Texas Governor Halts New Data Center Permits Pending Grid Audit

Texas Gov. Greg Abbott has ordered the state's environmental agency to halt the issuance of new permits for data centers until regulators complete an audit of the energy-intensive facilities seeking to connect to the Texas electrical grid, Liz Hampton and Laila Kearney reported for Reuters.

Texas Gov. Greg Abbott has ordered a pause on new state-issued data center permits pending an audit of their impact on the state's power grid and water resources. [Photo: Texas Governor Greg Abbott Facebook]

The directive to the Texas Commission on Environmental Quality effectively freezes new state-issued permits for data center developers, which have been attracted to Texas by its electricity supply, available land and business climate.

Texas has become one of the world's fastest-growing data center hubs since the artificial-intelligence boom accelerated roughly three years ago.

However, growing public opposition and concerns about the impact of data centers on electricity and water resources have prompted the state to tighten oversight.

Abbott had already ordered a freeze on new data center connections to the state grid and directed regulators to audit the facilities.

At the time of that directive, more than 470 gigawatts of data center projects and other large energy users were waiting to connect to the grid — more than five times the state's peak demand.

The Electric Reliability Council of Texas, which operates the state's power grid, is in the early stages of auditing data center electricity use, tax incentives and water consumption, among other factors.

“Simply put, Texans must come first,” Abbott said in a statement.

“Data centers must pay their own way, protect our grid and water, and complete the audits.”

Abbott is among a growing number of governors who have moved to impose tighter restrictions or additional oversight on data centers amid concerns about electricity demand, water consumption and the potential effect on utility costs.