Texas Governor Greg Abbott announced that all new data center projects in the state will need to undergo review by the Public Utility Commission of Texas and the electricity grid operator, the Electric Reliability Council of Texas, as new interconnection requests approach levels that could place severe pressure on the grid.
Texas had attracted technology companies and data center developers thanks to its less stringent regulatory environment and seemingly abundant energy supplies. The state ranks second in the United States in the number of data centers, after Virginia. But the rapid growth of proposed projects has prompted authorities to reassess the grid’s capacity to accommodate additional loads.
Interconnection Requests Exceed Five Times Peak Demand
The governor’s office said the Texas grid operator was tracking 474 gigawatts of new interconnection requests. That figure is more than double the 233 gigawatts recorded in January, meaning the increase occurred in less than six months. Data centers account for about 90% of these requests, according to the grid operator.
Not all requests mean that actual projects will enter service. Some remain merely preliminary proposals on paper, while many developers begin placing their projects in the interconnection queue before knowing whether they will proceed. Nevertheless, implementing only a small portion of these projects could impose a significant burden on the Texas grid; the current queue is more than five times the total peak demand on the Electric Reliability Council of Texas grid.
Additional Information on Electricity and Water
Abbott directed the Public Utility Commission and the grid operator to collect detailed information about proposed data centers, including electricity demand inside and outside the sites, water consumption, noise-reduction measures, lighting controls, and the use of tax incentives, in addition to ownership data.
The move follows an earlier attempt by the governor to obtain the information through a voluntary survey, but most entities did not respond to it, according to the report. The state therefore shifted to a more mandatory approach to ensure that new projects comply with the review process.
Energy and Prices Under Pressure
Data center operators, including Google and Microsoft, have benefited from Texas’s natural gas reserves. Wind and solar power have also helped keep pace with the growth in electricity demand, according to the U.S. Energy Information Administration. Utility-scale solar capacity quadrupled between 2021 and 2025, while electricity prices declined during a large part of the same period, according to a report from Amperon.
But prices, while remaining relatively low compared with those in other states, have begun to rise. The Energy Information Administration believes that data centers and cryptocurrency-mining facilities have contributed to pushing prices higher.
Historically, Texas has favored a lighter regulatory approach than many states, but data centers have become a point of contention across the United States, including in Texas. The results of the reviews will determine whether the state continues to receive projects at the previous pace or begins restricting their expansion.