Abbott seeks new limits on Texas data centers

Texas Governor Greg Abbott ordered the Texas Public Utility Commission (PUC) and Electric Reliability Council of Texas (ERCOT) to implement new restrictions on data centers, including mandating water-efficient technology and repealing tax incentives. In a letter to PUC Chair Thomas Gleeson and ERCOT President Pablo Vegas, Abbott demanded recommendations by July 17 to minimize adverse impacts on local communities, such as rising electricity costs and water consumption. He also pledged to work with the legislature to enforce stricter regulations on data center infrastructure. Texas currently hosts 217 operational data centers, with an additional 162 under construction and 747 announced projects, positioning it to surpass Virginia as the nation’s top data center hub. A 2023 report from The University of Texas at Austin warned that data centers could account for up to 9% of the state’s water use by 2040, prompting Abbott’s push for stricter oversight. Abbott’s shift comes despite his prior support for data center expansion, including celebrating Google’s $40 billion investment in Texas last year. Critics, such as Democratic challenger Gina Hinojosa, argue the policy change is politically motivated, with Hinojosa accusing Abbott of reversing course due to unpopularity. The Data Center Coalition, an industry advocacy group, has not yet publicly opposed the governor’s latest directives. The governor’s actions follow his 2023 signing of the Texas Responsible AI Governance Act, which imposed reporting requirements on AI developers, and his 2022 ban on certain Chinese-owned AI platforms for state devices. While Abbott frames the new data center rules as necessary to protect Texans, opponents question whether the measures will stifle economic growth in the state’s booming tech sector.