At the end of 2024, Texas’ grid operator had 63 GW of large new customers waiting in its queue. By June 2026, the requested capacity had risen to 474 GW, with data centres accounting for about 90% of the requests.
That prospective demand was more than five times record peak demand. The size of the queue did not mean every project would be built. Developers commonly filed requests for several sites, and many proposals had no customer in place.
Still, the requests posed an awkward question for a power system where almost any large new user or generator now needs an upgrade. Electricity also does not travel on a private lane from a chosen power plant to a particular building. It moves over every connected path, so a purchase agreement does not reserve a route to a data centre.
Governor Abbott responded on 3 August 2026 by halting new data centre grid interconnections. He ordered ERCOT and the Public Utility Commission of Texas, known as PUCT, to audit every project in the queue.
On 21 September 2026, Abbott widened the pause. He told the Texas Commission on Environmental Quality to stop issuing permits for data centre projects until audits by the grid operator and the Texas Water Development Board were complete.
“Simply put, Texans must come first. Data centers must pay their own way, protect our grid and water, and complete the ERCOT and TWDB audits. Until they do, TCEQ will issue no permits sought by data center projects,” Abbott said.
The earlier freeze applied to grid connections. A developer that generated its own electricity and never sought a grid connection could have avoided an ERCOT audit under that arrangement. The September directive brought environmental permitting into the hold as well.
The Public Utility Commission of Texas, ERCOT and the Texas Water Development Board have been told to seek details from developers on generation plans, projected power use, water consumption, cooling technology, tax subsidies and ownership. As of June 2026, only 28 of 377 companies had responded to a state survey on their resource use.
The Texas Commission on Environmental Quality had to report to the governor’s office on compliance by 19 October. ERCOT expects to complete its audit by 10 December 2026, when interconnections can resume subject to approval.
Texas has also set a condition for the projects that do make it through. Senate Bill 6, a 2025 law, requires data centres and other non-critical loads of 75 MW or more to accept curtailment, or shift to backup generation, during a firm load-shed emergency.
The scramble for capacity has reached beyond the grid paperwork. In Hood County, commissioners were asked to back a tax waiver for “Project Patriot” without being told who was behind it.
BloombergNEF estimated that the approval freeze could affect approximately 20% of the 253 GW US data centre development pipeline. It leaves developers awaiting the audit’s outcome, while Texas weighs a sector Abbott had previously called the “epicenter of AI development.”
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