The free-for-all is over. Texas, the nation’s second-biggest data center hub, is slamming the brakes on new projects after its grid interconnection queue exploded from 233 gigawatts in January to 474 gigawatts today—more than five times ERCOT’s total peak demand. Governor Greg Abbott announced Monday that every new data center proposal will now face mandatory audits from both the Public Utility Commission and ERCOT. About 90% of those connection requests are data centers.
This is a sharp U-turn for a state that built its reputation on light-touch regulation. Abbott had previously tried a voluntary survey asking operators for details on power draw, water use, noise, and tax incentives. Most companies ignored it. Now he’s making compliance compulsory, demanding granular information on everything from on-site electricity demand to ownership structures. The message: the honeymoon is over.
The math is alarming even if you discount vaporware. Many projects in the queue are speculative plays by developers simply getting in line—a common tactic when interconnection wait times stretch into years. Most will fizzle. But with Google, Microsoft, and others already operating major facilities in the state, even a modest conversion rate could buckle the grid. Texas has been able to keep pace with demand largely thanks to a fourfold expansion of utility-scale solar capacity between 2021 and 2025, which helped push electricity prices down during that period. That trend is now reversing. The EIA has already flagged data centers and crypto-mining operations as drivers of rising power costs.
What comes next depends entirely on what those audits unearth. If the numbers look as dire as the queue suggests, Texas could start rejecting projects outright—something that would have been unthinkable even a year ago. The state’s regulatory DNA rebels against this kind of intervention, but a collapsing grid is worse for business than paperwork. Developers who flocked to Texas to escape the permitting nightmares in Virginia may soon find themselves facing a different flavor of the same problem. The era of build-first-ask-questions-later is dead.
