Governor Greg Abbott has ordered a halt to new state-issued permits for data centers until ERCOT completes a comprehensive audit of their impact on Texas' electric grid. More than 470 GW of data center and large-user projects were queued to connect — over five times the state's peak demand. ERCOT is reviewing power consumption, tax incentives and water use, and Abbott said facilities must "pay their own way." Experts note the action reverses earlier claims that data centers would lower electricity prices.
Texas Halts New State-Issued Data Center Permits While ERCOT Audits 470+ GW Pipeline
FILE PHOTO: Texas Governor Greg Abbott seen on the sideline prior to a game at Kyle Field, College Station, Texas, US, September 19, 2026. Maria Lysaker-Imagn Images/File Photo
Texas Governor Greg Abbott on Monday directed the state's environmental regulator to stop issuing new state-issued permits for data centers until a comprehensive audit of the facilities' impact on the Texas electric grid is completed.
The directive to the Texas Commission on Environmental Quality (TCEQ) effectively freezes state-issued permits for data center developers — companies that have been drawn to Texas by abundant electricity, available land and pro-business policies. The move follows Abbott's earlier action last month to suspend new grid connections for data centers pending an audit.
At the time that suspension was announced, more than 470 gigawatts of data center projects and other large power users were in the queue to connect to the state's grid — more than five times Texas' peak electricity demand.
ERCOT Audit Targets Power, Taxes and Water
The Electric Reliability Council of Texas (ERCOT), which operates the state's power grid, has begun a wide-ranging review to evaluate data centers' electricity consumption, tax incentives, water usage and other potential impacts on grid reliability and costs. The audit is in its early stages and a completion date has not been announced.
"Simply put, Texans must come first," Abbott said. "Data centers must pay their own way, protect our grid and water, and complete the (audits)."
Proponents say data centers bring jobs and investment; critics warn they can strain infrastructure and contribute to higher electricity bills for consumers. Ed Hirs, an energy fellow at the University of Houston, said the governor was stepping back from earlier claims that rapid data center growth would lead to lower electricity prices.
The pause marks a notable policy shift by a state that previously competed aggressively to attract tech and AI-related projects. Developers, local officials and utilities will be watching ERCOT's audit closely — its findings could shape whether the freeze remains temporary or prompts longer-term regulatory changes.
Note: The TCEQ was instructed to withhold new state-issued permits until the audit is complete; local permitting processes or approvals not issued by the state agency may follow different timelines.
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