Texas Gov. Abbott orders pause on data center approvals for energy and water audit

Texas Governor Greg Abbott has implemented a 'pause' on new data center approvals, ordering state regulators to conduct a comprehensive audit of their energy and water consumption. The governor's directive follows increasing bipartisan scrutiny over the environmental and infrastructural impact of the booming data center industry in Texas, particularly concerning electricity and water usage. However, critics, including Texas Agriculture Commissioner Sid Miller, contend that the governor's order lacks sufficient legal backing and does not address the full scope of the issue without new legislative action.

The 'pause' primarily targets approximately 300 large data center projects that require connection to the state's electric grid managed by the Electric Reliability Council of Texas (ERCOT), using at least 75 megawatts of electricity. Many other projects, such as those with their own on-site power plants (like a Chevron facility powering a Microsoft data center in West Texas) or medium-sized data centers (25-75 MW), are not fully covered by the directive. ERCOT officials confirmed that for medium-sized data centers, the authority for connection largely rests with local utilities.

As part of the directive, ERCOT must now verify the readiness of large data center projects before proceeding with interconnection studies, a step previously planned concurrently. While this reordering of processes may delay some projects, experts like Joshua Rhodes of the University of Texas at Austin note it is not a full moratorium on all new data centers. Governor Abbott has stated that data centers will need to prove they are not negatively impacting communities or consumers' electricity costs, and has also called for eliminating sales tax breaks for these facilities. Major tech companies like Google and Meta have publicly pledged to minimize their impacts, though the state's enforcement mechanisms for these promises remain ambiguous.