Data center company decides not to build in East Texas
Diode Ventures has canceled its proposed data center project in Henderson County, East Texas, citing Governor Greg Abbott's stricter development standards for rural areas. The project faced significant local opposition due to concerns over its high water usage from Cedar Creek Lake and its proximity to residential communities. Governor Abbott has since proposed comprehensive regulatory recommendations for data centers across the state.
Diode Ventures has officially withdrawn its controversial data center project planned for Henderson County, Texas, stating its inability to meet the development standards recently articulated by Governor Greg Abbott for rural areas. The project, intended for a site near Cedar Creek Reservoir, was projected to consume 5 million gallons of lake water daily by its fifth year, a critical concern for local residents, especially given the region's current low rainfall levels.
Henderson County Commissioner Wendy Spivey expressed relief over Diode's decision, highlighting strong community opposition due to the proposed facility's location within a developed subdivision and its potential strain on Cedar Creek Lake, a vital water source. However, Spivey cautioned that the underlying issue persists, as the landowners may still pursue other data center developers, and Texas counties currently lack the zoning authority to effectively regulate such projects.
Governor Abbott affirmed that Diode's project did not align with Texas's requirements for protecting natural resources, the power grid, and residents' quality of life. Following Diode's withdrawal, he released a series of extensive regulatory recommendations for the 2027 legislative session, including mandates for data centers to cover their own grid interconnection costs, implement closed-loop water systems, and be ineligible for federal sales tax exemptions.
The company's retraction came shortly after a local coalition, "Save Cedar Creek Lake," submitted a petition with thousands of signatures and prepared to advocate for more stringent data center regulations in Austin. This incident underscores the growing scrutiny from policymakers statewide regarding the environmental and infrastructural impacts of data center development in Texas.