Texas’ audit of hundreds of proposed data centers will likely wrap up by the end of the year, grid officials said Aug. 20.
Up to 300 proposals will be audited to ensure they meet certain criteria before the data centers can begin connecting to the state electric grid. If all the plans are approved, these facilities alone could use about 200 gigawatts of electricity—more than twice Texas’ 91-gigawatt peak demand record, which was set on July 22.
How we got here
Texas is home to the nation’s fastest-growing data center market, with a January report from Bloom Energy projecting that the state will see a 142% increase in its share of the data center industry by the end of 2028.
In 2022, about 2.6 gigawatts of large electricity users, such as industrial facilities and data centers, joined the Texas grid, according to the Electric Reliability Council of Texas. About 6.4 gigawatts of large projects connected to the grid in 2024, jumping to 61 gigawatts of planned and approved projects this year. ERCOT is tracking approximately 474 gigawatts of large projects that are seeking to connect to the grid in the coming years—90% of which are data centers.
As residents from around the state raise concerns about the impact of data centers—including light and noise pollution, facilities’ water use and changes in electricity costs—state officials are grappling with how to manage the booming industry.
On Aug. 3, Gov. Greg Abbott directed ERCOT and the Public Utility Commission of Texas to audit proposed data centers to ensure developers provide information about the tax exemptions they are receiving; their plans for water and electricity use; how they will limit disturbances to local communities; and who owns each proposed facility. No new data centers will be approved until the audit is complete and any facilities that fail the audit “must be denied,” Abbott said.
More details
During recent PUC meetings, officials clarified they would audit about 250-300 facilities that were previously identified for ERCOT’s “Batch Zero” study. That study was designed to give ERCOT a big-picture view of the large facilities in line to join the grid and ensure enough power will be available to serve them, although the study was postponed while facilities are audited.
Prior to Abbott’s order, ERCOT had planned to complete its first batch study in April, at which point it would begin approving data centers from that batch. Officials said they did not know how the audit process would impact the full batch schedule.
“We will not have the study done by [April]—we’re still working on what that new timeline might be once we get done with the [audit and] verification process, and there's plenty of time to address that,” Chad Seely, ERCOT’s general counsel and chief compliance officer, said Aug. 20. “So it's not an essential issue right now to decide what the timeline is for the batch zero study process.”
How it works
Only large loads, or facilities that are expected to use at least 75 megawatts of electricity, will be included in the audit. However, officials said ERCOT will also survey proposed data centers that would use 25 megawatts of electricity or more and collect information about those facilities' impact on local communities.
“You'll get descriptive statistics out of that: How much the tax abatements are, how much water [they're using], and then from that we can come back to you all ... as we're trying to bring on these data centers," PUC chairman Thomas Gleeson said during an Aug. 19 legislative hearing. "That's really the goal, as we understand it from the governor's directive, is to gather that information ... so it can help inform decisions going forward."
Medium-sized data centers that are not being audited do not have to wait to connect to the grid, Seely said Aug. 20.
“ERCOT does not have that authority to stop them,” he told the PUC. “Those medium-sized loads will work directly with their utility through their interconnection process, so it's really up to the local utility on where they are in that process as far as connecting them to the grid.”
Information shared with the PUC on Aug. 20 shows that officials plan to:
- Collect information on large and medium-sized data center proposals through November
- Release a “batch zero eligibility verification report” and “community impact review report” on Dec. 10
- Present information from those reports during a Dec. 17 PUC meeting
