Texas hits pause on new data center grid connections, orders audits
Facing 474 gigawatts of connection requests — five times peak demand — Texas is auditing data centers before letting more onto its grid.
What happened: Texas Governor Greg Abbott ordered the state's utility commission and grid operator, ERCOT, to audit every new data center proposal before it can connect to the power grid. The trigger: ERCOT's queue of connection requests has ballooned to 474 gigawatts, more than five times the grid's peak demand, and about 90% of that is data centers. The queue more than doubled in under six months. The move also postpones ERCOT's planned 'Batch Zero' — the first group of data centers set to get connection approval this week.
Why it matters: Texas is the country's second-biggest data center market after Virginia, with over 335 centers running and 248 more planned, built on a reputation for cheap power and light regulation. That queue number is mostly speculative — companies file early and many projects fizzle — but if even a fraction get built, it could strain a grid already dealing with data centers and crypto mining pushing up electricity prices, per the EIA. This follows New York's own data center moratorium, suggesting a bipartisan shift toward slowing down energy-hungry AI infrastructure.
How it works, plainly: The audit forces data centers to disclose tax incentives received, how much power and water they'll need, water sourcing, ownership, and plans to manage noise and light pollution for neighbors. Notably absent: any requirement to report air pollution or greenhouse gas emissions. That gap matters because Texas has a separate permit loophole letting AI companies install gas turbines and diesel generators on-site without full environmental review. Those 'behind-the-meter' projects, which skip the public grid entirely, are exempt from this pause altogether.
The rollout: It's unclear how long audits will take or how many projects they'll ultimately block — Abbott previously tried a voluntary survey that most companies simply ignored, which is why this version is mandatory. Meanwhile, behind-the-meter power is booming as a workaround: Texas already has 40 gigawatts of such announced capacity, the most in the US, with companies like Meta, Microsoft, Amazon, and OpenAI turning to mobile gas generators and repurposed aircraft turbines to skip grid queues entirely.