Hundreds of data centers to be audited, possibly added to state power grid

In a Public Utility Commission of Texas (PUCT) meeting Aug. 14, officials said that 250 to 300 projects would be eligible for the first batch of an audit process that could allow projects like data centers to connect to the state power grid. 

Gov. Greg Abbott issued a directive to the PUCT and the Electric Reliability Council of Texas on Aug. 3 to complete an audit of all data centers going through the ERCOT interconnection process, or the process that connects projects to the state power grid. New data centers must complete the audit before they can be connected to the Texas power grid, according to an Aug. 3 news release from the Governor’s office. 

“Our top priority is to protect Texans’ safety and quality of life,” Abbott said in the news release. “Any project that fails to comply with the requirements set forth by the PUC and ERCOT, and by state law, must be denied connection to the Texas grid. … Simply put, Texans must come first.”

The directive follows a June 10 letter Abbot sent to the PUCT and ERCOT directing them to protect residents from costs related to data center expansion. The audit requires PUCT and ERCOT to get information on who owns and funds data centers, how centers source and use their water and electricity and how they are reducing impacts on communities, such as noise and light. 

Projects have currently requested over 474 GW from ERCOT according to the news release. This number represents over five times the highest energy demand ERCOT has recorded, 91 GW, a record set this July. 

It is important to understand that a directive like this from the governor is not legally binding, said Randy Erben, an adjunct professor at the UT School of Law. However, because the governor appoints members of the PUCT who are largely responsible for appointing ERCOT leadership, the governor typically expects the advisory to stand, he said.

David Spence, a UT professor of energy law, said that the PUCT was developing its own way to analyze potential data centers, but there were concerns about the number of projects needing approval and the ability of ERCOT to meet power demand. 

“At the same time, the public seemed to turn really sharply against data centers, mainly sort of in their backyard,” Spence said. “They were really rising up against the idea of a data center in their neighborhood, and the people who own and develop data centers are just not terribly popular.” 

There has been increased concern for the environmental impact of data centers, and the effectiveness of companies’ pledges to lower carbon emissions, Spence said.

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