CryptoSlate
Texas Governor Greg Abbott has directed state regulators to require AI data centers to fully fund the electric infrastructure they trigger, ending an era in which households subsidized the buildout through one of the country's most generous industrial incentive packages. In a June 10 letter to the Public Utility Commission and ERCOT, Abbott ordered the agencies to keep grid-expansion costs from passing through to residential customers and to start lowering residential transmission costs by the end of July. The pair must deliver a joint memo by July 17 spelling out what they can do under existing authority and what will need fresh legislation in 2027.
The directive lands on a market the state spent a decade cultivating. Texas now has roughly 6.5 gigawatts of data-center capacity under construction — about a fifth of the national pipeline — and JLL projects it could overtake Northern Virginia as the world's largest data-center market by 2030. The state's 6.25% sales tax exemption for qualifying facilities will cost roughly $3.2 billion in forgone revenue over the next two years, with about $1.3 billion of that landing this fiscal year across 121 facilities, per the comptroller's office.
Why it matters
The pressure forcing the policy is visible in ERCOT's own numbers. The grid operator set an all-time peak of 85,508 megawatts in August 2023 and now projects peak demand of up to 367,790 megawatts by 2032 — more than four times the record. Large-load interconnection requests rose about 270% in 2025 to roughly 226 gigawatts, with 73% of that demand coming from data centers. Abbott pointed back to Senate Bill 6, the 2025 law that already requires large loads to bring backup power and curtail during emergencies, as evidence the state had already begun moving in this direction.
Market impact
Developers will now shoulder the upfront cost of substations, transmission upgrades, and interconnection work that used to be spread across ratepayers, pushing more operators toward behind-the-meter generation, co-located gas or solar, and large battery installations.
Frequently asked questions
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What did Governor Abbott direct ERCOT and the PUC to do?
In a June 10 letter, Abbott ordered the agencies to require AI data centers to fully fund the electric infrastructure they trigger, start lowering residential transmission costs by the end of July, and deliver a joint memo by July 17 on what existing authority can cover and what needs fresh legislation in 2027.
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How much data center capacity is under construction in Texas?
Texas has roughly 6.5 gigawatts of data-center capacity under construction, about a fifth of the national pipeline, and JLL projects it could overtake Northern Virginia as the world's largest data-center market by 2030.
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What is ERCOT's forecast for peak electricity demand?
ERCOT set an all-time peak of 85,508 megawatts in August 2023. Its preliminary long-term forecast now estimates peak demand of up to 367,790 megawatts by 2032 — more than four times the record.
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Why might Bitcoin miners come out ahead under the new rules?
Mining loads can power down within minutes, the same trait that helped ERCOT avoid roughly $18 billion in peaker construction after the 2021 blackouts. A rulebook that rewards flexibility favors miners beside AI training and inference loads that must run flat out.
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What costs will data center developers now have to shoulder?
Developers will be expected to fund substations, transmission upgrades, and interconnection work that used to be spread across residential ratepayers, pushing more operators toward behind-the-meter generation, co-located gas or solar, and large battery installations.
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