Texas data center developers can still build, but getting power from the state’s main grid just became more complicated.
Gov. Greg Abbott ordered regulators to pause approvals for data centers seeking connections to the Electric Reliability Council of Texas grid until proposed projects complete a comprehensive audit. The move comes as requested electricity demand has climbed above 474 GW, with data centers accounting for roughly 90% of the proposed load.
For cloud providers, AI developers, and infrastructure investors, the order could translate into longer approval timelines, additional disclosure requirements, and greater uncertainty around project schedules.
Texas wants more proof before approving connections
Abbott directed the Public Utility Commission of Texas and ERCOT to audit data centers moving through the grid’s interconnection queue.
The reviews will examine projected electricity use, on-site and off-site power generation, water demand, cooling operations, tax incentives, ownership information, and measures to reduce noise, lighting, and other effects on nearby communities.
“Our top priority is to protect Texans’ safety and quality of life,” Abbott said in a statement, cited by The Texas Tribune.
“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,” Abbott added.
The Data Center Coalition, a trade group representing major technology companies, said the audit could help regulators distinguish responsible developers without unnecessarily slowing compliant projects.
“Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily, ensuring Texas will continue to be the national leader in economic development,” coalition spokesperson Dan Diorio said, per The Texas Tribune.
Officials have not said how long the reviews will take or when approvals will resume.
The 474 GW figure needs context
The Texas Tribune noted that ERCOT’s queue includes more than 1,800 proposed projects representing over 474 GW of requested power, more than five times the grid’s record peak demand.
The number does not mean Texas must immediately supply 474 GW. Developers often join interconnection queues early because grid access can take years, and some proposals never advance beyond the planning stage.
TechCrunch reported that ERCOT’s queue stood at 233 GW in January before more than doubling in less than six months.
Even if only a portion of the projects are completed, the requests show the scale of electricity demand associated with AI infrastructure, cloud services, and other computing workloads.
Not every Texas project is affected
The directive applies to data centers seeking access to the ERCOT grid. It does not necessarily stop projects that generate their own electricity or facilities planned in regions outside ERCOT, including El Paso.
The Texas Tribune has identified at least 335 operating data centers and 248 planned facilities in the state. Texas is the country’s second-largest data center market behind Virginia, according to the publication.
Developers may now need to account for longer approval timelines, more detailed disclosures, and the possibility that a grid connection will be rejected.
What IT and infrastructure leaders should review
Companies planning Texas capacity should verify whether a proposed site depends on an ERCOT connection and whether its schedule includes time for the new audit.
Operators should also review cooling designs, water projections, backup or on-site generation, local community requirements, and any tax incentives tied to the facility.
The review does not end Texas’ data center expansion, but it adds a new gate to the process. Until regulators explain the audit timeline and approval standards, developers should treat grid access as a project risk rather than an assumption.
Related News: Texas is not alone in slowing data center growth. See why New York paused new hyperscale permits while it studies impacts on the grid, water, ratepayers, and local communities.
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