020What does a blue Texas mean for the data center boom?

Texas froze its own boom

Hinojosa inherits a pipeline her Republican predecessor had already stopped. On August 3, Gov. Greg Abbott told the Public Utility Commission and ERCOT to audit every data center seeking a grid connection and to deny any that failed. ERCOT stopped approving data centers of 75 MW or more to switch on. Seventeen loads, about 6.6 GW, had cleared every step but that one; none has been approved since. ERCOT slates a cohort of 17 loads, which we take to be the same ones, for the second quarter of 2027. ERCOT also halted Batch Zero, the first round of its new process for large loads, which holds 194 GW in its base and studied groups.

On September 21 the freeze reached the workaround. Abbott told the Texas Commission on Environmental Quality to stop issuing permits for data centers until the audits finish, and law firms read that to include the on-site gas plants that let a campus skip ERCOT’s queue, but not permits already issued. Enforcement has been leaky: watchdogs counted air notices and stormwater approvals after the order; TCEQ later said the permits issued since then had been suspended, and shut its automatic e-filing system. Abbott kept the pause after President Trump called it a mistake. ERCOT files its audit on December 10, and the commission takes it up on December 17, five weeks before Hinojosa is sworn in.

Most of the rulebook is already agreed

Abbott’s June package, Paxton’s Senate plan and the Democrats’ plans overlap more than the campaigns suggest. Abbott, Paxton, Talarico and Hinojosa would all repeal the data center sales tax exemption, which state projections put at $1.3 billion or more in 2026 (the comptroller counts 121 data centers using it). Abbott, Paxton and Talarico would also make data centers pay for their own power and grid connections, and Hinojosa would protect households from rate increases driven by data centers. Senators of both parties questioned the exemption at a July hearing; whether existing certifications would be honored was left open. Both sides’ plans put those rules before the 2027 session.

What Democrats add is narrower: a moratorium until laws pass (Hinojosa by executive order, Goodwin through a special session), a local veto over projects (Talarico, Hinojosa; Goodwin wants residents consulted), union labor on construction (Hinojosa) and, from the Senate seat, federal minimum standards (Talarico).

What Hinojosa can actually do

Less than the campaign suggests in 2027, and more by 2028. A governor can’t write statute: the session that opens January 12 needs the Legislature, and the Texas House went into the election 88–62 Republican. Her levers are directives and appointments. Abbott’s freeze is a set of letters, which a successor can keep, rewrite or rescind, but the agencies’ commissioners decide how to act on them, and she can’t remove the ones Abbott appointed: only the governor who made an appointment can, with two-thirds of the state Senate.

The utility commission turns over faster than that suggests. A new governor can name its chair as soon as she takes office. Two of its five commissioners appear to be Abbott recess appointees who need two-thirds of the Senate by May 31 or lose their seats, a third appears to be serving past an expired term, and two terms end on September 1, 2027. Recess appointments after the session could give Hinojosa a majority of the commission by late 2027 without a Senate vote, on one reading of the constitution that hasn’t been tested. That matters less for the 2027 freeze than for the rules that follow it: Batch Zero’s allocations, the next batch and who pays for transmission. At TCEQ, one of three seats turns over in August 2027.

How far a letter goes is already in question. ERCOT and the commission complied with Abbott’s, yet a former ERCOT market monitor doubts its requirements can be enforced without new laws, and both agencies asked lawmakers for more authority. A successor’s order would meet the same doubt, from agencies she didn’t appoint, and probably a lawsuit. That is why our paths assume only part of a Democratic moratorium holds, and more of it the more offices Democrats win.

The 474 GW is a list of requests, not a pipeline: more than five times ERCOT’s record peak of about 91 GW. ERCOT’s 2025 forecasting method counted new data center requests at 49.8%, and only about 46% of the large load it has approved since 2022 showed up at July’s peak. So the freeze matters less for the headline number than for the few dozen GW with studies, tenants and money behind them. We model those: the cleared loads, Batch Zero’s base load at ERCOT’s 49.8% realization, and the named self-powered and out-of-ERCOT campuses. That puts about 17.2 GW of new data center load on before the end of 2028 had nothing been frozen, and 14.9 GW on Abbott’s path.

On Abbott’s path the commission acts on the audit in December, switch-ons and permits resume early in 2027, and the 2027 session writes his package into law. Texas adds about 5.8 GW of new data center load by the end of 2027 and 14.9 GW by the end of 2028. With Hinojosa sworn in on January 19, a moratorium on new data centers runs until the Legislature passes protections she signs. In the base case approvals wait about 3 months longer and own-gas permits about 4, which leaves Texas 2.2 GW short at the end of 2027 and 2.9 GW short at the end of 2028, with about 1.0 GW never built by 2030. If Goodwin’s lead for lieutenant governor holds, the gap at the end of 2028 is about 3.8 GW.

The range runs from 2.0 GW at the end of 2028, if the moratorium ends when the session does, to 5.9 GW if Democrats also win the lieutenant governor’s office and the Texas House and the moratorium lasts to the end of 2027. Most of the gap is time, not cancellations: the GW come later. The hardest hit are self-powered campuses, where the governor’s environmental agency is the gate: on Abbott’s path about 2.8 GW of them is running by the end of 2028; in the base case, 1.6 GW.

Self-powered campuses are the most exposed

The irony of the freeze is that the campuses built to avoid the grid are the ones a governor reaches most directly. ERCOT’s pause runs through a utility commission whose members a new governor can replace only as their seats come open; TCEQ’s permits are where a governor’s letter has already worked. Five campuses were waiting on air permits, or will need them:

• Anthropic’s Hill County campus (Nexus): a 1.6 GW gas plant, with about $15 billion of senior debt that Google agreed to guarantee, per Bloomberg; its major-source permit drew a hearing request in October.
• Microsoft’s 900 MW Abilene expansion with Crusoe, first building due mid-2027, where a pending permit for added generation appears to cover its plant (our reading of a TCEQ notice that names Crusoe), and its Pecos campus with Chevron, about 2 GW from 2028, where a minor-source authorization is in review and we found no filing yet for the main air permit.
• OpenAI and Oracle’s Frontier in Shackelford County, where VoltaGrid’s major-source air permit for the site is pending; its first engines were approved in 2025.
• Fluidstack’s Cameron County site, up to 1.5 GW with on-site generation that will need permits, in the county with the most Batch Zero base and studied load; its tenant isn’t named.

Grid-tied campuses carry timing risk, not existential risk. Some hold ERCOT approvals or base-load status: Galaxy’s Helios for CoreWeave, IREN’s Sweetwater, Cipher’s Colchis and Crusoe’s Childress site for Meta. Others’ ERCOT status isn’t public: Cipher’s Barber Lake, Google’s Armstrong and Wilbarger campuses and Amazon’s Comanche Peak site, which Vistra says the pause doesn’t affect. Most of their dates hinge on December 17. Amazon’s GW Ranch already holds its 7.65 GW air permit, which makes it one of the least exposed large projects in the state. Fermi’s risk is its own: its only announced lease isn’t in force.

A longer freeze also has winners. Every megawatt already energized in Texas becomes scarcer: IREN’s Childress site, Cipher’s Black Pearl for AWS and Core Scientific’s Denton campus could command better terms on new or renewed contracts as new supply slips, and capacity outside Texas gets a political-risk premium it didn’t have a year ago.

The Senate seat matters less, for now

Democrats needed a net gain of four seats for a Senate majority, and NBC and CBS project they got it, with Talarico’s seat among the gains; NBC also projects a Democratic House. Even with both chambers, bills face a Republican president’s veto until 2029, so Talarico’s federal minimum standards for data centers are a long shot. What changes sooner is confirmations, including FERC and NRC commissioners, and the ability to block a federal bill preempting state AI or data center rules.

ERCOT sits largely outside FERC’s wholesale jurisdiction, so Washington’s reach into the Texas buildout runs mainly through much of the Panhandle and El Paso, which belong to the SPP and WECC grids. For the campuses in this pack the governor matters far more than the senator.

Democratic governors have gone both ways

Facing the same backlash, two Democratic governors made opposite calls this year. In July, New York’s Kathy Hochul ordered a pause on new permits for data centers of 50 MW or more, for about a year while the state writes an environmental review process. In April, Maine’s Janet Mills vetoed a moratorium her Legislature had passed, saying she would sign a version that exempted one project. Hinojosa will be choosing between those two models, with a Republican president who has already criticized Abbott’s pause.

What to watch

The rest of the count. The lieutenant governor’s race decides who runs the state Senate’s agenda, though the chamber stays Republican; the Texas House, 88–62 Republican going in, decides whether a local veto or labor rules can pass.

December 10 and 17. ERCOT’s audit reports, then the commission’s open meeting on them, with Abbott still governor after conceding. Approvals granted before January 19 are hard to reverse, so what the commission clears in December is largely out of a new governor’s reach.

January 19. Whether Hinojosa signs a moratorium order, what it covers (new projects, or anything not yet switched on) and whether TCEQ and the commission follow it.

December 31. The commission’s deadline for its transmission-cost rule, which as proposed bills large loads on 12 monthly peaks instead of 4 and sets a 20-year minimum bill. The current commission writes it, before Hinojosa takes office.

The exemption bill. Abbott, Hinojosa and both Senate candidates back repeal; grandfathering decides whether it changes the economics of campuses already certified.

Company calls. Oncor and IREN report on November 5, Fermi next week. Watch for Batch Zero commitments, collateral withdrawals and anything self-powered campuses say about permits.