As artificial intelligence fuels a rapid expansion of data centers across Texas, Gov. Greg Abbott is ordering a closer review of proposed projects before they are allowed to connect to the state’s electric grid.
The governor’s directive requires the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive review of proposed data center projects, saying the goal is to protect the reliability of the Texas power grid as electricity demand continues to grow.
Under Abbott’s order, developers must provide information about their expected electricity demand, water use, cooling systems, tax incentives, project ownership and how they plan to reduce impacts on nearby communities before moving forward with new grid connections.
The announcement comes as Texas continues to position itself as a national leader in artificial intelligence and cloud computing infrastructure.
Northwest Houston data center expanding
One project already underway is the Serverfarm data center on Cutten Road in northwest Houston.
According to the Texas Department of Licensing and Regulation, Serverfarm filed plans to build a new $137 million data center at the site.
Neighbors say data centers have operated at the location for decades under previous owners, making the latest project an expansion of an existing campus rather than an entirely new facility.
“It’s just an expansion of one that’s been here for a while,” resident Ken Rice said. “It’s a much smaller footprint of building, so I’m not surprised in this day and age of AI and all that that brings.”
Texas experiencing a data center boom
Texas has become one of the nation’s fastest-growing markets for data centers.
According to the Texas Tribune, there are 335 operating data centers statewide, with at least 248 more planned or under construction.
Industry databases also show the Houston area is one of Texas’ largest data center markets, with more than 60 facilities across the metropolitan area.
Supporters say the facilities create construction jobs, attract private investment and help meet the growing demand for artificial intelligence, cloud computing and digital services.
But the rapid growth has also sparked questions about whether the state’s infrastructure can keep pace.
Residents express mixed feelings
Residents living near the Serverfarm campus say they recognize the economic opportunities data centers can bring, but they also want to understand how the projects could affect surrounding neighborhoods.
“It mixed, mixed feelings,” said David Parra. “I mean, I know it’s, you know, jobs for some, but also kinda like an eyesore for the rest of the community. I don’t know how, how much of an impact it will have on the area, so, time will tell.”
Rice said his biggest concerns involve electricity and water usage.
“Taking the bigger picture, certainly with the needs that data centers have vis-a-vis electricity and water usage, that’s been brought before,” Rice said. “So, certainly that’s a concern.”
He added that while he believes data centers are part of the future, growth should be carefully managed.
“It’s a business, jobs, the digital age, these things are a natural advancement of what’s going on. So, we’re gonna need them, but let’s be responsible.”
Parra also wants more information about how facilities use water.
“So that’s kind of my question is like, what are they doing with the water? Like, is it one way or is it like being a recycle,” he said.
Rice said he supports the governor’s decision to require additional review before more projects move forward.
“I think it was a smart move to put… things down for a little bit, just make sure we’re doing this the right way,” he said.
Concerns extend beyond Houston
The debate over data centers is not limited to northwest Houston.
KPRC 2 has previously reported on residents in Iowa Colony who oppose a proposed data center in their community.
In Alvin, city leaders recently approved a resolution opposing new data center developments within city limits.
Alvin City Council approves resolution opposing data centers pending further review
Those concerns mirror conversations taking place across Texas as communities weigh the economic benefits of attracting large technology projects against questions surrounding electricity demand, water resources and neighborhood impacts.
Could consumers eventually pay more?
One question many Texans have is whether the rapid growth of large electricity users could eventually affect their monthly utility bills.
University of Houston electrical engineering professor Dr. Harish Krishnamoorthy said accommodating massive new industrial loads requires significant planning.
“So that is going to increase the consumer cost, unfortunately,” Krishnamoorthy said. “That said… there is the cost of these really large loads, data centers and other industrial loads, which ERCOT is planning for.”
His comments come as ERCOT continues planning for increasing electricity demand driven by population growth, industrial expansion and the rapid adoption of artificial intelligence technologies.
Why the governor says the review is needed
According to the governor’s office, the review is designed to ensure proposed data centers can be integrated into the Texas electric grid without compromising reliability.
Developers will be required to disclose:
- Expected electricity demand
- Water use and cooling systems
- Tax incentives or public financial assistance
- Ownership information
- Steps to reduce impacts on nearby communities
State leaders say the additional review will help ensure future projects can support Texas’ growing economy while protecting the electric grid and surrounding communities.
Serverfarm did not respond to KPRC 2’s request for comment regarding Governor Abbott’s order before this story aired.