Texas has implemented a freeze on new data center connections to its power grid until a thorough audit is completed, which will examine not only electricity usage but also tax incentives and ownership structures. Governor Greg Abbott communicated this directive in a letter to the state's Public Utility Commission and the Electric Reliability Council.
The audit will require operators to disclose a variety of information, including electricity demand, water usage, on-site generation plans, and noise and light management strategies. Notably, the audit will focus on tax incentives and ownership, as data centers often benefit from state and local tax breaks, and their ownership can involve complex holding companies that obscure accountability.
Currently, ERCOT has over 1,800 data center projects awaiting connection, representing a combined capacity of more than 474 gigawatts, which is over five times the grid's highest recorded demand. Governor Abbott noted that data centers account for approximately 90 percent of new connection requests, with the queue having previously been at 233 gigawatts in January.
In the context of local growth, Howe is situated about 34 miles north of Plano, a city that has emerged as the second largest data center market in the nation. Analysts predict that Texas could potentially lead the global market by 2030. However, the audit's requirement for transparency regarding incentives will clarify the economic trade-offs involved in this rapid expansion.
Projects that generate their own power will still be able to proceed without delay, while no completion date for the audits has been established.
