Texas is halting the approval of new data center projects until state regulators can audit all data centers seeking to connect to the power grid, Gov. Greg Abbott announced Aug. 3.<\/p>\n
What you need to know<\/p>\n
The governor directed the Public Utility Commission of Texas<\/a> and the Electric Reliability Council of Texas<\/a>\u2014the state utility regulator and grid operator, respectively\u2014to conduct \u201ca comprehensive verification and audit\u201d of all data center applicants \u201cbefore any additional data centers are approved to move forward.\u201d<\/p>\n The move comes amid growing public criticism of Texas\u2019 booming data center industry and recent political pressure for Abbott to respond to concerns about the impacts data centers can have on communities, local water supplies and the electric grid. Some Texans, including elected officials, have asked Abbott to enact a complete moratorium on data center development until the legislature can address residents\u2019 concerns.<\/p>\n Officials did not say how long the pause would last or when the audits would begin. In an Aug. 3 letter<\/a> to the heads of the two agencies, Abbott asked that the PUC and ERCOT collect the following information from each proposed data center project:<\/p>\n Details on the state and local tax incentives or exemptions data center developers are receivingWhether data centers plan to generate their own electricity and how much power they will needHow the projects will use water, how much water they will need and their impacts on local water resourcesEfforts to limit noise, light pollution and other impacts on local communitiesWho owns each proposed facility<\/p>\n Data centers that do not meet pass the audit should not be allowed to connect to the grid, Abbott said.<\/p>\n \u201cAny data center project that fails to comply with the verification and audit process to protect the reliability and resilience of the Texas electric grid must be denied,\u201d Abbott said in the letter. \u201cSimply put, Texans must come first.\u201d<\/p>\n The Data Center Coalition<\/a>, which advocates for the industry, said in a statement that it hoped Abbott\u2019s directive would \u201cshowcase the good actors\u201d among Texas data center developers without \u201cdelaying [projects] unnecessarily.\u201d<\/p>\n \u201cThe Data Center Coalition and its members strive to be good actors where we operate, which is why we are hopeful this directive from the governor will help separate those who are responsible water and energy stewards from those who are not,\u201d said Dan Diorio, the coalition\u2019s vice president of state policy. \u201cWith billions of dollars in investment and hundreds of thousands of jobs on the line, we urge the PUCT and ERCOT to move swiftly in order to distinguish between speculative projects and serious, committed investors and community partners.\u201d<\/p>\n The big picture<\/p>\n ERCOT is currently tracking about 474,000 megawatts of large projects<\/a> seeking to connect to the grid. More than 420,000 megawatts, or 90% of all large load interconnection requests, are data centers, officials said during a July 29 legislative hearing. Abbott\u2019s letter directs the two agencies to audit all projects in ERCOT\u2019s interconnection queue.<\/p>\n In response, ERCOT said it would postpone its new batch study process<\/a>, which requires that data centers and other large projects be evaluated in groups before they can start construction and join the grid. The transmission planning process was approved in June, and applicants were set to learn by Aug. 7<\/a> if they’d be included in the first phase of the study, deemed \u201cBatch Zero.\u201d<\/p>\n \u201cERCOT is reviewing Gov. Abbott’s letter concerning data centers and will work with the Public Utility Commission of Texas to implement the governor’s directive, including postponement of the Batch Zero transmission planning study,\u201d an ERCOT spokesperson told Community Impact in an Aug. 3 statement.<\/p>\n Neither ERCOT nor the PUC provided details on the rulemaking process for the audit or how long they expected the audit would take.<\/p>\n \u201cWe appreciate Gov. Abbott\u2019s directive and will continue to work closely with ERCOT to ensure these requirements, along with those laid out in our July 17, 2026 letter to Gov. Abbott, are fully carried out on behalf of the people of Texas,\u201d PUC Chair Thomas Gleeson said in an Aug. 3 statement to Community Impact.<\/p>\n Previously, Abbott asked the two agencies<\/a> to shield residential customers from the costs of data center development in a June 10 letter, and Gleeson laid out their ongoing work<\/a> on the issue July 17. The governor framed his Aug. 3 order as the next step in data center oversight.<\/p>\n Something to note<\/p>\n During a June 23 hearing, PUC officials said just 28 companies representing less than 100 data center facilities responded to a recent survey on the industry\u2019s water and power use, Community Impact reported<\/a>. The Texas Water Development Board heard back from about 17% of the data center developers it surveyed about water usage, with lawmakers calling the response rates \u201cterrible.\u201d<\/p>\n \u201cWhen you\u2019re talking about massive water usage, especially groundwater, and the state can\u2019t calculate how much water is being [used], I think we can all understand why Texans are rightfully concerned about making sure that we have enough water … to meet our future demand,\u201d Rep. Trent Ashby, R-Lufkin, said at the hearing.<\/p>\n The governor wrote that the lack of response from data centers “makes this [audit] necessary.” Legislators have also criticized the data center industry for not being transparent or making efforts to connect with local stakeholders, according to previous reporting.<\/p>\n The debate<\/p>\n State Rep. Gina Hinojosa, an Austin Democrat who is running against Abbott in the Nov. 3 election, urged the governor to do more to stop rapid data center growth.<\/p>\n \u201cLet\u2019s be very clear about this: Abbott can take action now to end the data center madness,\u201d Hinojosa said in an Aug. 3 statement. \u201cHe could issue a moratorium until the legislature meets to put in place real protections for Texans and give them a seat at the table to decide if and how data centers move into their communities.\u201d<\/p>\n