Several major data center companies have committed to following new standards established by Gov. Greg Abbott as Texas officials move to impose stricter requirements on the industry’s impact on the state’s electric grid, water resources and local communities.
Since Abbott announced the standards earlier this summer, QTS Data Centers, Skybox, Digital Realty, Mara, Meta, OpenAI, Oracle, EdgeConneX, and Stream Data Centers have announced plans to comply with the requirements, according to the governor’s office.
Amazon and Google also have expressed support for the standards, while Diode announced it would no longer pursue a proposed data center in Henderson County.
“Let’s be clear: the growth of data centers must not come before the quality of life of Texans,” Abbott said in announcing QTS’s commitment.
What Abbott’s Data Center Standards Require
Abbott directed the Public Utilities Commission of Texas and the Electric Reliability Council of Texas to establish a review process for data center projects seeking to connect to the Texas electric grid.
Under the standards, data centers are expected to:
- Pay for their own electric infrastructure rather than shift costs to Texas families and small businesses.
- Reuse water used by their facilities.
- Take steps to reduce electricity costs for Texans.
- Avoid disrupting residential neighborhoods.
- Pay their own way rather than relying on outdated taxpayer-funded incentives.
The standards also require companies to provide regulators with detailed information about their proposed projects before they can move forward.
That includes disclosure of taxpayer-funded incentives, grants, tax abatements and other public financial assistance connected to a project.
Companies must also provide projected electricity demand and explain plans for on-site power generation or other measures designed to reduce their reliance on the ERCOT grid.
Water Use and Community Impacts Also Under Review
Water conservation is another major part of the state’s review process.
Data center operators must identify their water sources, projected water consumption, water-reuse practices and water-efficient cooling technologies.
Projects also must outline plans to limit their effects on surrounding communities. Those plans can include noise mitigation, lighting controls, property setbacks, traffic improvements and emergency response coordination.
The review process also requires companies to disclose project ownership and controlling interests.
Abbott said the information is necessary for PUCT and ERCOT officials to properly evaluate the potential effects of large data centers on the state’s electric system.
“The PUCT and ERCOT cannot make decisions to guarantee grid stability and reliability based on substantially incomplete information,” Abbott said.
Companies that fail to comply with the ERCOT audit process could have their approval to connect to the Texas grid denied.
Companies Announcing Compliance
QTS Data Centers was among the first companies to publicly commit to the governor’s standards, announcing on August 6 that it would participate in the state’s comprehensive audit.
The company said it would work with elected officials, regulators, utilities and local communities to ensure its data center investments benefit Texans.
The following day, Abbott announced that Skybox, Digital Realty and Mara also had committed to complying with the standards.
Meta and OpenAI announced their commitments August 10, followed by Oracle, EdgeConneX and Stream Data Centers on August 11.
The announcements add to earlier responses from other companies.
Amazon sent a letter stating that it was committed to working with Texas and embracing Abbott’s standards. Google also welcomed the requirements and said it would work with state leaders to increase affordability, protect resources and create jobs.
Chevron announced plans to build a power plant in Texas to support a Microsoft data center. The governor’s office said the project would help mitigate impacts on water resources and the electric grid and therefore comply with the standards.
“Guardrails” or a “Mistake?”
Not every company has agreed to move forward under the new requirements.
Diode announced that it did not meet Abbott’s standards and would not pursue a proposed data center in Henderson County.
Abbott’s office said data centers across Texas have now either announced their compliance with the standards or announced they are ending their projects.
The governor’s office characterized the requirements as “guardrails” intended to allow continued data center growth while protecting Texas communities, water supplies and electricity customers.
In an interview last week, Trump characterized Texas’ requirements for data centers as a “mistake,” The Dallas Express reported.
“I saw Texas the other day sort of is against data centers,” Trump said, per Punchbowl News. “I think it’s a mistake.”
He said that data centers are very important to the economy, adding, “For Texas to say no to data centers is a mistake in the sense that it could be bigger than oil.”
However, it appears that the majority of companies planning to build data centers in the state have not been deterred by the governor’s requirements.
