Texas Just Hit Pause on Austin's AI Data Center Boom

Just east of Austin, rural Bastrop County has quietly become one of Central Texas' biggest data-center construction zones.

More than 5,500 acres of data-center projects are planned or under development around Cedar Creek, including billions of dollars of new infrastructure and a roughly 2,800-acre campus that AI company Anthropic has reportedly considered leasing.

Now, that 2,800-acre project appears to be among the first caught in a new statewide pause.

Texas has temporarily halted permits sought by data centers while ERCOT, the Public Utility Commission, and other state agencies review the industry's impact on the electric grid, water supply, and surrounding communities.

The scale is enormous. ERCOT is currently considering more than 474 gigawatts of large-load requests, more than five times Texas' record peak electricity demand. According to the Governor's office, roughly 90% of that demand comes from data centers.

What happens now?

ERCOT is requiring developers of data centers 25 megawatts or larger seeking grid connections to submit detailed information about their projects.

That includes:

• How much electricity the project expects to use

• How much power will come from the ERCOT grid versus on-site generation

• Projected water consumption and where that water will come from

• What type of cooling technology the facility will use

• Any tax incentives, grants, abatements, or other public assistance

• Measures addressing noise, lighting, traffic, setbacks, and emergency response

• The project's owners and controlling interests

The rules could get even tighter

The state has also laid out several expectations for projects that eventually move forward.

According to the directive, data centers must cover the electrical infrastructure costs associated with their projects, report their electricity and water usage, avoid using water needed by surrounding communities, and comply with setback requirements intended to protect nearby properties.

Governor Abbott also said he plans to work with the Texas Legislature during its next session to eliminate financial incentives for data centers.

The next major dates:

October 12: Data-center disclosures are due to ERCOT.
October 19: TCEQ must update the Governor on its implementation.
December 10: ERCOT and PUCT plan to publish their findings.

For the thousands of acres of data-center development planned around Austin, those reviews will help determine which projects can move forward and under what conditions.