Texas halts power grid connections for new data centers over energy, water supply concerns

Gov. Greg Abbott on Monday ordered state energy regulators to halt approvals for all new data center projects attempting to join the state's power grid until a comprehensive audit and verification process is completed.

In a directive issued to Public Utility Commission of Texas (PUCT) Chairman Thomas Gleeson and Electric Reliability Council of Texas (ERCOT) CEO Pablo Vegas, Abbott warned that failure to comply with the new audit requirements or state standards will result in immediate denial of grid connection.

What they're saying:

"Our top priority is to protect Texans’ safety and quality of life," Abbott said. "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. Simply put, Texans must come first."

Massive demand threatens grid stability

The mandate comes as ERCOT faces an unprecedented surge in power demand. According to state figures, ERCOT is evaluating roughly 474 gigawatts in grid connection requests—more than five times the state’s current record peak electricity demand. Roughly 90% of those incoming requests stem from energy-intensive data centers.

State officials warned that the rapid influx of computing infrastructure threatens the overall stability and reliability of the state's main electrical grid.

Audit timeline remains unknown

In his letter, Abbott noted that the strict audit was triggered in part because several data center operators failed to comply with a state survey measuring water and power usage under the General Appropriations Act. He added that recent legislative hearings highlighted mounting public concern over how data centers affect municipal utility supplies and surrounding neighborhoods.

Under the executive directive, the PUCT and ERCOT must collect detailed disclosures from every pending data center project, including:

• Tax Incentives and Subsidies: Documentation of all state and local tax abatements, grants, and public financial assistance requested or received.
• Power Generation: Annual and peak electricity consumption projections, along with progress on building or procuring on-site power generation to reduce grid load.
• Water Usage and Cooling Tech: Projected peak water consumption, supply sources, and details on cooling systems, such as air-cooled or closed-loop technology, to protect local water supplies.
• Community Protections: Measures taken to mitigate neighborhood impacts, including noise controls, setbacks, lighting mitigation, traffic management, and local emergency coordination.
• Ownership Transparency: Comprehensive disclosure of all ownership and controlling interests tied to the project.

Neither ERCOT nor the PUCT has announced an official timeline for completing the audit process.

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