What happened
Gov. Greg Abbott said Texas' environmental agency will stop approving additional data center permits until the state's grid operator completes an audit of the companies in line for power connections. Every applicant in that queue was still waiting for approval to tap the grid.
This is a pivot. Abbott once billed Texas as the "epicenter of AI development," but he is now putting up hurdles that slow it down.
Where projects may go instead
After the governor's switch from booster to skeptic, developers have begun weighing other states, with Utah and Georgia frequently mentioned. Iowa is also seen as a viable landing spot, according to people with knowledge of the matter.
The reassessment jeopardizes Texas' momentum just as the state seemed poised to overtake Virginia as the globe's leading data center hub. Many in the industry view the pause as election-season politics that could fade after the midterms, but they also see they need a sharper pitch for local officials and wary residents.
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The politics and the business impact
As his campaign for a fourth term - which would make him Texas' longest-serving governor - grew more difficult against a surprisingly strong Democratic challenger, he altered his approach to data centers. The governor also appears to be responding to broad, bipartisan resistance to these projects.
Even the largest players are feeling it. Banks have delayed selling bonds tied to a Texas data facility set to be leased to Anthropic PBC. The Claude maker said this week that Texas regulations restrict the growth of the computing capacity its AI models rely on.
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