On Monday, in apparent response to concerns about potential disruption to the Texas electrical grid, Gov. Greg Abbott ordered the state’s top two energy agencies to pause any new data center grid connections while the effect of those connections is studied by the state.
In a letter to the heads of the Public Utility Commission of Texas and the Electric Reliability Council of Texas, the governor cited the 474 gigawatts of power under request for bulk-power projects, an amount more than five times the state’s record peak demand. About 90 percent of those projects are data centers, the governor noted.
“That unprecedented load growth could endanger the reliability and stability of the Texas electric grid,” wrote Abbott.
“Our top priority is to protect Texans’ safety and quality of life. That includes providing affordable energy, maintaining a reliable electric grid, preserving water for our communities, and championing Texas values. Those priorities can, and must, be achieved while also creating the jobs and providing the economic opportunity that comes with our national leadership in technological innovation and investment.”
Abbott said that the two agencies “must conduct a comprehensive verification and audit of all data centers advancing through ERCOT’s interconnection process before any additional data centers are approved to move forward.”
“Any project that fails to comply with requirements set forth by the PUC and ERCOT, and by state law, must be denied connection to the Texas grid.”
“The failure of some data centers to comply with the PUC’s survey measuring water and power usage under the General Appropriations Act makes this necessary.”
The letter asks the agencies to collect and assess each project’s construction and operational plans, including the extent to which they are developing on-site electrical generation and behind-the-meter power sourcing that might reduce their demands on the ERCOT grid.
In addition, the governor is also demanding financial and social information about the data projects, ranging from their reliance on tax incentives, abatements and other forms of public assistance to details about their ownership.
But alongside power consumption and interconnection issues, the letter also orders the agencies to obtain information from the various data center projects regarding their potential peak water usage and their impact on neighboring property owners, “including noise mitigation, light controls, setbacks, traffic improvements, emergency response coordination and other community protection measures…”
Most, but not all, of Texas lives in the ERCOT grid, independent of both NERC and FERC authority. The governor’s move comes at a time when industry and federal regulators are giving mixed signals about the threat of massive computational and data storage operations on the nation’s electrical reliability oversight.
In May, the North American Electrical Reliability Corporation issued a “Level 3 Alert” — its highest — requesting data and planning information from grid planners and operators concerning complications caused by data centers that can even trigger the smallest disruptions in the grid. The deadline for industry responses was today.
By contrast, the Federal Energy Regulatory Commission issued a “show cause” order demanding that the same regional grid users and operators identify and justify, as a national priority, any rules and processes that might slow down integration of large-load power sources related to data center development into their grids. That deadline is Aug. 17.
The issue pits disaster planning against the perceived need for regulatory speed, but the threat is not theoretical.
Data centers — whether for data storage, crypto-mining or computations for artificial intelligence — demand massive amounts of uninterrupted and stable power for their highly specialized and sensitive hardware. When a data center senses a power disruption or a change in voltage, it is designed to automatically switch to backup power sources, triggering grid outages because of the sudden loss of load.
The recent NERC warning grew from an incident two years ago in Northern Virginia. On July 10, 2024, a lightning arrestor failed on a 230 kV transmission line there, resulting in a permanent fault that locked out the transmission line, triggering a series of “auto-reclosures” — automatic attempts to reset system circuit breakers and restore power to the line.
The incident lasted 82 seconds during which there were six successive system faults, the longest of which lasted 66 milliseconds. The system worked as designed and power was restored, but not before the affected area recorded a dramatic rise in frequency, a significant rise in voltage and a load reduction of up to 1,500 megawatts that lasted for several hours.
But the Level 3 Alert by NERC was issued because a previous lower-level warning was all but ignored by an industry for which the penalty for missed timelines can be calculated in billions.
In May, ERCOT reported that a reliability review of large-load users revealed four West Texas data centers seeking connection to the grid that failed its reliability testing. Reuters has reported that ERCOT has identified at least 26 incidents attributable to computational users abruptly disconnecting from the grid.
A former regulatory lawyer, who asked to be unnamed, said Texas is foreclosed from some benefits of being connected to the national grid, but it does benefit by having a more unified regulatory regime than other states.
“Texas is the beneficiary of having been its own master. They’re not subject to FERC’s general rate and transmission jurisdiction. They have the state commission (PUCT) in a direct line of sight over everything, and so they can coordinate all these things.”
“In other parts of the country, it’s really hard. There are so many different players in the room, and a lot of those players don’t have any legal authority to tell a load: ‘You can’t interconnect here, or you can interconnect this data center.’”
“I think that’s where the tension is showing up more crisply. Now Texas has its own problems. But in this space, at least, they are the beneficiaries of a unified regulatory construct.”