Texas election results threaten data center expansion

Texas, the fastest-growing US data center market, faces potential restrictions after Democrats won major statewide races. James Talarico defeated Ken Paxton for a US Senate seat, while Gina Hinojosa defeated incumbent Governor Greg Abbott. Democrats also took control of the Texas House for the first time in 24 years. Hinojosa campaigned for a data center moratorium after previously supporting tax breaks for the facilities.

Developers reported a shift before the election. On September 21, Abbott directed a key state regulator to halt data center permits, raising industry concerns that existing projects could slow and new developments could stop. Major projects at stake include Stargate Frontier in Shackelford County, projected to serve 1,820 megawatts, and Nexus Hubbard, intended mostly to serve Anthropic, with a planned size of 6,400 megawatts.

Potential restrictions add uncertainty as banks and lenders become more selective about financing the AI infrastructure buildout. Voters nationally supported measures protecting electricity customers from data center-related bill increases and, in some cases, broader development bans. Texas counties hosting major projects nevertheless split politically. Approval decisions involve city, county and state authorities, leaving room for local resistance to statewide restrictions. Construction unions that supported Democratic campaigns could also oppose a moratorium, making implementation more complicated than campaign promises suggest.