Texas halts new data center connections pending audits

Texas Governor Greg Abbott has ordered a halt to new data center grid connections pending audits by state energy regulators ERCOT and PUCT. The move addresses concerns over grid stability, as connection requests have surged to 474 gigawatts—over five times the state's peak demand—with data centers accounting for 90% of the new load. This marks a significant regulatory shift for the nation's second-largest data center market.

Texas data center audit requirement

• ▪The stated purpose of the audit is to "keep the grid stable and reliable."
• ▪The audits will require data centers to provide information on state incentives, water consumption, grid reliance, and community impacts like noise.
• ▪Texas Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and ERCOT to audit new data center proposals before they connect to the state grid.

ERCOT interconnection queue growth

• ▪Data centers account for approximately 90% of new power connection requests submitted to ERCOT.
• ▪ERCOT's interconnection queue more than doubled from 233 gigawatts in January 2026 to 474 gigawatts in less than six months.
• ▪ERCOT is considering over 474 gigawatts of requests to connect to the Texas grid, which is more than five times its record peak electricity demand.

Texas electricity supply dynamics

• ▪Texas is the second-largest data center market in the U.S. after Virginia, with at least 335 operating facilities and 248 more planned.
• ▪According to the Energy Information Administration (EIA), data centers and crypto-mining facilities have contributed to higher electricity prices in Texas.
• ▪Some parts of Texas, such as El Paso, fall outside of ERCOT’s domain, and some data centers can generate their own power on-site.

Data center regulatory shift

• ▪The move is part of a broader trend, similar to New York's data center moratorium, where elected leaders are slowing down energy-intensive projects.
• ▪The directive follows a failed attempt by Governor Abbott to gather information from data centers through a voluntary survey to which most did not respond.
• ▪The audit requirement represents a shift from Texas's historically business-friendly and light regulatory environment.

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