Governor Greg Abbott announced that Diode will not pursue a proposed data center near Cedar Creek Lake in Henderson County after the company determined the project did not meet the Governor’s directives or community expectations, according to a July 23 news release.
The withdrawal reflects a standard Abbott has sought to impose on the fast-growing data center industry in Texas, tying new development to protections for the electric grid, water resources and surrounding communities, the release said. In a notice to Henderson County officials, Diode said the project fell short of those expectations.
“Data centers that want to do business in Texas must meet a clear standard. This project did not,” Abbott said. “Texas requires companies to put communities first, protect our natural resources and power grid, and respect the quality of life of our residents. Diode did the right thing by withdrawing their project. If other data center developments refuse to meet these standards, I expect them to do the same.”
Abbott outlined those expectations in a June 10 directive to the Public Utility Commission and the Electric Reliability Council of Texas, according to the release. The directive calls for data center interconnections that reduce residential electric bills, requires developers to pay their own electric infrastructure costs so that no residential ratepayer is burdened, and asks that projects add to the state’s electric capacity rather than only its demand. It also calls for water-efficient technologies such as closed-loop cooling systems and community safeguards including setbacks from neighborhoods and noise-reduction measures.
The Governor said he will seek legislation to codify those expectations and to add new requirements, including annual reporting of electricity and water usage by large data centers to the Public Utility Commission and the repeal of sales tax exemptions and other incentives for data centers, the release said. Abbott pledged to continue advancing policies to ensure data center growth does not come at the expense of Texas families or rural communities.