Key Takeaways:

  • Texas' suspension of data center grid connection reviews could delay about 20% of data center projects nationwide, according to an analysis released Wednesday by BloombergNEF (BNEF). The analysis addresses the impact of the Lone Star State's recent decision.
  • Texas Governor Greg Abbott (Republican) implemented the suspension on Monday, affecting nearly 49.8 gigawatts of projects. Abbott called for an audit of all data centers in the Electric Reliability Council of Texas (ERCOT) interconnection queue, leading the grid operator to postpone reviews of the first batch of projects originally slated to enter the state's new large-load interconnection process.
  • BNEF estimates that if 60% of the delayed capacity is AI-related, data center revenue losses could reach $8 billion by the first quarter of 2027. Risks could rise further if the suspension lasts until Texas' 2027 legislative session, as lawmakers may consider modifying the new interconnection process.

In-Depth Analysis:

BNEF said the financial impact of Texas' data center suspension could be "enormous." The energy research firm forecasts that total new ERCOT data center capacity will be about 1.2 gigawatts from the second quarter of this year through the first quarter of 2027.

"Delays in energization during this period could put billions of dollars in data center leasing revenue at risk," BNEF said. The firm's analysis estimates that AI computing capacity can generate about $1.76 billion in revenue per gigawatt per month.

"If interconnection policy changes in the next term, potential revenue losses for data centers could reach billions of dollars," BNEF said.

In a letter Monday calling for an audit of data center proposals, Abbott noted that ERCOT interconnection queue requests total about 474 gigawatts. "About 90% of new electricity requests come from data centers," he said.

The queue is more than five times ERCOT's record peak demand, highlighting the scale of construction and the potential for duplicate or excessive interconnection requests. BNEF expects ERCOT to add about 8.25 gigawatts of data center capacity by 2030, bringing total capacity above 17 gigawatts. Of the roughly 50 gigawatts of Texas data center projects tracked by BNEF, more than 70% are in early stages.

BNEF said the 2030 forecast "could be significantly revised upward" if ERCOT's initial study of large-load projects, known as "Batch Zero," proceeds as planned. But the new audit could cause delays.

Abbott's audit will examine whether data centers have self-supplied power or rely on the grid; water usage; and which data centers utilize state or federal assistance, such as tax incentives, grants, or tax abatements.

"Any data center project that fails to pass the validation and audit process to protect the reliability and resilience of the Texas grid must be rejected," the governor said in the letter.

Texas' suspension follows New York State, which in July paused approvals for new data centers for up to a year while developing new development rules.