Texas Freezes Data Center Boom Amid Electricity Demand Concerns
The state of Texas has unexpectedly halted new connections to data centers due to concerns over electricity demand. Governor Greg Abbott ordered the Public Utility Commission of Texas (PUCT) and grid operator ERCOT to stop approving new data center connections on August 3, effectively freezing the largest power-hungry queue in American history.
The reason behind this decision is that data centers are requesting more than five times the electricity Texas has ever actually used at once. The ERCOT interconnection queue now contains over 1,800 projects requesting a combined 474 GW of capacity. This includes roughly 90% of those queued requests coming from data centers.
The freeze was triggered by Governor Abbott's concern for protecting Texas ratepayers. He believes that speculative projects, which may never actually get built, are clogging the pipeline and distorting how the state plans for future power generation. ERCOT responded to Abbott's order by suspending its Batch Zero interconnection study, which was meant to be a first step toward sorting through the backlog.
The freeze puts approximately 49.8 GW of projects at risk of delay, representing roughly 20% of the entire US data center pipeline concentrated in a single state. According to BloombergNEF, this will lead to substantial revenue implications, with estimated losses between $8 billion and $15 billion by early 2027. The freeze also affects crypto mining operations, as Texas has been one of the top destinations for Bitcoin mining due to cheap electricity and regulatory flexibility.