Gov. Greg Abbott halts Texas data center approvals
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A rally at the Texas Capitol protesting data center expansion in July. Photo: Jay Janner/The Austin American-Statesman via Getty Images
Texas Gov. Greg Abbott on Monday halted approvals for new data centers until the state can audit the ones looking to connect to Texas' electric grid.
Why it matters: Abbott has signaled a desire to make data center regulation a top priority as he seeks reelection and ahead of a new legislative session next year.
- Data centers have drawn increased scrutiny amid backlash to AI.
The latest: Abbott directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to deny grid connection to any project that doesn't meet requirements.
By the numbers: About 90% of new connection requests for the Texas grid are data centers, Abbott says.
- ERCOT, the state's grid operator, is considering more than 474 gigawatts of requests — more than five times Texas' record peak electricity demand, Abbott added.
Zoom in: Among the information the governor is seeking from data center projects is:
- The extent to which a center is seeking state and local tax incentives.
- Whether a data center developer plans to provide some of its own electricity, and a center's estimated annual and peak electric consumption.
- A data center's projected annual and peak water consumption and its water sources.
- Any measures a project is taking in regard to noise mitigation, light controls, emergency response coordination and more.
What they're saying: "Our top priority is to protect Texans' safety and quality of life," Abbott said in a statement. "Texans must come first."
"We are hopeful this directive from the Governor will help separate those who are responsible water and energy stewards from those who are not," Dan Diorio, executive vice president of state policy and government affairs for the Data Center Coalition, tells Axios in a statement.
- "Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily," Diorio adds.
Between the lines: Democratic gubernatorial candidate Gina Hinojosa last month called on Abbott to halt data center construction across Texas.
- "So nice to see another strongly worded letter from Abbott after he proudly made Texas the Wild West of data centers," Hinojosa said in a statement Monday.
- "Abbott's call for a 'pause' could be for one day – and no one buys it."
Flashback: Abbott in June directed state officials to take up data center regulation — including calling on lawmakers to phase out what he called "outdated tax incentives."
The big picture: Texas is seen as one of the friendliest states in the nation for data center development, in part due to having one of the most generous tax incentives.
Zoom out: At a Texas Senate committee meeting last month, lawmakers signaled an openness to repealing or updating the state's tax incentives. Data centers were increasingly getting tax breaks, lawmakers learned.
- Of 138 recipients, only 20 had been audited, and six of those weren't meeting state requirements, per the Texas Comptroller of Public Accounts.
- "Pursuing smart reforms does not mean being unfriendly to business," Texas Sen. Joan Huffman (R-Houston) said.
Editor's note: This story has been updated to add comment from the Data Center Coalition.