Texas Halts New Data Center Approvals as AI Boom Threatens Power Grid Stability

Texas halts data center connections to power grid amid overwhelming demand

Nowhere is the US data center boom bigger than in Texas. But less than a year after declaring Texas the "epicenter of AI development," Governor Greg Abbott has declared a moratorium on all new power grid connections for data centers -- at least until developers provide more information about their projects' potential impacts on the grid and communities. The Republican governor directed regulators in an August 3 announcement at the Public Utility Commission of Texas and the grid operators at the Electric Reliability Council of Texas (ERCOT) to perform a "comprehensive verification and audit of all data centers advancing through ERCOT's interconnection process." As an independent system operator, ERCOT oversees a power grid that operates separately from the rest of the United States and provides services to most of Texas. Texas has aggressively courted data center development with its availability of cheap land and relatively abundant energy resources, along with offering state incentives, like tax breaks and fewer regulations. That puts the state on track to surpass Virginia in becoming the largest US data center market. But the recent AI boom and the accompanying frenzy of data center development threaten to overwhelm the Texas grid on paper, despite the state leading the country in adding new power generation. The ERCOT interconnection queue currently includes more than 1,800 projects representing over 474 gigawatts' worth of requests to connect to the Texas grid -- more than five times Texas' record peak electricity demand -- and about 90 percent of those power connection requests come from data centers. "That unprecedented load growth could endanger the reliability and stability of the Texas electric grid," according to the statement from Abbott's office. Many of those data center projects may never materialize for various reasons. But ERCOT has still forecast that data center demand and other factors could drive statewide electricity demand to double the current demand record by 2032, according to The Texas Tribune. The AI boom has led to additional consequences for Texas. A data center tax break that originally passed with bipartisan support in 2014 has ballooned into more than $1 billion in tax breaks annually for data center developers -- and The Texas Tribune reported the state government estimates it could lose $3.2 billion in sales tax revenue over the next two years. The new directive from Abbott requires audits of data center projects that include how much data centers would depend on the ERCOT grid for power, along with obtaining projections of data centers' annual and peak electricity consumption. The directive further requires information on how much individual data center projects depend on state financial assistance, along with details on each data center project's ownership and controlling interests. Possible gaps in the data center audits Abbott also directed state regulators and grid operators to discover the extent to which data centers' cooling systems and water usage may draw upon local water supplies needed by local communities. However, the governor's directive does not mention the fact that data centers often use much more water through their power generation sources than directly through their cooling systems -- a fact highlighted by researchers like Shaolei Ren at the University of California, Riverside. Texas communities like Corpus Christi have already been grappling with a yearslong drought. But their water woes have been compounded by both climate change and large energy and chemical companies' operations that have "sucked the region dry," according to San Antonio News. A Sierra Club report looking at federal data showed how Texas natural gas plants used 56 billion gallons of water in 2024, while coal plants consumed an additional 34 billion gallons, and nuclear plants used 26 billion gallons. By comparison, Texas data centers directly used 8 billion gallons of water for cooling purposes, but many such data centers rely on water-intensive power generation sources. Abbott's directive also seeks to increase scrutiny of measures that data centers are taking to "reduce impacts on neighboring property owners and communities, including noise mitigation, light controls, setbacks, traffic improvements, emergency response coordination and other community protection measures." But the directive conspicuously neglects to mention local air pollution and greenhouse gas emissions associated with data centers. Nonprofit newsroom Floodlight has reported that AI companies used a local permit loophole in Texas to install gas-powered turbines and backup diesel generators on site at new data center campuses -- all without requiring more extensive environmental reviews or outreach to local communities. Notably, the Texas pause on data center grid connections does not apply to data center projects that are building their own on-site power generation to get up and running as fast as possible. That "behind-the-meter power" strategy has become increasingly common among tech and AI companies like Meta, Microsoft, Amazon, Oracle, OpenAI, and Anthropic, according to research by market intelligence platform CleanView. Such behind-the-meter power typically relies on natural gas. But with lengthy order backlogs for combined-cycle gas turbines, CleanView says data center developers are turning to alternative sources, such as "mobile gas generators strapped to semitrucks" and "aeroderivative turbines originally designed for aircraft and warships." Texas leads all US states in total announced behind-the-meter capacity for data centers by having 40 gigawatts of such announced capacity. That factor is driven by the Texas Permian Basin gas supply and "extensive pipeline infrastructure" along with the "state's permissive regulatory environment," according to CleanView. The national resistance to data centers Despite the oversight gaps, the Texas moratorium on data center approvals "throws a massive wrench into ERCOT's plans to bring data centers online," according to E&E News. The Texas grid operator has been seeking to connect data center projects to the grid in groups, with notifications for the coveted first group known as "Batch Zero" planned to go out by the end of this week. But ERCOT officials said they will postpone the Batch Zero process while working with state regulators to carry out Abbott's directive. Abbott's change of tune on AI data centers comes as the incumbent governor has "seen support erode over concerns about data centers and extra-high-voltage transmission lines built in rural areas," E&E News reported. It also pointed to polls showing Texas voters generally opposing data centers in their communities -- part of a national trend among Americans -- and Democratic challenger Gina Hinojosa running just one percentage point behind Abbott in a recent Fox News poll. In a statement describing Abbott's pause as inadequate, Hinojosa called for Abbott to issue a full moratorium on data center development until the state legislature can pass stronger rules around it. She and Democratic US Senate nominee James Talarico have both called for tighter regulations on Texas data centers. Community concerns about data centers include local environmental impacts and rising electricity bills. State regulators have been working with utility companies to prevent residential ratepayers and small businesses from shouldering the burden of paying for the power infrastructure upgrades necessary to accommodate data center demand. The Trump administration has touted its Ratepayer Protection Pledge signed by major US tech companies, but an Ars analysis previously highlighted how that agreement lacks any meaningful enforcement mechanism. Multiple state legislatures have introduced and debated moratoriums on data center development, including lawmakers in Virginia, which currently hosts the largest US data center market. On July 14, New York Democratic Governor Kathy Hochul announced a yearlong ban on data center construction to give the state time to work out standards for data center development.

The AI boom just hit a wall -- these states are considering banning all new data centers

Texas joins the list of states that are looking to pump the brakes on data centers It's become a part of everyday life to wake up to a news story about AI data centers being built somewhere in the U.S. It's also become equally common to be treated to threads full of negative feedback from randoms and the people living in those states once they learn about them. The speedy development of data centers has been tied to plenty of unfortunate outcomes thus far -- their expansion across the DMV (Washington, D.C., Maryland and Virginia) and Georgia is reportedly driving people from their homes as the spaces they occupy are being considered as fertile ground for new data centers. The growing opposition to them is due in large part to their massive consumption of water and electricity they consume, which then raises the utility bills for nearby residents. Add on the constant noise pollution from continuous cooling systems, air emissions from backup generators and the conversion of natural green spaces (such as farms) into massive industrial warehouses and you have a long list of valid complaints against continued data center development. While states such as Ohio, Illinois and Arizona stand out as growing hubs for the constant advancement of new data centers, there's also a bunch of other states that are going in the opposite direction. Here are the ones that are considering banning them altogether. Texas is joining the list of other states that are considering blocking new AI data centers Most recently, The Texas Tribune reported that Texas Gov. Greg Abbott announced a moratorium on all data center approvals through the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT). That is, until the agencies have completed an audit of data centers seeking approval to connect to Texas's electric grid. In a written statement to both agencies, Abbott had this to say: "Our top priority is to protect Texans' safety and quality of life. Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid. Simply put, Texans must come first." Alongside Texas are the following states that have introduced moratoriums, continued them or passed legislation on the rapid development of data centers (this information comes courtesy of The National Conference of State Legislatures: * Delaware introduced a moratorium "on permits for data centers over 100 MW until January 2027." * Georgia introduced a moratorium that "forbids local governments from permitting data centers until December 2028." * Michigan introduced a moratorium that says "local governments and the public service commission may not permit or approve new data centers until April 2027." * New York passed legislation that enacted a "one-year moratorium on data centers over 20 MW." * Pennsylvania introduced a "three-year moratorium on new data centers, paired with impact studies; or empower municipalities to prohibit data centers." * South Carolina introduced a moratorium that "forbids local approval of data centers until the Legislature adopts a "comprehensive oversight" framework." * Vermont introduced a "moratorium on data centers until 2030, requires impact study." * Virginia continued a moratorium that "prohibits final approval of new data centers until all interconnection requests are fulfilled, or until July 2028." It's also worth mentioning the states where moratorium bills against new data centers have failed in their processes of getting passed: * Maryland * Minnesota * New Hampshire * Oklahoma * South Dakota * Wisconsin Bottom line The stats laid out by Electric Choice in connection to data centers are pretty alarming: 700+ data centers are currently under construction across 38 states, 4,500+ active facilities are littered across all 50 states while consuming 4.4% of total U.S. electricity, and the total natural energy consumption is projected to double by 2028, driven primarily by AI workloads. Even though there seems to be a bigger push towards producing even more data centers, it's refreshing to see some states rising against the AI tide by enacting temporary pauses on their fast-paced development. If you're looking for information on whether data centers have been built or are planning to be built in your home state, it's definitely worth checking out sites such as Cleanview and Track Data Centers. Follow Tom's Guide on Google News and add us as a preferred source to get our up-to-date news, analysis, and reviews in your feeds. Subscribe to Tom's Guide on YouTube and follow us on TikTok.

Texas Data Centers Suffer Brutal Collision With Reality

Can't-miss innovations from the bleeding edge of science and tech Texas is tripling down on the construction of AI data centers, at any cost. But there's a glaring problem that's grinding construction plans to a halt: a woefully inadequate power grid that won't be able to support all of these new facilities. As The Texas Tribune reports, governor Greg Abbott announced a moratorium for all new data center approvals on Monday. It certainly wasn't a response to the spiking bipartisan opposition to data centers that has gripped the nation. Instead, Abbott's goal was to give regulators time to perform an audit on how to hook up new data centers to the Texas grid without melting it down. "Our top priority is to protect Texans' safety and quality of life," Abbott said in a statement. The scale of the proposed data center buildout is staggering. The Electric Reliability Council of Texas (ERCOT) alone has a queue of over 1,800 projects that would draw over 474 gigawatts of electricity. According to the regulator, that's over five times the Texas grid's record for peak demand. The news highlights major headwinds in the Lone Star State's efforts to go all-in on AI, a construction frenzy that's now experiencing a brutal collision with reality. Even before the AI gold rush, the state's grid has struggled to keep households warm during unusually cold winters. Major cryptocurrency mining operations have also risked bringing the grid to its knees. Other states have resisted the boom, with New York imposing the country's first statewide ban last month. As the Tribune points out, both the public and state officials are being kept in the dark about who exactly is applying to build data centers in Texas, as well as how many are seeking approval. So far, the newspaper estimates there to be at least 335 data centers in the state and at least 248 planned ones. Hundreds more are in earlier development stages, queuing up to be allowed to be hooked up to the grid. Many existing data centers are using on-site power generation, including pollutant-spewing diesel generators, to bypass the grid entirely. The news comes as a vocal opposition to data center buildouts, driven by spiking electricity prices, dwindling water supplies, noise pollution, and an increase in emissions, continues to grow. Some lawmakers have been pushing for tighter rules to keep all of these negative side effects in check. For now, many of them appear to be flying blind as companies race to open new facilities. Abbott claimed this week that some data centers failed to comply with a regulator survey for water and power usage, inspiring the most recent audit. According to Texas state representative Brad Buckley, only 28 out of 377 companies that were surveyed by the Public Utility Commission of Texas (PUCT) issued responses, which he called "pretty pathetic" earlier this year. More on data centers: The Number of Regular People Being Arrested for Protesting Data Centers Is Astounding