Texas Halts Data Center Permits
PHOTO CAPTION: Illustrative file photo. Server racks operate inside a CyrusOne data center in Carrollton, Texas. Gov. Greg Abbott has paused new state permits for data centers while regulators review electricity use, water demand and grid impacts from more than 474 gigawatts of proposed projects seeking grid access. (Photo courtesy of CyrusOne Inc., CC BY SA 3.0)
Texas has paused new state approvals for data center projects as regulators examine how the rapidly expanding industry could affect the state’s electric grid, water supply and local communities.
Gov. Greg Abbott directed the Texas Commission on Environmental Quality on Monday to stop issuing permits sought by data centers until state agencies complete ongoing reviews of the industry.
The order also says other state agencies should not move forward with regulatory approvals for data center development until regulators have the information they need about electricity use, water demand and other impacts.
The scale of the proposed development is enormous.
ERCOT, which operates most of the Texas electric grid, said in August that it was considering more than 474 gigawatts of requests from data centers seeking connections to the grid.
That is more than five times ERCOT’s record peak electricity demand.
Not every project in that queue will necessarily be built.
Large proposed loads can enter the interconnection process years before construction, and some projects are speculative or may ultimately be canceled.
But the volume has become large enough that Texas officials are now requiring developers to provide substantially more information before projects can advance.
The state wants details on electricity demand, on site power generation, water sources, water consumption, cooling systems, tax incentives, ownership and potential impacts on nearby communities.
Abbott said Monday that data centers should cover the cost of electrical infrastructure required to serve them and should not place Texas residents’ electricity or water supplies at risk.
His order says projects must report their electricity and water consumption and comply with the state review before receiving approvals.
The permit freeze expands actions Texas had already taken this summer.
On Aug. 3, Abbott ordered the Public Utility Commission of Texas and ERCOT to audit data center projects seeking connections to the grid.
Projects that fail to complete that process can be denied interconnection.
Water has become another major concern.
On Sept. 14, Abbott directed the Texas Water Development Board to enforce state water reporting requirements against large users, including data centers.
The Texas Tribune reported that as few as 28 percent of data centers had responded to a state water use survey intended to help officials estimate future demand.
The governor then broadened the restrictions Monday by ordering environmental permits paused as well.
The move could also affect projects that plan to generate their own electricity rather than rely entirely on the ERCOT grid.
Those projects might otherwise have avoided some of the restrictions tied specifically to the grid interconnection process.
Texas has become one of the country’s largest targets for new data center investment because of its available land, energy resources and business climate.
Demand has accelerated with the expansion of artificial intelligence systems, which require enormous amounts of computing equipment and electricity.
The federal Department of Energy says data centers can consume many times more electricity per square foot than conventional commercial buildings, with the largest facilities requiring extremely large power supplies.
Texas regulators are now trying to determine how many of the proposed projects are realistic and what infrastructure would be required if they are built.
ERCOT has set an Oct. 12 deadline for developers covered by its current information request.
The grid operator says it intends to publish its analysis by Dec. 10, 2026.
Abbott also said he plans to work with the Legislature next session to eliminate financial incentives for data centers.
The Data Center Coalition has said it supports Texas obtaining accurate information needed to make decisions about the industry, while data center companies broadly argue that reliable permitting and infrastructure policies are important to continued investment and development.
For Texas, the immediate issue is the size of what developers are asking the grid to accommodate.
More than 474 gigawatts of proposed data center demand is currently in the connection queue.
Texas’ record peak electricity demand is less than one fifth of that amount.
(Source: OAF Nation)
