Texas halts new data centers as governor calls for audits

Texas has spent the past few years as the go-to spot for anyone wanting to build a data center fast and cheap. Loose rules, plentiful power, and an attitude that generally lets developers do their thing without a lot of paperwork. Only Virginia hosts more data centers than Texas does. But that hands-off era just hit a wall.

Governor Greg Abbott announced Monday that every new data center project will now need to go through audits from both the Public Utility Commission of Texas and ERCOT, the state's grid operator. The reason is right there in the numbers. Back in January, ERCOT was tracking 233 gigawatts of projects waiting in its interconnection queue. In under six months, that figure more than doubled. Today it sits at 474 gigawatts, and roughly 90% of that is data centers. For context, that queue is now more than five times ERCOT's total peak demand. Not all of those projects will actually get built — plenty are just placeholders developers file to hold a spot in line — but even a fraction of that load coming online would strain the grid badly.

And it's not like Texas has been sitting still on power supply. Natural gas has been the big draw for companies like Google and Microsoft, but wind and solar have quietly done a lot of the heavy lifting too, according to the Energy Information Administration. Utility-scale solar capacity in the state grew fourfold between 2021 and 2025, and electricity prices actually fell for much of that stretch, per a report from Amperon. Texas power remains cheaper than in a lot of other states. But the EIA says data centers and crypto mining operations have started pushing those prices upward, and that trend is exactly what Abbott appears to be trying to get ahead of.

The audits will require developers to hand over details on electricity and water demand, both on-site and off, along with noise mitigation plans, lighting controls, tax incentive usage, and who actually owns the project. This is a real shift for a state that famously lets Houston operate without a zoning code and prides itself on business-friendly rules. Abbott had already tried a softer approach, sending out a voluntary survey to data center operators. Most of them just didn't bother responding. So now he's making it mandatory.

Data centers have turned into a political flashpoint in plenty of states, and Texas joining that list says something about how fast this buildout has outpaced anyone's ability to plan for it. Whether the audits slow things down, add friction developers can live with, or actually choke off new projects depends entirely on what PUCT and ERCOT find once they start digging. But the free-for-all phase of Texas's data center boom looks like it's ending.