Texas spent years selling itself as the easiest place in America to build a data centre. This week it started making that harder. Governor Greg Abbott, who last year called the state the “epicenter of AI development,” has ordered a pause on new data-centre connections to the power grid. Regulators must audit every project in the queue first.

The number that forced his hand is stark. ERCOT, which runs most of the Texas grid, is sitting on about 474 gigawatts of requests to connect, more than five times the state’s record peak demand. Roughly 90% of that comes from data centres. In a directive to regulators, Abbott said the load growth “could endanger the reliability and stability of the Texas electric grid.”

What the audit demands

The review asks for the things nobody in the state could pin down before. Each project must disclose the tax breaks it has taken, how much it will lean on the grid, its water use and cooling, its plans to limit noise and traffic, and who owns it. Any project that fails the audit “must be denied,” the letter says.

Abbott tied the move to data centres ducking an earlier survey on water and power. Of 377 companies the utility commission asked, 28 responded, according to The Texas Tribune. Texas is the second-largest data-centre market in the country behind Virginia, with hundreds operating and hundreds more planned. In response to the order, ERCOT paused its own review of the first batch of projects.

The holes in the pause

It is narrower than a ban. The order covers projects connecting to the ERCOT grid, so a data centre that builds its own power on site can sidestep both the queue and the audit. Parts of the state, including El Paso, sit outside ERCOT entirely. On-site generation usually means gas, which carries its own noise and pollution.

The politics are loud. Abbott is a Republican facing re-election, and critics say it stops short. Texas Agriculture Commissioner Sid Miller called it “all hat and no cattle,” and pressed for a special session. His Democratic challenger, Gina Hinojosa, dismissed it as “another strongly worded letter” that “no one buys.” The Data Center Coalition, an industry group, was cautiously supportive.

A national turn against the buildout

Texas is not alone in pumping the brakes. New York became the first state to pause large data-centre construction, and local opposition has spread across the country. It goes further than the voluntary federal pledge that critics called toothless.

The stakes for Texas are financial too. Its data-centre tax break now tops $1bn a year, and the state expects to forgo $3.2bn in sales tax over two years, Ars Technica reported. How long the audit takes, and how much it slows building, is not yet clear.

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