Texas Governor Halts Data Center Expansion Plans

Texas has announced a pause on new data center projects that seek to utilize public utilities, following recent regulations implemented by Governor Greg Abbott.

The latest directive requires the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT) to conduct thorough audits of data center developers prior to their connection to the state’s utility grid. Developers must disclose details regarding “state and local tax incentives, grants, abatements, or other public financial assistance,” anticipated water and electricity usage, and the controlling interests in their projects.

Currently, there are 1,800 projects waiting for ERCOT’s approval to connect to the state grid. Approximately 90 percent of these projects are data centers, which would collectively require 474 gigawatts of electricity, as reported by the governor’s office. This anticipated demand exceeds the grid’s peak usage by more than five times, according to the Texas Tribune.

Governor Abbott stated, “Our top priority is to protect Texans’ safety and quality of life. Any project that does not adhere to the requirements established by the PUCT and ERCOT, as well as state law, must be denied access to the Texas grid. In simple terms, Texans must come first,” in a press release dated August 3.

In recent years, Texas has experienced numerous power outages, notable among them the severe power crisis in 2021.

According to the tracking site Data Center Map, Texas hosts over 500 data center projects. It ranks second only to Virginia in the number of data centers, often dubbed the nation’s “data center alley.”

The rapid growth of these centers in Texas has been attributed to a regulatory loophole that has permitted companies to construct energy-intensive facilities without notifying the public, as highlighted in recent coverage by Wired. Many local communities express feelings of being caught off guard by the sudden appearance of large construction projects, leading to the formation of coalitions advocating for a statewide moratorium on all data center developments.

Recent crowdsourced information gathered by environmental advocate Erin Brockovich has revealed over 1,300 residential complaints linked to utility usage and environmental health issues stemming from data centers, significantly surpassing complaints in the next highest state, Pennsylvania. In Sulphur Springs, Texas, home to a contentious data center campus project managed by MSB Global, residents have submitted nearly 400 complaints alone.

The newly established audit process will also necessitate that developers submit plans addressing the protection of nearby communities, including strategies for “noise mitigation, light controls, traffic improvements, and emergency response coordination,” recognizing the unique characteristics of each community.