USA: Texas Hits Pause on New Data Center Grid Connections

Texas Governor Greg Abbott ordered state utility regulators to stop approving new data center connections to the Texas grid until every project currently in the pipeline has been audited. 

The audit requires collecting information on tax incentives and public financial assistance; reliance on the grid versus on-site generation; water sourcing and cooling technology; community-impact measures; and ownership.

The move is a sharp shift for a state that has actively courted artificial intelligence and hyperscale data center investment, and it lands in the middle of a broader national debate about how the electric grid should absorb the surge in AI-driven load. 

The directive does not touch data centers that are already operating, but it stops the clock on the queue of pending projects — and it comes with a preview of legislation Texas is likely to consider in 2027 that would reshape the economics of building a data center in the state.

For more information, see our client briefing.