Texas Gov. Greg Abbott has ordered a temporary halt to data center connections to the state’s power grid as officials review the sector’s growing impact on electricity demand, water use and local communities.
Abbott on August 3 directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to conduct a comprehensive audit of all projects moving through the state’s power grid interconnection process. No data center project may proceed until the audit is completed.
The review will collect information on each project’s water use, power sources, state and local tax incentives, and measures intended to limit impacts on neighboring property owners and communities. State agencies were also instructed to identify the ownership and controlling interests behind each project.
“Our top priority is to protect Texans’ safety and quality of life,” Abbott said in a statement. “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.”
Texas has become a major destination for data center development due to its available land, energy resources and business-friendly environment. JLL’s North America 2025 Year-End Data Center report found that Texas is on pace to surpass Virginia as the largest domestic data center market by 2030.
According to Abbott’s office, ERCOT is considering more than 474 gigawatts of power capacity requested by large projects in Texas, more than five times the record demand on the state grid. About 90% of those requests are from data centers, raising concerns that the rapid load growth could threaten grid stability and reliability.
The directive follows a June 10 letter from Abbott to state regulators calling for reductions in expanding tax breaks for data center projects and action on rising utility bills for ratepayers. Texas lost more than $1 billion in state sales tax revenue last year because of an exemption for qualified data centers, a figure expected to rise by 33% over the next five years to nearly $8 billion, according to the state comptroller of public accounts.
Abbott has said repealing large sales tax exemptions and other incentives he described as outdated or unnecessary will be a priority for the state legislature in 2027. His other priorities include requiring data centers to pay for grid infrastructure costs, ensuring they add to power generation capacity, mandating water-efficient technologies, requiring annual reporting of electricity and water use, and setting standards to reduce noise and other local impacts.
