Texas Governor halted new data center grid connections pending state audit of power grid impact.
Texas Governor Greg Abbott has ordered the state's electric grid regulators to conduct a sweeping audit of every data center project seeking to connect to the Texas grid, halting new interconnections until the review is complete. The order raises uncertainty for the wave of artificial intelligence-driven data center construction already underway in the state, with more than 1,800 projects currently seeking grid connections.
The state's grid operator, the Electric Reliability Council of Texas, is evaluating more than 474 gigawatts of interconnection requests, with roughly 90 percent coming from data centers, according to the governor's office. This demand far exceeds current capacity: Texas set a record for hourly peak demand of 91 gigawatts on July 22, breaking the previous record of 85.5 GW.
The order directs ERCOT and the Public Utility Commission of Texas to verify and audit all data center projects in ERCOT's interconnection process. Any project failing to comply with requirements set by the two agencies will be denied a grid connection. Legal analysts warn that Abbott's order could complicate deals already signed and under construction, with law firm Morrison Foerster flagging uncertainties around closing conditions, funding obligations, and completion deadlines in existing contracts.
Abbott's August 3 order builds on an earlier June 10 directive establishing statewide standards to ensure data center development does not disadvantage Texas families or communities. On Wednesday, Abbott's office announced that Core Scientific, Vantage Data Centers and SB Energy had committed to compliance, joining Meta, OpenAI, Google, Amazon, Oracle, Digital Realty, QTS Data Centers, Mara and Skybox Datacenters. However, one unnamed data center developer told the state it could not meet the standards and ended its project before construction began, and developer Diode scrapped a proposed data center in Henderson County citing inability to meet the guidelines.
Texas is the second-largest data center market in the country, behind Virginia, and is poised to take the top spot. A Texas Tribune analysis in June identified at least 248 data center projects statewide, while a tracking service documented 591 facilities at various stages—operating, under construction, and planned—as of July, representing roughly 91,000 megawatts of capacity. Dallas-Fort Worth, Austin, Houston and San Antonio are the state's four major hubs, though some of the largest developments, including the 4.5 gigawatt Stargate project backed by OpenAI, Oracle and SoftBank, are occurring in rural Abilene County, where local zoning controls are less restrictive.
The data center interconnection freeze is separate from Texas's temporary halt of billions in federal broadband funding disbursements, as the state's broadband office undergoes a forced leadership change. Broadband Office Director Bryant Clayton has said a rule change preceding the BEAD awards came at the governor's direction.
Abbott's order reflects a broader national wave of state-level pushback against data center growth. New York became the first state to enact a statewide moratorium in July, when Governor Kathy Hochul signed an executive order pausing environmental permits for data centers of 50 megawatts or larger for up to a year. At least 14 other states had data center moratorium bills pending in their legislatures, while thousands of local governments have enacted or considered their own construction pauses.