Texas Gov. Greg Abbott has ordered a pause on new data center approvals seeking connection to the state's electrical grid, citing concerns over surging electricity demand and prioritizing existing residents. The directive instructs the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to deny grid connection requests from projects that do not meet state requirements.
ERCOT is currently evaluating over 474 gigawatts of new connection requests, a figure that dwarfs the state's record peak electricity demand by more than five times. According to Abbott, approximately 90% of these new connection requests originate from data centers. The governor has indicated a desire to make data center regulation a priority as he seeks reelection ahead of the next legislative session.
Abbott is seeking detailed information from data centers requesting grid access, including whether they plan to generate some of their own power, their estimated annual and peak electricity consumption, and their water usage and sources. "Our top priority is to protect Texans' safety and quality of life," Abbott stated, emphasizing that "Texans must come first."
The Data Center Coalition expressed hope that the directive would help distinguish responsible industry actors from those who are not. "Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily," said Dan Diorio, executive VP of state policy and government affairs for the coalition.
This move follows Abbott's earlier call to ban new data center developments in rural Texas. He previously stated that any AI data center considering expansion into the state should be prepared to "bring their own money, bring their own power, reuse their own water and do it in a way that reduces the cost of electricity for residents across our state."
Texas has been a favorable state for data centers due to its substantial tax incentives, which have provided over $1 billion in tax breaks annually, according to the Texas Tribune. In June, Abbott directed state officials to address data center regulation and urged lawmakers to consider phasing out what he termed "outdated tax incentives."
In related political developments, Democratic gubernatorial hopeful Gina Hinojosa had previously called for a statewide pause on data center construction. She criticized Abbott's approach, stating he had made "Texas the Wild West of data centers" and suggested his call for a pause might be superficial. Lawmakers have also signaled openness to revising or updating the state's tax incentives for data centers, particularly after a state committee meeting revealed that some recipients were not meeting requirements. An audit by the Texas Comptroller of Public Accounts found that six out of 20 data centers audited were not meeting state requirements for tax break recipients.