Key highlights:
- Governor-elect Gina Hinojosa wants new laws to protect people living near data centers.
- Local fights over water, electricity, noise, and zoning are making things tough for developers.
- ERCOT is considering a new process that would make getting local permits important for connecting to the power grid quickly.
- Developers still want to invest in Texas, but some projects might get delayed.
Texas has become a popular spot for building data centers because it has plenty of energy, cheap land, and policies that help businesses. Big companies like Meta, Google, and Microsoft have announced major projects in Texas. But the rapid growth has worried people in rural areas. They’re concerned about how much electricity and water these huge facilities use, the noise they make, and the changes to their communities.
These worries have now become a big topic in Texas politics. On Tuesday, Democrat Gina Hinojosa beat Republican Greg Abbott in the governor’s race. She promised to stop new data center approvals until lawmakers create rules to protect local residents.
Hinojosa’s Plans Add a New Layer to Texas Data Center Policy
During an interview with CNN on Thursday, November 5, Hinojosa said she plans to push for laws that protect people who live near data centers. She pointed out that data centers are coming up in rural towns with hardly any rules in place to protect residents. She wants those communities to help decide if new projects can be built and how they should be run. She’s called for a pause on development until new safeguards are ready.
Her plan could lead to big changes, depending on what laws get passed once she takes office. This comes after outgoing Governor Abbott, who, on August 3, stopped new data centers from connecting to the state power grid and ordered a review of power demand, environmental impact, and tax breaks for these projects. At that time, ERCOT was monitoring more than 400 gigawatts of data center proposals trying to hook up to the grid.
Local governments are reacting in different ways. Hill County put a temporary freeze on data centers, but developers are fighting that in court. San Marcos said no to a rezoning request for a data center, while San Angelo made new rules about building distance and noise. Round Rock allowed a project to go ahead even though some people didn’t want it. These examples show just how much local rules can change the way projects move forward.
Grid Access and Community Approval Shape Developers’ Plans
Soon, ERCOT could put a new process in place that makes it harder for data centers to skip local rules. To connect to the power grid faster, projects will need to prove they have all the local permits they need, or that they don’t need any. Juliana Sersen from law firm Baker Botts pointed out that the new rule doesn’t say if a local decision is fair or not. That might make it take longer for some projects to get approved or even connect to the grid.
According to Baker Botts and Argus, there are about 87 data centers up and running in Texas, plus around 156 more in the plan stage. Because people are worried about water, electricity, noise, and rural land use, some counties are putting holds on new projects or passing extra rules.
The Data Center Coalition says its members still plan to build in Texas and will keep working with state and local officials. Jess Heck, who handles Texas government issues for the group, says data centers can still bring money and jobs into local towns. Still, experts expect some projects will be delayed or move somewhere else. Austin McCarty from K&L Gates said some developers might rush to finish building and get connected to the grid before new rules come into effect.
Brittany Kaiser, head of Alpha Compute, said developers need to talk directly with lawmakers, regulators, and local people, not just follow the rules, but work with the communities. She said companies that don’t already have signed contracts and funding are more likely to look at other states, Canada, Mexico, or Europe.
These changes could also affect big companies based in Texas. Elon Musk supported Abbott in the election, and on Wednesday, Musk said he spent $158 million to back Texas Republican US Senate candidate Ken Paxton. Musk’s companies, SpaceX and Tesla, are headquartered in Texas, and he wants to start a chipmaking business there, too. Hinojosa said Texas can keep a good relationship with Musk’s companies, but it would have to be on her administration’s terms.
Back in October, Texas Monthly reported the state was talking about selling Boca Chica State Park to SpaceX. On Thursday, Hinojosa said she told the boss of Texas Parks and Wildlife to pause everything until the new governor takes office. SpaceX hasn’t commented yet, according to Reuters.
