Greg Abbott Says Texas Data Centers ‘Dug Their Own Grave’ as Backlash Grows

Texas Governor Greg Abbott has significantly changed his stance on data center development, now criticizing the industry he once heavily courted. Abbott stated that data center companies have "dug their own grave" by expanding too rapidly without local community support, and deserve the growing political backlash.

In response to public opposition, Governor Abbott has directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT) to audit data centers seeking connections to the state's power grid. This audit requires developers to disclose projected electricity and water use, public tax incentives, ownership interests, and plans to mitigate community effects. Abbott also called for phasing out some tax incentives for the industry.

Democratic gubernatorial nominee Gina Hinojosa has criticized Abbott, arguing he waited until public opposition threatened him politically. Hinojosa is calling for an immediate statewide moratorium on new data center projects and a special legislative session to establish comprehensive rules for electricity costs, water consumption, tax incentives, and community protections. She claims Texas households could face an additional $600 annually to cover infrastructure costs and has accused Abbott of accepting $20 million from donors with data center interests, a figure her campaign provided and that the Observer has not independently verified.

The debate extends to municipally controlled electricity markets in San Antonio and Austin, which Abbott seeks to open to private retail providers, a move opposed by entities like CPS Energy. Despite the statewide policy discussions, data center projects like CyrusOne's $500 million facility near Castroville and Microsoft's expansion in Bexar and Medina counties continue, raising questions about power, water, and job creation.