Texas Governor Greg Abbott declared a moratorium on all new power grid connections for data centers on August 3, directing the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to perform a comprehensive verification and audit of all data center proposals advancing through ERCOT's interconnection process2,3.
Abbott said the review is needed to "keep the grid stable and reliable". The moratorium applies at least until developers provide more information about their projects' potential impacts on the grid and surrounding communities.
The scale of pending demand is driving the action. Abbott's office said ERCOT is tracking 474 gigawatts of new connection requests, with about 90% of those coming from data centers1. In January, ERCOT had 233 gigawatts of projects waiting to connect; that figure more than doubled in less than six months. The current interconnection queue represents more than five times ERCOT's total peak demand.
Many of those projects are paper proposals — developers often enter the queue early because wait times have grown so long, and many projects fizzle out as they progress. But even a fraction reaching completion could overwhelm the grid.
Under the new requirements, data centers must provide information on state and local incentives they have received, how much they would rely on the state grid, expected water consumption and sources, and how they plan to track community impacts including noise. Abbott has also directed PUCT and ERCOT to collect details on proposed facilities' on- and off-site electricity and water demand, noise mitigation efforts, light controls, and ownership details.
Abbott had previously tried to coax data centers into providing more information through a voluntary survey, but most data centers did not respond.
The moratorium marks a reversal for a state that has aggressively courted data center development. Texas has attracted tech companies and developers with cheap land, relatively abundant energy resources, tax breaks, and fewer regulations. Only Virginia currently hosts more data centers than Texas, and the state is on track to surpass Virginia as the largest U.S. data center market. Less than a year ago, Abbott declared Texas the "epicenter of AI development".
ERCOT operates as an independent system operator overseeing a power grid that functions separately from the rest of the United States and serves most of Texas. While many data center operators, including Google and Microsoft, have been drawn to Texas for its ample natural gas reserves, wind and solar have helped ERCOT keep pace with growing electricity demand — utility-scale solar capacity grew fourfold between 2021 and 2025. Still, data centers and crypto mining facilities have pushed electricity prices higher.
ANALYSIS The shift from a voluntary survey — which most data centers ignored — to a mandatory audit with a moratorium attached signals that Texas regulators now view unchecked data center growth as a grid reliability risk rather than a pure economic benefit. The 474-gigawatt queue, dwarfing ERCOT's actual peak capacity, illustrates the gap between speculative demand filings and physical infrastructure reality. For AI companies planning large-scale compute buildouts in Texas, the audit process introduces a new layer of regulatory friction in what had been one of the most permissive U.S. markets for data center siting.