Even Texas has a limit
Tech companies scouring the US for data-centre sites have been drawn to Texas by loose regulation and seemingly abundant power - only Virginia hosts more. That era may be ending. Governor Greg Abbott announced that all new data-centre projects will need to be audited by both the Public Utility Commission of Texas and the state's grid operator, ERCOT.
The number that forced the decision
ERCOT's interconnection queue has exploded. In January it held 233 gigawatts of projects waiting to connect; in under six months that more than doubled, and Abbott's office now puts it at 474 gigawatts of new connection requests - roughly 90% of them data centres, per the grid operator. For scale, that queue is more than five times ERCOT's all-time peak demand. Many entries are paper proposals, since long queues push developers to get in line early and plenty of projects fizzle - but even a fraction materialising could overwhelm the grid. Electricity prices in Texas remain affordable relative to other states, helped by utility-scale solar quadrupling between 2021 and 2025, but they have been rising, with the EIA attributing part of that to data centres and crypto mining.
What the audits will demand
Abbott has directed PUCT and ERCOT to collect on- and off-site electricity and water demand, noise mitigation, light controls, use of tax incentives, and ownership details. The heavier hand followed a failed lighter one: an earlier voluntary survey went mostly unanswered. In a state where Houston famously has no zoning code, that is a notable reversal - and TechCrunch's closing line is worth quoting in a board deck: depending on what the audits find, Texas's days as a data-centre mecca may be ending.
The infrastructure planning consequences
- If your AI roadmap assumes cheap, fast US capacity, rebuild the assumption. The most permissive large market just added a review gate, and public opposition to AI infrastructure is rising nationally. Expect longer lead times and higher delivered costs on new capacity from 2027 onward.
- For anyone signing multi-year cloud or colocation contracts, ask providers directly where contracted capacity will be sited and what its interconnection status is. A queue position is not a data centre, and providers with energised sites now hold real pricing power.
- Water and noise disclosure is becoming standard. If you operate or sponsor facilities, get ahead of it: the operators who ignored Texas's voluntary survey converted a soft ask into a mandatory audit, which is a lesson in how regulatory escalation actually works.
- Strategically, this strengthens the case for the efficiency lane: smaller models, better routing, open weights run locally, and inference optimisation all reduce exposure to a capacity market that is getting tighter and more politically contested. Cost engineering is now also risk management.