By Shelby Shank
Field Editor<\/p>\n
Texas is experiencing a surge in data center development, and Gov. Greg Abbott is directing state regulators to ensure the rapid expansion doesn\u2019t come at the expense of homeowners, businesses and rural communities.<\/p>\n
Abbott directed the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to take immediate steps to protect residential ratepayers from the costs of data center expansion.<\/p>\n
\u201cData centers must operate in ways that reduce costs for residential electricity customers, do not drain water needed for our communities and take into consideration the needs of our neighborhoods,\u201d Abbott said.<\/p>\n
In a letter<\/a> to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas, Abbott directed the PUC to require date centers to fully fund the electric infrastructure necessary for their operations instead of shifting those costs to residential customers.<\/p>\n Abbott also instructed PUC and ERCOT to identify additional ways to protect residential and small business ratepayers. The agencies must submit recommendations to the governor by July 17 and begin taking steps to reduce residential ratepayers\u2019 transmission costs by July 31.<\/p>\n He also said he\u2019ll work with lawmakers in the next session to codify those protections, including requiring water-efficient cooling systems, better reporting of electricity and water use, phase out outdated tax incentives and adopt other practices that protect neighboring communities, such as setbacks and noise reduction.<\/p>\n Abbott has also taken a stronger stance on where future facilities should be located, calling for restriction on new data centers in rural communities.<\/p>\n \u201cWe must prohibit them from building AI data centers in rural Texas neighborhoods,\u201d Abbott said. \u201cAny AI data center even thinking about coming here, they must 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.\u201d<\/p>\n Many of those concerns were discussed during Texas Farm Bureau\u2019s (TFB) Summer Conference<\/a>, where State Rep. Ken King joined former U.S. Rep. Bill Flores, chair of ERCOT, and Will McAdams, president of McAdams Energy Group, for a panel discussion on the opportunities and challenges of data center development.<\/p>\n The conversation focused on concerns from farmers and ranchers, including electricity demand, water use, land conversion and the infrastructure needed to support the industry\u2019s rapid growth across Texas.<\/p>\n King said the scale of proposed projects has grown far beyond what state officials anticipated a few years ago.<\/p>\n \u201cPUC and ERCOT came to my office and said Texas needs to be prepared for maybe 10 additional gigawatts of power coming into the grid in the next five to 10 years,\u201d King said. \u201cToday, PUC and ERCOT are examining over 400 gigawatts of proposed new power.\u201d<\/p>\n King said lawmakers must balance the economic opportunities created by data center development with protections for rural communities.<\/p>\n \u201cTexas hasn\u2019t seen this kind of financial development since the discovery of oil and gas,\u201d he said.<\/p>\n Many communities still don\u2019t have enough information about projects proposed in their area. \u201cData centers have done a horrible job explaining what they\u2019re going to do in your community,\u201d King said.<\/p>\n Texas is expected to become one of the nation\u2019s leading destinations for new data center development.<\/p>\n That growth has been fueled in part by state incentives, including a sales tax exemption that, according to reports, exceeds $1 billion annually. Proponents argue the incentives attract investment and innovation, but questions remain about sustained impacts and the return for taxpayers and local communities.<\/p>\n \u201cCurrently, Virgina is ground zero for data centers, but Texas is quickly becoming ground zero,\u201d King said. \u201cIf even 20% of what we\u2019re talking about builds out, Texas will surpass Virginia on the number of data centers.\u201d<\/p>\n McAdams said rural Texas is attractive to data center developers because of available land, access to natural gas, electric transmission and fewer development restrictions than urban areas.<\/p>\n \u201cThey look to rural Texas for freedom to fully develop their plans,\u201d McAdams said. \u201cThey like rural Texas because they have the ability to build their own campus, their own complex and their own configuration.\u201d<\/p>\n Many projects are expected to rely on a combination of onsite natural gas generation, renewable energy, battery storage and grid connections to meet their power needs.<\/p>\n Flores said Texas has significantly strengthened grid protections since Winter Storm Uri. Large industrial users, including data centers, are now expected to provide backup generation and reduce their power consumptions before residential customers experience outages.<\/p>\n Panelists noted that existing state agencies, including the Texas Commission on Environmental Quality and local groundwater conservation districts, already oversee wastewater discharges and groundwater withdrawals. Lawmakers continue exploring whether additional safeguards are needed as development expands.<\/p>\n Many counties and landowners have pushed for greater local authority over where data centers can be built.<\/p>\n A recent analysis by the Texas Tribune<\/a> found nearly half of planned data centers in Texas are proposed for unincorporated areas, where county governments have limited authority over development, up from 12% now.<\/p>\n