Texas Halts New Data Centers, Mandates Audits Amid Grid Concerns
Texas Governor Greg Abbott has ordered audits for all new data center projects, as a surge in grid connection requests threatens to overwhelm the state's power network. The decision follows a largely ignored voluntary survey.
Tech companies and developers have long sought locations for data centers across the U.S., and Texas has attracted many due to its light-touch regulation and seemingly abundant power. Only Virginia has more data centers than Texas.
On Monday, Governor Greg Abbott announced that all new data center projects will undergo audits by the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT), the state's grid operator. ERCOT's interconnection queue has expanded dramatically this year: in January, 233 gigawatts of projects were waiting; in less than six months, that number more than doubled. Abbott's office now reports 474 gigawatts of new connection requests, roughly 90% of them data centers.
Many of those projects are paper proposals at this stage, as developers rush to secure a spot in line. A significant portion will likely fizzle out. However, even a fraction coming online could strain the Texas grid, since the current queue represents more than five times ERCOT's total peak demand.
While operators like Google and Microsoft have been drawn to Texas for its natural gas reserves, wind and solar have also played a key role in meeting rising electricity demand, according to the Energy Information Administration. Utility-scale solar capacity quadrupled between 2021 and 2025. Electricity prices generally declined during much of that period, but they have recently climbed, with data centers and crypto mining pushing rates higher, per the EIA.
Abbott aims to reverse that trend. He has directed ERCOT and PUCT to gather data on proposed centers, including onsite and offsite electricity and water needs, noise mitigation, light controls, tax incentives, and ownership details.
Texas has traditionally favored minimal regulation, epitomized by Houston's lack of zoning. But data centers have become a flash point across the nation. Abbott previously sought information through a voluntary survey, but most developers ignored it. Now he is compelling compliance. Depending on audit findings, Texas's status as a data center hub could be in jeopardy.
