Texas governor-elect proposes moratorium on data center construction

Newly elected Texas Governor Gina Hinojosa has pledged to implement a moratorium on new data center projects until state lawmakers enact comprehensive regulatory safeguards. The policy shift signals a potential end to the favorable investment climate that has seen Texas become a primary hub for artificial intelligence infrastructure, with roughly 26% of U.S. planned capacity located in the state.

Investment bank Jefferies estimates that the proposed pause could impact 13.3 gigawatts of announced projects, potentially delaying construction or forcing firms to abandon expansion plans. The move targets the existing tax exemption system—which has cost the state billions in revenue—and seeks to address rising concerns over strain on power grids and local water supplies. Critics of the current model argue that industry incentives fail to justify the long-term impact on utility costs for residents.

While the previous administration under Greg Abbott had initiated a review of energy and water demands, Hinojosa’s plan seeks a more permanent legislative overhaul. Whether these restrictive measures can be fully implemented remains dependent on the degree of cooperation between the executive branch and state lawmakers.