Texas Governor Greg Abbott has ordered state regulators to audit every data centre seeking a connection to the state’s main electricity grid before allowing the project to proceed. The requirement follows a sharp increase in proposed large-load projects that state officials warn could threaten grid reliability if too many advance at once.
The Electric Reliability Council of Texas is tracking more than 474 gigawatts of requests from large electricity users, up from 233 gigawatts in January. About 90% of the proposed demand comes from data centres, and the full queue represents more than five times ERCOT’s record peak electricity demand.
Projects Must Pass Review Before Connecting
Abbott directed ERCOT and the Public Utility Commission of Texas to complete a comprehensive verification process for every data centre in the interconnection queue. Projects that fail to provide the required information or meet state requirements will be denied access to the grid.
The governor’s official directive requires developers to disclose projected electricity and water use, including demand generated both on-site and through supporting infrastructure. Regulators will also examine ownership, financing, tax incentives, construction schedules, noise controls and measures intended to reduce light pollution.
Many of the projects may never be built because developers often enter interconnection queues before securing land, customers, financing or final construction plans. However, even a portion of the proposed 474 gigawatts could place substantial pressure on Texas power generation and transmission systems.
Data Centres Drive Rapid Electricity Demand Growth
Technology companies have been attracted to Texas by relatively affordable electricity, available land and access to natural gas, wind and solar generation. The state has become the second-largest US data centre market after Virginia.
The US Energy Information Administration previously forecast that electricity demand within ERCOT would increase by 7% in 2025 and 14% in 2026 as data centres and cryptocurrency mining facilities connected to the grid. Large flexible loads were expected to account for about 10% of ERCOT electricity consumption in 2025.
Renewable generation has helped Texas serve this growth. Electricity demand increased by 5% in 2025, while solar generation rose by 20 billion kilowatt-hours and natural gas generation declined by six billion kilowatt-hours.
Voluntary Requests Produced Limited Information
Abbott had previously asked data centre operators to provide information through a voluntary survey. Most companies did not respond, leading the governor to require formal audits before projects can move through the connection process.
Texas has traditionally maintained a business-friendly development environment and offers qualifying data centres exemptions from sales tax on equipment, electricity, cooling systems and other infrastructure. Projects generally must meet investment, employment and salary requirements to receive the incentive.
The audit does not place a general ban on new data centres. It gives state regulators greater control over which projects advance and provides more information about their potential effects on electricity prices, water supplies and nearby communities.
Featured image credits: hanwha data centers
For more stories like it, click the +Follow button at the top of this page to follow us.