Texas halts new data centers as governor calls for audits
Texas Governor Greg Abbott has ordered that all new data centre projects in the state undergo audits by the Public Utility Commission of Texas and grid operator ERCOT, marking a sharp shift away from the state's traditionally light-touch approach to development. The move comes as Texas, second only to Virginia in data centre hosting, faces a surge in electricity connection requests that threatens to overwhelm its power grid, with officials fearing rising costs and strain on infrastructure if left unchecked.
ERCOT's interconnection queue has ballooned from 233 gigawatts in January to 474 gigawatts today, roughly 90% of it linked to data centres, and now stands at more than five times the grid's peak demand, though many proposals are expected to fall through before completion. Abbott has directed regulators to gather detailed information on each project's electricity and water demands, noise and light mitigation, tax incentive use and ownership, having previously relied on an unsuccessful voluntary survey. While solar capacity has quadrupled since 2021 and helped keep prices relatively low, electricity costs have begun climbing, partly driven by data centres and crypto-mining operations.
In short
- Texas now requires audits for all new data centre projects
- ERCOT's grid connection requests have doubled to 474 gigawatts since January
- Move ends Texas's light-touch approach amid fears of grid overload and rising prices
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The case for audits addresses genuine infrastructure risks. Texas's grid cannot accommodate 474 gigawatts of new demand without risking reliability and higher consumer electricity costs. Data centres consume enormous power and water in a water-stressed state, and unchecked expansion threatens both grid stability and affordability, making audits essential to ensure projects align with capacity rather than proceeding speculatively.
The case against
The case against regulation emphasises market discipline and competitiveness. Texas has attracted major data centre investment through its business-friendly environment, and mandatory audits risk driving operations to other states. The interconnection queue itself indicates market self-correction—many projects will naturally fail—and Texas's expanding renewable capacity, combined with ERCOT's expertise, provides adequate safeguards without regulatory measures that could choke economic opportunity.
Explained simply
Data centres are large buildings filled with computer equipment that store information and run online services. They need substantial amounts of electricity to power and cool their equipment, and often use water for cooling too. Texas has attracted many such projects, partly because it has generally made it relatively easy to build and connect new developments.
The state’s electricity grid is managed by ERCOT, which oversees most of Texas, while the Public Utility Commission regulates the power industry. A request to connect to the grid is an early step in planning a project; it does not mean construction will go ahead. As demand for power grows, the amount and timing of new connections matter for planning electricity supply and the cost of keeping the grid reliable.