Texas Pauses Data Center Approvals Amid Grid and Resource Concerns

Texas has temporarily paused approvals for new data centers seeking connections to the state’s electric grid, as Governor Greg Abbott has ordered regulators to conduct a comprehensive audit of projects already moving through the approval process.

The move comes as Texas is facing growing scrutiny over the rapid expansion of data centers, driven in part by the booming demand for artificial intelligence and cloud computing.

Greg Abbott orders Texas data center audit

Abbott directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to review data center projects currently advancing through the state’s interconnection queue before additional approvals are granted.

Developers will have to provide information on their expected electricity demand, water consumption, cooling systems, ownership and tax incentives. They must also explain how they plan to reduce the impact of their facilities on nearby communities.

Abbott said projects that fail to meet state requirements should be denied access to the Texas power grid.

"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."

Why Texas is scrutinising data centers

The Texas data center boom has created concerns about electricity demand, water use and the pressure placed on local infrastructure.

According to ERCOT, more than 1,800 projects are currently waiting for grid connections, representing more than 474 gigawatts of potential electricity demand. That is more than five times Texas' record peak demand. Governor Greg Abbott said roughly 90% of those new power requests come from data center projects.

The governor's latest action was also prompted by limited participation in a PUCT survey designed to gather information about data centers' electricity consumption, water use, cooling technology and power sources.

Of the 377 companies notified about the survey, only 28 submitted responses, according to information discussed during a June hearing.

Elon Musk's Texas connection

The decision is particularly notable given Texas' growing reputation as a destination for major technology companies and entrepreneurs, including Elon Musk.

Musk has encouraged businesses to relocate to Texas, while Tesla moved its headquarters to the state.

In a post shared on X in November 2025, Musk wrote: "Texans come first. I’m directing state agencies and universities to freeze new H-1B visa petitions. Texas taxpayers invest billions to train our workforce. Those jobs should go to Texans. Texas is the strongest economic engine in America. We’re going to keep it that way."

While Musk's comments were about H-1B visas rather than data centers, his broader push for Texas as a business and technology hub has added to the state's changing economic landscape.

Texas data center approvals could face delays

Abbott's directive could affect ERCOT's evolving interconnection process, including projects being reviewed under the first phase known as "batch zero." ERCOT said it will postpone a transmission planning study while it reviews the governor's order.

Environmental groups have welcomed greater scrutiny but are calling for permanent safeguards.

Luke Metzger, executive director of Environment Texas, said: "AI has real promise, but it shouldn’t come at the cost of our water, our air, and our neighborhoods. Now that the state is asking the right questions, it needs to use the answers to develop safeguards that protect Texans."