Governor Greg Abbott has declared a moratorium on all new power grid connections for data centers in Texas, directing the Public Utility Commission of Texas and ERCOT to perform a comprehensive verification and audit of all data centers in the ERCOT interconnection process. ERCOT, which operates Texas's separate power grid, currently has over 1,800 projects in its queue representing more than 474 gigawatts of connection requests—more than five times Texas's record peak electricity demand—with approximately 90 percent coming from data centers.
Texas has aggressively pursued data center development through cheap land, abundant energy resources, state incentives, and tax breaks, positioning itself to surpass Virginia as the nation's largest data center market. However, ERCOT has forecast that data center demand could drive statewide electricity consumption to double the current record by 2032. Abbott's office stated that this unprecedented load growth could endanger the reliability and stability of the Texas electric grid.
The new directive requires audits covering how much data centers would depend on the ERCOT grid, projections of annual and peak electricity consumption, the extent of state financial assistance each project receives, and details on project ownership. Additionally, a data center tax break that originally passed with bipartisan support in 2014 has grown to over $1 billion annually in tax breaks, with the state estimating it could lose $3.2 billion in sales tax revenue over the next two years.