North Texas data centers: Governor halts new state permits

Governor Greg Abbott suspended state-level permits for new data centers in Texas on Thursday. The pause remains in effect until state regulators complete audits of all large-scale projects seeking to connect to the state power grid. This administrative action directly impacts construction activities across the state, particularly in the rapidly growing corridor north of Dallas.

The decision follows a surge in infrastructure development in the region. According to data from Cleanview and Data Center Map, the area between Interstate 35 and Interstate 45, approximately 20 minutes south of Dallas, has become a primary hub for these facilities. In the city of Red Oak, nine data centers are currently operational. Additionally, 14 new facilities are under planning in the same municipality.

Residents in Red Oak have organized a group called No More Data Centers. The coalition argues that new construction sites are located increasingly close to private homes. Their concerns are shared by neighbors in nearby Lancaster and Wilmer, which sit within the same geographic corridor. In Lancaster, three data centers are currently under construction, with eight more in the planning phase. Wilmer hosts one operational facility and has 11 projects in the planning stage.

Industry analysts point to economic drivers behind the expansion. John McWilliams, an analyst at Cushman & Wakefield, noted that successful returns for early operators have made the market more attractive. His firm recently published a study ranking Dallas first globally for data center development. The report cited factors such as land availability, electrical supply, and ongoing construction projects. McWilliams predicts that the number of facilities in the region will double within three to five years.

The rapid expansion has raised questions about the capacity of the local power grid. Dr. Krystel Castillo of the University of Texas at San Antonio’s Energy Center stated that grid expansion requires years of planning and substantial investment. She emphasized that solving these challenges requires participation from the government, data center operators, and the research community. Conversely, Haynes Strader, a development executive at Skybox, a Dallas-based data center company, stated that the southern Dallas region has sufficient electrical connection capacity. Strader said his company focuses on industrial zones rather than residential areas and that their facilities contribute millions in tax revenue to the city.

The state’s new audit process will determine which projects can proceed with state-level permitting. Regulators are currently reviewing the energy impact of the pending projects in the Dallas corridor. No timeline for the completion of these audits has been released.

Construction work continues at the three active sites in Lancaster. Developers in the corridor are waiting for the regulatory review to conclude before moving forward with state permit applications for their 30 additional planned facilities.