News
26/08/04
Texas halts data center approvals: Update
Texas halts data center approvals: Update
Updates with comment from American Electric Power Houston, 4 August (Argus) —
Texas governor Greg Abbott (R) has halted approvals for new data center projects
seeking to connect to the state's power grid until regulators complete an audit
of the facilities, directing the Public Utility Commission of Texas (PUCT) and
the Electric Reliability Council of Texas (ERCOT) to expand its review of all
projects advancing through the interconnection process. Under the order made
Monday, regulators must collect information on power consumption, water use,
on-site generation plans, tax incentives, ownership structures and potential
impacts on local communities. Projects that fail to comply with the review must
be denied connection to the Texas grid. The order comes as opposition to data
center development spreads across Texas and pressure mounts on Abbott to take a
tougher stance on the industry. Local governments across the state have pursued
moratoriums and proposed new restrictions on data centers, while elected
officials from both parties have called for greater scrutiny of facilities'
effect on the grid, water supplies and rural communities. Against that backdrop,
Abbott's directive expands an ongoing effort by ERCOT and the PUCT to vet
large-load projects, broadening the review beyond grid planning to include
resource consumption, incentives and local impacts. ERCOT is currently
considering approximately 474GW of requests to connect to the Texas grid, more
than five times the state's record peak electricity demand, Abbot said. Roughly
90pc of those requests are associated with data centers, according to the
governor. "That unprecedented load growth could endanger the reliability and
stability of the Texas electric grid," Abbott wrote in the directive. The review
is necessary in part because some data centers failed to comply with a state
survey measuring water and power usage, he said. He also cited concerns raised
during legislative hearings and public meetings regarding the sector's impact on
local communities and critical infrastructure. The Data Center Coalition, which
represents major data center operators, said it supports the review if it helps
distinguish legitimate projects from speculative proposals. "We are hopeful this
directive from the Governor will help separate those who are responsible water
and energy stewards from those who are not," said Dan Diorio, the group's
executive vice president of state policy and government affairs. "With billions
of dollars in investment and hundreds of thousands of jobs on the line, we urge
the PUCT and ERCOT to move swiftly." Behind the hype Texas officials have been
struggling to determine how much of the state's projected load growth is genuine
and how much reflects speculative filings, duplicate applications and so-called
"ghost load" requests. Regulators have warned that inflated interconnection
queues make it difficult to forecast future demand and risk prompting
unnecessary spending on generation and transmission infrastructure, potentially
saddling consumers with the cost of investments that ultimately prove
unnecessary. In an effort to streamline the process, the state launched Batch
Zero , which was developed to help separate credible projects from speculative
proposals by imposing stricter requirements on large-load customers. Under the
framework, projects seeking 75MW or more that meet certain financial commitments
are grouped into a single system-wide study intended to identify which projects
are prepared to move forward and what transmission infrastructure may be
required to serve them. In a notice to market participants Monday, ERCOT said it
was pausing the process and would not issue the 7 August classifications
scheduled under the study, delaying a key milestone that would have informed
developers whether their projects had been selected for evaluation in the first
batch. "ERCOT is reviewing governor Abbott's letter concerning data centers and
will work with the Public Utility Commission of Texas to implement the
governor's directive, including postponement of the Batch Zero transmission
planning study," the grid operator said. American Electric Power, one of the
largest utilities participating in ERCOT's new large-load review process, said
it is monitoring the governor's order and assessing potential impacts. The
company recently disclosed that it has submitted about 45GW of prospective
demand to ERCOT for interconnection, making it one of the biggest utility
stakeholders in Batch Zero. "We respect governor Abbott's focus on supporting
Texas' continued economic growth while ensuring a reliable and resilient
electric system, and we will continue to work constructively with state leaders,
ERCOT, customers and other stakeholders as this process moves forward," the
company said in an email to Argus . The Columbus, Ohio-based utility said it
remains confident in its Texas growth outlook, citing demand from large oil and
gas companies, industrials and data centers. ERCOT said it would consult with
the commission on next steps before the PUCT's 20 August open meeting. By
Jasmina Kelemen Send comments and request more information at
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