air-cooled or closed-loop technology, to protect local water supplies.
• Community Protections: Measures taken to mitigate neighborhood impacts, including noise controls, setbacks, lighting mitigation, traffic management, and local emergency coordination.
• Ownership Transparency: Comprehensive disclosure of all ownership and controlling interests tied to the project.

Neither ERCOT nor the PUCT has announced an official timeline for completing the audit process.

Gina Hinojosa calls for emergency executive order on data centers

The other side:

In a press release on Monday, Democratic nominee for Texas Governor, Gina Hinojosa, called on Abbott to sign an emergency executive order to put a moratorium on data centers until the Texas Legislature meets to discuss the matter.

"The people of Texas are being taken advantage of, in a big way, by corporations who are operating under no rules," Hinojosa said. "Data centers are coming in and doing as they please – they are guzzling up all our water, guzzling up all our electricity – and the people have no say. They have no power. That is the Wild West of data centers that Greg Abbott has created in Texas. People need relief."

"I’m calling for a moratorium until a legislative session that puts Texans first so that we don’t have any more communities in Texas who are powerless against these global corporations."

Hinojosa's Texans First Data Center Priorites

Dig deeper:

Hinojosa outlined her Texans First Data Center Priorities for the next legislative session, which she urged Abbott to call for today.

• Requiring American union jobs, so operators hire skilled, licensed, union labor, and undoing the fast-track rollbacks that let corporations cut safety corners. When corners get cut on builds this size, workers die.
• Giving Texans a seat at the table to decide if and how data centers come to their communities.
• Creating full transparency by stopping data center companies from using NDAs.
• Lowering costs for Texans by ensuring data center companies prove households won’t pay more for electricity or water, including the hidden costs passed through for grid upgrades, transmission, and new capacity.
• Make data centers pay for themselves by stopping subsidies. These data centers are owned by the richest men in the world; Texans shouldn’t foot the bill.
• Putting water and power for Texans first by ensuring any water contract with data centers becomes unenforceable if it threatens a community’s water supply.

Hinojosa recently met with rural Texans in the Panhandle to talk about data center concerns.

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