In the dead of summer, Texas’ governor put a freeze on data center connections to the state’s power grid.
Texas Gov. Greg Abbott instructed the Public Utility Commission of Texas and the Electric Reliability Council of Texas on Monday to complete a comprehensive audit of all data center projects moving through the state’s power grid interconnection process. The audits will gather information on water use, power sources, whether projects received state and local tax incentives, and what measures are being taken to limit impacts on neighboring property owners and communities.
Abbott also directed the state agencies to gather information on the ownership and controlling interests in each project. The agencies must complete their audit before any data center project can move forward.
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Texas is on pace to surpass Virginia as the largest domestic data center market by 2030, JLL’s North America 2025 Year-End Data Center report found.
The state’s abundance of land, plentiful energy resources and business-friendly climate have made it a magnet for artificial intelligence data centers, according to the report.
Abbott’s press release states that ERCOT is considering more than 474 gigawatts of power capacity requested by large projects in the state. That total is more than five times the record demand on the state grid.
It’s also the equivalent of adding more than 415 million new homes to the state, as 1 GW of capacity could power around 876,000 households for one year.
About 90% of those requests come from data centers. That load growth could jeopardize the stability and reliability of the state grid, according to Abbott’s press release.
Abbott’s latest directive comes nearly two months after the governor sent a letter to state regulators saying he wants to see cuts to the ballooning tax breaks given to data center projects and to rising utility bills expected by state ratepayers.
Texas lost more than $1B in state sales tax revenue last year due to an existing exemption for qualified data centers. That figure is expected to rise by 33% over the next five years, reaching nearly $8B, according to data from the state comptroller of public accounts.
That’s why Abbott made repealing large sales tax exemptions and what he called “other outdated or unnecessary incentives” top priorities for the state legislature next year. He pledged to work with the state legislature to implement his priorities during its 2027 session.
The other priorities included in Abbott’s June 10 letter include:
requiring data centers to pay for their grid infrastructure costs;
ensuring data centers add to the state’s power generation capacity;
mandating water-efficient technologies in new data centers;
directing data centers to report electric and water use to the state annually;
and establishing standards to reduce impacts on local communities of noise and other concerns.
