Texas Halts Grid Connections Pending Data Center Audits

Abbott's August 3 directive requires the PUCT and ERCOT to obtain details on the degree to which each project relies on public assistance, including state and local tax incentives, grants, abatements, and other financial support. Regulators must also collect projected annual and peak electricity use, the extent of planned reliance on the ERCOT grid, and information on any on-site generation or other demand-reduction measures, according to the governor's office.

Water infrastructure is also in scope. The directive calls for projected annual and peak water consumption, expected water sources, and cooling-system details, including whether a facility uses air-cooled, closed-loop, or other water-efficient designs. The Texas Tribune further reports that developers are being asked to provide information about facility ownership and efforts to limit effects on surrounding communities.

"Our top priority is to protect Texans' safety and quality of life," Abbott said in the directive. "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."

The governor's office states that ERCOT is considering more than 474 GW of requests to connect to the Texas grid, more than five times the state's record peak electricity demand. About 90% of those new power requests are associated with data centers, according to the same release.

TechCrunch reports that ERCOT's queue stood at 233 GW in January, illustrating the rapid expansion in proposed large-load projects. The publication also notes that interconnection queues can include early-stage proposals that never reach construction, an important qualification when comparing the queue's aggregate capacity with actual operating demand.

Texas is the second-largest US data center market behind Virginia, according to The Verge. However, the Texas order applies to facilities seeking access to the ERCOT system, not necessarily all projects in the state. The Verge notes that areas including El Paso are outside ERCOT's jurisdiction and that some facilities may pursue on-site generation rather than an ERCOT connection.

The order adds a regulatory review step to one of the largest US markets for AI and cloud infrastructure. It does not prohibit data center construction in general, but it conditions ERCOT interconnection progress on the audit and compliance review.

For infrastructure teams, the requested disclosures put several engineering inputs into a state review process: peak-load forecasts, annual energy estimates, on-site generation plans, cooling architecture, and water sourcing.

The reporting leaves open how the PUCT and ERCOT will sequence audits and how long projects could remain under review. It therefore does not establish the practical effect on data center delivery schedules.