Texas Governor Abbott ordered a comprehensive grid and water impact review, resulting in a statewide pause on new data center approvals.
Governor Greg Abbott has ordered a pause on new data center approvals tied to Texas' main electric grid while regulators examine the electricity and water demands those developments could place on the state's power infrastructure. On August 3, Abbott instructed the Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission of Texas to audit proposed data centers seeking interconnection, directing that projects failing this "comprehensive verification and audit" should not be allowed to connect to the grid.
The scale of the challenge is substantial. ERCOT is monitoring more than 1,800 developments in its interconnection queue, collectively accounting for over 474 gigawatts of demand—more than five times the grid's peak-demand record. Abbott noted that approximately 90% of new power requests are tied to data centers. According to current counts, at least 335 data centers are already operating in Texas, with another 248 in development.
Abbott has requested that regulators collect additional information on project incentives, ownership structures, projected electricity demand, water consumption, power generation methods, cooling practices, and effects on local communities. In a statement, he emphasized: "Our top priority is to protect Texans' safety and quality of life."
The directive follows weak participation in a state survey on data center water and power usage. Of 377 companies contacted, only 28 responded. The issue is particularly acute given data centers' substantial requirements for electricity and water, especially when deployed for AI computing and large-scale cloud services. Texas has already experienced mounting local resistance, with counties and cities attempting to slow projects, though some efforts have been rejected, rescinded, or challenged in court.
Abbott's order represents the strongest statewide effort yet to slow data center development pending regulatory clarity. The PUCT and ERCOT are already reviewing large-load projects, and PUCT Chair Thomas Gleeson indicated that the agencies seek additional authority from the Legislature to regulate the industry.
The directive has received mixed reactions. Some industry groups support a faster but more detailed review process. Dan Diorio, spokesman for the Data Center Coalition, said: "Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily." Others contend that an audit alone is insufficient without stricter legislation. Texas Department of Agriculture Commissioner Sid Miller called the directive "all hat and no cattle," while environmental advocates and some lawmakers are pressing for a special legislative session focused on data center regulations. Luke Metzger, executive director of Environment Texas, stated: "AI has real promise, but it shouldn't come at the cost of our water, our air, and our neighborhoods."