Texas Governor Abbott halts all state-issued permits for data centers until grid audit is complete

By Liz Hampton and Laila Kearney

DENVER/NEW YORK, Sept 21 (Reuters) – Texas Governor Greg Abbott on Monday barred the state’s environmental agency from issuing new permits for data centers until ​regulators complete a massive audit of the energy-hungry facilities ‌seeking to connect to the Texas electrical grid.

The Republican governor’s directive to the Texas Commission on Environmental Quality effectively freezes all state-issued permits to data center developers, which had flocked to the region for its abundant electricity, land ‌and ​pro-business reputation.

Since the artificial intelligence boom began ⁠roughly three years ago, ⁠Texas has become one of the fastest-growing data hubs in the world. But intensifying public backlash over the facilities, and fears about AI more broadly, prompted Abbott last month to freeze ​the connection of new data centers to the state grid and order an audit of the facilities.

By the time of ⁠that directive, there were more than 470 ⁠gigawatts’ worth of data center projects and other ​large energy users in line to connect to the grid — more than ​five times the state’s peak demand.

The Electric Reliability Council ‌of Texas, which operates the state grid, is in the early stages of auditing data center power use, tax incentives and water consumption, among other factors.

“Simply put, Texans must come first,” Abbott said in ⁠a statement. “Data centers must pay their own way, protect our grid and water, and complete the (audits).”

Abbott is among a swelling number of governors ⁠who once raced to ‌attract data center investments — and touted their ⁠public benefit — but are now tightening restrictions on ​the developments ‌to ease their constituents’ fears about rising power ​bills and ⁠environmental issues caused by the facilities.

Ed Hirs, an energy fellow at the University of Houston, said Abbott was walking back “his earlier pronouncements about data centers leading to lower electricity prices.”

(Reporting by Liz Hampton in Denver and Laila Kearney in New York; Editing by David Gregorio ​and Aurora Ellis)