Texas is emerging as a potential new obstacle to the US data center boom. Industry insiders said the state, once considered one of the easiest places to build, began changing course in September as political opposition grew. Governor Greg Abbott directed regulators to halt data center permits, while the next governor, Hinojosa, has moved from supporting data center tax incentives to advocating a broad moratorium.
Texas turns against rapid data center expansion
At the DCD conference in Ashburn, Virginia, on Tuesday, data center industry panelists said Texas had been an unusually favorable environment for development until September. They suggested the shift reflected growing bipartisan opposition to the facilities.
Developers said the governor’s office stopped responding to their emails. On September 21, Abbott directed key state regulators to halt data center permits. Several conference panelists predicted that the move could delay projects already in development and stop new projects from moving forward.
Hinojosa, who is expected to become the next governor, appears likely to continue that approach. Hinojosa supported a 2023 tax cut for data centers intended to encourage construction jobs, but began campaigning for a full-scale moratorium during the election.
Major AI infrastructure projects face uncertainty
A prolonged permitting slowdown could create problems for Big Tech hyperscalers planning large artificial intelligence training facilities in Texas. The scale of projects already underway is substantial.
The Stargate Frontier data center in Shackelford County is projected to provide 1,820 megawatts of capacity. That is roughly equivalent to the capacity planned for SpaceX’s Colossus 2 in Tennessee, described as the nation’s largest data center, and more than twice the capacity of the largest data center currently operating in Texas.
Nexus Hubbard is also under construction, primarily to serve Anthropic. With a planned capacity of 6,400 megawatts, it would be the second-largest data center under construction in the United States, behind Meta’s Hyperion project in Louisiana.
Democratic officials could delay these projects or impose a moratorium on new developments, intensifying concerns that the AI infrastructure buildout could slow. Banks and other financial companies are already raising concerns about the projects they finance. Because data center construction is currently contributing significantly to economic growth, the combined effect could extend beyond the technology industry.
Voters signal concern over data center costs
Voters across the country made their concerns clear in the midterm elections, from state ballot measures to national races. They supported proposals intended to protect electricity customers from higher power prices linked to data centers and, in some cases, backed broader bans on new facilities.
The results provide further evidence that Big Tech has not fully persuaded voters that AI-driven economic growth will improve health care, reduce the cost of goods and accelerate scientific progress without imposing significant local costs.
Source: www.technologyreview.com