Texas Puts New Data Centers on Hold and Demands Audits

For years, tech companies scoured the country for data-center sites and were happy to pick Texas — for its light-touch regulation and its seemingly bottomless supply of electricity. Only Virginia has more sites. But even Texas has its limits.

On Monday, Governor Greg Abbott announced that, from now on, every new data-center project must be audited by two agencies at once — the state's Public Utility Commission (PUCT) and the grid operator, ERCOT.

A Queue Bigger Than Demand

The trigger was a rapid surge in the queue for grid connections. In January, ERCOT counted 233 gigawatts of proposed projects, and in less than six months that figure has more than doubled: the operator is now tracking 474 gigawatts of connection requests, according to the governor's office. Around 90% of them come from data centers.

Admittedly, some of these projects exist only on paper for now. Because of the drawn-out queues, the first thing a developer does is grab a spot on the list, and many of these initiatives then quietly fade away. Even so, partial follow-through alone threatens overload: the total volume of requests today is more than five times the peak consumption of the entire ERCOT grid.

Cheap Electricity Gets Expensive

Many operators, including Google and Microsoft, were drawn to Texas by its abundance of natural gas, but wind and solar helped the grid keep up with rising demand: according to the EIA, utility-scale solar capacity quadrupled between 2021 and 2025, and electricity prices fell for a long time. Now they are climbing again — and, as the EIA notes, it is precisely the data centers and crypto-mining farms that are pushing them up.

This is exactly the trend Abbott wants to halt. He has directed the PUCT and ERCOT to gather detailed information on each project: electricity and water use on and off the site, noise-reduction measures, lighting control, use of tax breaks, and ownership data.

The End of the Anything-Goes Era

Historically, Texas has favored light regulation: Houston is famous for having no zoning, and the state's business climate is considered one of the freest in the country. But data centers have become a sore point all across America, and Texas is no exception. Earlier, the governor had tried to get data operators to comply voluntarily, through a survey — most simply didn't respond. Now he is taking a tougher approach.

Exactly what the audits will reveal is still unknown. But it seems the days of Texas as the undisputed mecca of data centers may be numbered.

Source: TechCrunch