Proposed East Texas AI Data Center Withdrawn Amid Tougher State Guidelines
Diode has withdrawn its proposed data center project near Cedar Creek Lake in Henderson County, Texas. The company stated the project did not meet Governor Abbott's directives or community expectations for data center developments. Governor Abbott emphasized the state's commitment to protecting natural resources, the power grid, and community quality of life.
Diode has announced its decision to withdraw a proposed data center project near Cedar Creek Lake in Henderson County, Texas. In a notice to Henderson County officials, the company indicated that the project failed to meet Governor Greg Abbott's directives and community expectations for such developments within the state.
Governor Abbott publicly affirmed this outcome, stating that data centers operating in Texas must adhere to clear standards that prioritize communities, protect natural resources and the power grid, and respect residents' quality of life. He commended Diode for its withdrawal and urged other developers to follow suit if their projects do not meet these criteria.
Governor Abbott's expectations, outlined in a June 10 directive to the Public Utilities Commission (PUC) and the Electric Reliability Council of Texas (ERCOT), include ensuring data center interconnections reduce residential electrical bills, requiring developers to cover all electric infrastructure costs, and mandating that data centers add to, rather than just demand from, Texas's electric capacity. Furthermore, new data centers must utilize water-efficient technologies like closed-loop cooling systems to preserve local water resources and implement best practices such as neighborhood setbacks and noise-reduction technology to mitigate community impacts.
Looking ahead, the Governor plans to seek legislation to codify these directives, including requirements for large data centers to annually report electricity and water usage data to the PUC, and the repeal of sales tax exemptions and other incentives deemed outdated or unnecessary for data centers. These measures aim to ensure that data center growth does not negatively impact Texas families or rural communities.