Data center companies agree to meet Texas’ new power, water standards

By Anthony Collins

LPR Editor                                  

   Several major data center companies have agreed to comply with new Texas standards aimed at protecting the state’s electric grid, water resources and residential ratepayers as demand for artificial intelligence and cloud-computing facilities continues to grow.

   Gov. Greg Abbott announced that Skybox Datacenters, Digital Realty and MARA have committed to meeting the standards and guidelines established by the state. Their commitments follow a similar announcement from QTS Data Centers, which operates four facilities in Texas.

   The growing list of companies agreeing to the requirements comes after Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to conduct a comprehensive review of data center projects seeking connections to the state’s power grid. “I established clear guardrails to ensure data centers protect our electric grid, conserve our water, respect our neighborhoods, and pay their own way,” Abbott said. “They must not pass costs on to Texas families or interfere with their quality of life.”

   Under the standards, data center developers will be expected to pay for the electric infrastructure needed to serve their facilities rather than shifting those expenses to residential customers and small businesses. Developers will also be expected to reduce their reliance on the ERCOT grid by providing details about on-site power generation or other measures designed to meet their electricity needs.

   Water use will also receive increased scrutiny. Companies must identify where their water will come from, how much they expect to use and what conservation or reuse practices will be incorporated into their operations. Water-efficient cooling technologies, including closed-loop cooling systems, are among the measures being encouraged by the state. Projects will also be reviewed for their potential impact on surrounding communities. Developers will be asked to provide information about noise mitigation, lighting, setbacks, traffic improvements and coordination with local emergency responders.

   Financial transparency is another part of the review. Companies will be required to disclose taxpayer-funded incentives, grants, abatements and other forms of public assistance connected to their projects, along with information identifying project ownership and controlling interests. “The PUCT and ERCOT cannot make decisions to guarantee grid stability and reliability based on substantially incomplete information,” Abbott said. The PUC and ERCOT must receive and audit the required information before projects can move forward. Companies that fail to comply with the audit process could have their requests to connect to the grid denied.

   QTS previously announced it would comply with the standards and work with elected officials, regulators, utilities and local communities to ensure its investments benefit Texans. Skybox Datacenters, Digital Realty and MARA have now made similar commitments. Other major technology companies have also responded to the governor’s initiative. Amazon said it is committed to working with the state and embracing the new standards, while Google expressed support for requirements intended to increase affordability, protect resources and create jobs.

   Not every proposed project is moving forward. Diode announced that it would abandon a proposed data center in Henderson County after acknowledging that the project could not meet the governor’s standards. The developments come as Texas faces a surge in proposed data centers driven largely by expanding artificial intelligence, cloud storage and other technology demands. While those facilities can represent billions of dollars in investment, their large electricity and water requirements have raised concerns among residents, local governments and state leaders.

   Railroad Commissioner Wayne Christian has also supported the review, saying Texas needs a long-term approach that allows the state to benefit from new investment while protecting local communities and resources. Critics, however, say additional action is needed. State Rep. Gina Hinojosa, D-Austin, who is challenging Abbott for governor, has called for a moratorium on new data center development until lawmakers can establish stronger statewide protections.

   For now, Abbott has said data center projects that can demonstrate adequate power, water and financial resources, and meet the state’s other requirements, may continue through the approval process. Those that cannot meet the standards could be prevented from connecting to the Texas electric grid.