Abbott says data centers must answer for power costs, water use, and local strain

Texas Gov. Greg Abbott is demanding more from the data center industry as public resistance grows around some of the massive facilities being built for artificial intelligence. His message is that new projects should not leave Texas families paying higher infrastructure costs or communities dealing with unexpected pressure on water, power, and neighborhoods.

Abbott sharpened that message in an Aug. 23 interview on ABC’s “This Week,” saying developers helped create the backlash by expanding quickly without doing enough to win local support. Texas is still attracting major technology investment, but projects seeking access to the state’s main grid now face a much closer review.

Abbott blames developers for the backlash

Abbott said the speed of development caught many residents by surprise. He also argued that some companies failed to work well enough with state officials, local governments, and the communities where projects were planned. In his words, developers had “dug their own grave” by creating conditions for public opposition.

The governor said gaining local support is essential and stressed that data centers should not disturb neighborhoods or rural communities. That position is a clear shift in tone from his earlier promotion of Texas as a leading destination for AI investment, though he has not rejected data center growth altogether.

His current approach is built around conditions rather than a statewide ban on the industry. Abbott says covered projects should demonstrate how they will protect the grid, manage water, cover their costs, and limit local disruption before they are allowed to advance through the state’s review process.

The grid audit changes what moves forward

On Aug. 3, Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas, or ERCOT, to audit data centers advancing through ERCOT’s interconnection process. Covered projects cannot proceed in that process until the required verification is complete.

The state says ERCOT has been considering more than 474 gigawatts of new-connection requests, more than five times the grid’s record peak demand. Abbott’s office said about 90% of those new power requests are tied to data centers, showing why state officials are worried about the scale of proposed growth.

The audit requires developers to provide details on expected electricity use, plans for on-site generation, public incentives, ownership, and steps to reduce strain on nearby communities. ERCOT also delayed parts of its large-load interconnection work after receiving Abbott’s directive.

The queue is distorting grid forecasts

Texas regulators are also trying to determine how much of the proposed electricity demand is likely to become real. ERCOT officials have said their existing interconnection process was not designed for the enormous volume of large projects now seeking grid access.

Recent data show nearly 2,000 requests in the ERCOT queue. Officials and energy experts say many data center proposals are speculative, which can make long-term electricity forecasts look much higher than the demand that may actually materialize.

ERCOT expects to audit about 250 to 300 projects in its initial review, representing roughly 200 gigawatts of potential demand. Separating serious projects from less-developed proposals could give regulators a clearer picture of future electricity needs before approving major grid investments.

Power costs are now a central issue

Abbott has repeatedly said families and small businesses should not pay the infrastructure costs created by large data centers. In a June directive, he told state regulators to require data centers to fully fund the electric infrastructure needed to serve their operations rather than shifting those costs to residential customers.

Texas had already adopted new rules for very large power users. Senate Bill 6, which became effective in 2025, directed regulators to establish interconnection standards for large loads and require those customers to contribute to the cost of connecting their facilities to the electric system.

The pressure is growing because electricity demand is rising. The U.S. Energy Information Administration says data centers are helping to drive national power demand growth. In Texas, state leaders are trying to attract investment while avoiding a situation in which rapid load growth raises reliability concerns or leaves other customers bearing new system costs.

Water use faces closer scrutiny

Water is a major part of Abbott’s review. Data centers in ERCOT’s interconnection process must disclose their annual and peak water demand, sources, reuse plans, and cooling technologies before proceeding.

Abbott has called for water-efficient cooling and reuse, saying projects should avoid taking water needed by nearby communities. Those requirements reflect concern as fast-growing and water-stressed Texas communities weigh development.

Hays County adopted a 180-day water-protection review that temporarily suspends certain discretionary approvals for high-water-use projects, including data centers. San Marcos separately barred data centers through its citywide zoning rules.

Local resistance is becoming harder to ignore

San Marcos became the first Texas city to ban data centers within its city limits through local zoning. The Texas Tribune has identified more than 200 additional data centers planned across the state, suggesting similar debates could emerge in more communities as projects move from proposals to construction.

National polling shows the resistance is broader than Texas. An August survey from the University of Pennsylvania’s Annenberg Public Policy Center found 61% of U.S. adults opposed new data centers in their area, up from 49% in a survey completed earlier in the year.

A separate Heatmap Pro poll conducted by Embold Research found 75% of registered voters would oppose a new data center near where they live. The surveys used different samples and methods, but both point to strong public concern about the physical expansion of AI infrastructure.

Texas is trying to keep growth under new rules

Abbott’s tougher stance does not mean every data center project is being pushed out of Texas. His office has announced commitments from numerous companies that say they will follow the state’s standards on grid costs, water conservation, local impacts, and disclosure.

At least one proposed project has gone the other direction. In July, the developer Diode withdrew a planned data center near Cedar Creek Lake after determining that the project would not meet Abbott’s directives and community expectations, according to the governor’s office.

The policy shift is already affecting official forecasts. In its Aug. 11 outlook, the U.S. Energy Information Administration cut its forecast for Texas electricity-load growth in 2027 to 6%, down from 14% in its previous outlook, citing Abbott’s pause on new data center development.

TL;DR:

• Abbott says data center developers helped create today’s backlash by moving quickly without building enough local support.
• Texas is auditing data centers advancing through ERCOT’s interconnection process before covered projects can continue toward grid approval.
• State policy focuses on ensuring that large projects cover infrastructure costs, manage electricity demand, and avoid shifting expenses onto households.
• Water use and neighborhood impacts are also under review, while places including San Marcos and Hays County have taken local action.
• Texas still wants data center investment, but Abbott is demanding stronger safeguards as public opposition and pressure on infrastructure grow.

Don’t forget to follow us for more exclusive content.

If you liked this, you might also like:

• Why Erin Brockovich is mapping AI data center complaints nationwide
• Michigan lawsuit highlights rising tensions over AI data center growth
• Texas data center boom faces grid and water limits

This article was made with AI assistance and human editing.