Texas says data centers must pass an audit before connecting to the grid

Texas Governor Greg Abbott has issued a directive requiring new data center proposals to undergo a rigorous audit before connecting to the state's energy grid. On Monday, Governor Abbott instructed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to verify new facilities, citing the need to maintain grid stability and reliability. Data centers will now be mandated to disclose details regarding state and local incentives received, their projected reliance on the state grid, anticipated water consumption and sources, and how they plan to monitor community impacts such as noise.

This new policy is expected to potentially slow the approval process for new data centers, though the exact duration and impact of the audit remain unclear. The directive comes as ERCOT faces requests totaling over 474 gigawatts for grid connections, more than five times its record peak electricity demand, with data centers accounting for approximately 90 percent of these new power requests. Texas currently hosts at least 335 operational data centers and has 248 more planned, making it the second-largest data center market in the US, behind Virginia. This move follows New York's data center moratorium, reflecting a growing bipartisan sentiment among national leaders to moderate the expansion of energy-intensive projects.