As part of the review, developers will be required to provide additional information about their projects, including whether they are seeking state or local tax incentives, how much electricity and water their facilities are expected to consume annually and at peak demand, whether they intend to generate some of their own electricity, and what measures they plan to implement for noise reduction, light controls, emergency response coordination, and other operational considerations.
"Our top priority is to protect Texans' safety and quality of life," Abbott said in a statement. "Texans must come first."
The order follows an earlier effort by the governor to gather similar information through a voluntary survey of data center developers. After limited participation, the state is now requiring additional scrutiny before projects can move forward with grid interconnection.
The Data Center Coalition welcomed the review while urging regulators to distinguish between responsible operators and projects that fail to meet expectations.
"We are hopeful this directive from the Governor will help separate those who are responsible water and energy stewards from those who are not," Dan Diorio, executive vice president of state policy and government affairs for the Data Center Coalition, said in a statement.
"Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily," Diorio added.
The announcement comes as Texas continues to attract large-scale AI and cloud infrastructure projects because of its business-friendly environment and available power resources. At the same time, rapid growth in proposed data centers has increased concerns about electricity demand, water consumption, and the strain additional facilities could place on the state's grid.
The directive also arrives amid broader discussions in Texas over incentives for data center development. Abbott previously called on lawmakers to phase out what he described as "outdated tax incentives," while lawmakers have recently examined the state's tax incentive programs after learning that only 20 of 138 recipients had been audited, with six found not to be meeting state requirements, according to the Texas Comptroller of Public Accounts.
Political debate over the issue has also intensified. Democratic gubernatorial candidate Gina Hinojosa criticized the governor's action, saying, "So nice to see another strongly worded letter from Abbott after he proudly made Texas the Wild West of data centers."
Hinojosa also questioned the scope of the pause, adding, "Abbott's call for a 'pause' could be for one day – and no one buys it."
The audit process will determine what information regulators collect from pending projects before new grid connections move forward, as Texas weighs continued data center expansion against growing demands on its energy and water infrastructure.
This analysis is based on reporting from Axios.
Image courtesy of Kaylee Greenlee for The Texas Tribune.
This article was generated with AI assistance and reviewed for accuracy and quality.
