A growing group of data center operators—including Dallas-based Skybox Datacenters, Austin-headquartered bitcoin miner and hyperscale developer Mara, and global colocation giant Digital Realty—have publicly committed to comply with Texas Gov. Greg Abbott’s data center standards and the state’s active audit of projects in the Texas grid operator’s interconnection queue.
They join QTS Data Centers, Blackstone’s large-scale data center platform, along with Compass Datacenters and Montera Infrastructure, which have separately endorsed Abbott’s push for tighter standards. The data center operators pointed to existing or pledged practices covering grid infrastructure costs, water use, electricity and water reporting, cooling technologies, load flexibility, community impacts, and transparency.
The commitments are the first coordinated corporate response to Abbott’s directive, first reported by POWER on Aug. 4, which ordered the Public Utility Commission of Texas (PUCT) and Electric Reliability Council of Texas (ERCOT) to review every large-load request in the state’s queue—roughly 474 GW of pending capacity, about 90% of it data centers—and seek disclosures covering ownership, water use, infrastructure needs, and community effects. Abbott warned that any project failing to comply “must be denied connection to the Texas grid. Simply put, Texans must come first.”
Separately, major power companies operating in Texas have largely characterized the review as manageable—and, in some cases, as validation of commercial models already designed to distinguish credible projects, require large loads to support new infrastructure and generation, and avoid shifting costs or reliability risks onto existing customers.
A Distinctive Audit
Abbott’s Aug. 3 order built on a June 10 directive that instructed the PUCT to ensure data-center interconnections reduce residential electric bills and require data centers to pay for all of their electric infrastructure costs, and directed the PUCT and ERCOT to review existing authorities for further consumer safeguards. Abbott also pledged to pursue legislation in the next session that will codify cost obligations, and potentially require new data centers to add to Texas’ electric capacity rather than only its demand, mandate water-efficient technologies such as closed-loop cooling, require annual electricity and water usage reporting to the PUCT, repeal sales-tax exemptions and other incentives for data centers, and require impact-mitigation measures including setbacks and noise reduction.
Responding to the Aug. 3 directive, ERCOT issued Market Notice M-A080326-01, which postponed Batch Zero classification notifications expected on Aug. 7 to transmission and distribution service providers. The grid operator said it will instead seek a good-cause exception at the PUCT’s Aug. 20 open meeting. Batch Zero, approved by the PUCT on June 18, is ERCOT’s first-in-the-nation batch process, which groups qualified large projects of 75 MW and greater “into a single study so ERCOT can assess the full picture of future electricity demand at once, fairly allocate available grid capacity, and identify needed transmission upgrades,” the grid operator has said. It replaces a project-by-project evaluation “that had become lengthy and repetitive as large electricity users rushed to connect to the grid.”
However, BloombergNEF (BNEF) in an Aug. 5 report suggested the audit could expose 49.8 GW of pending ERCOT data center demand—”almost 20% of the U.S.’s 253-GW data center pipeline”—to delay. The firm forecasts 1.2 GW of ERCOT data center additions between 2Q 2026 and 1Q 2027, and modeled a three-month delay to the 3Q 2026 through 1Q 2027 subset slipping into 2Q 2027. Delays could cost projects “just over $8 billion cumulatively by 1Q 2027 if a supermajority of 60% of delayed capacity is AI-related,” rising to roughly $15 billion in a full-delay case under a 100% AI-compute mix.
Data Center Owners and Operators Reveal What Compliance Could Mean
The governor’s office has said several major technology and data center companies have already responded to Abbott’s directives. In an Aug. 6 release, Abbott’s office said Amazon had committed to work with the state and embrace the standards, while Google had welcomed the requirements. Google in November 2025 announced a $40 billion Texas investment that includes the Meitner Energy Center in Gray and Roberts counties, a more-than-1-GW complex pairing a Google data center with new wind, solar, battery storage, and on-site gas-fired generation, and designed to use air cooling rather than evaporative cooling. Abbott’s office also pointed to Chevron and Engine No. 1’s Project Kilby, a 2.67-GW co-located natural gas facility in West Texas—developed through Chevron subsidiary Energy Forge One and Engine No. 1’s newly launched Joulent—that will supply a Microsoft data center under a 20-year power purchase agreement while “aiming to mitigate impacts on the regional grid relied on by consumers.”
The governor’s office also said Diode Ventures—the data-center development subsidiary of Overland Park, Kansas-based engineering firm Black & Veatch—had abandoned a proposed Henderson County data center near Cedar Creek Lake on July 23 after determining the site “does not meet the higher standard we believe should guide data center development.” Diode had sought to draw up to 5 million gallons of raw water per day from the reservoir, which supplies most of Fort Worth’s drinking water, with the possibility of scaling to 20 million gallons per day. Abbott said the withdrawal set a benchmark. “Data centers that want to do business in Texas must meet a clear standard. This project did not,” he said. “If other data center developments refuse to meet these standards, I expect them to do the same.”
Mara Points to Curtailment Record During Winter Storm Fern. Austin-headquartered MARA said its Texas operations are designed to function as flexible loads, including by bringing their own power, using underutilized energy resources, and curtailing when the grid is under stress. During Winter Storm Fern in January 2026, the bitcoin miner and hyperscale developer said it voluntarily curtailed approximately 550 MW in ERCOT. MARA also said its largest data center used roughly one-third the annual water of a typical household in 2025, that it voluntarily reports water use through the Public Utility Commission of Texas Energy and Water Survey, and that it supports policies requiring large new loads to contribute appropriately to the infrastructure needed to serve them. “These are not new commitments we are making in response to this review,” MARA said. “They reflect how we have operated for years and are consistent with the kind of responsible growth Texas should encourage.”
Skybox Backs Ratepayer Protections, Resource Disclosure. Skybox Datacenters cited Abbott’s directive to emphasize that developers should be evaluated before connecting to the Texas grid. The Dallas-based company said it supports the Ratepayer Protection Pledge, full disclosure of power and water use, and the state’s emerging verification standards. It also said it has used closed-loop cooling since 2015 and exclusively across all projects since 2020, recirculating water instead of continuously drawing from local supplies. CEO and co-founder Rob Morris said stronger standards should apply across the sector. “We welcome clear standards that safeguard water and power resources and hold every developer to the same expectations,” he said.
Digital Realty Puts Industry Responsibility at the Center. Digital Realty, the Texas-headquartered operator of more than 300 data centers globally, said sustaining rapid growth in artificial intelligence and cloud infrastructure will require continued attention to grid reliability, consumer protection, responsible resource management, and greater transparency around data center development. The company pledged to work with ERCOT, the Public Utility Commission of Texas, utilities, policymakers, and local communities as the state carries out its review. “It is incumbent upon our industry to engage constructively, address legitimate concerns, and provide solutions that work for all Texans,” President and CEO Andy Power said.
QTS Emphasizes Ratepayer Protection and Zero-Water Operations. QTS Data Centers said Abbott’s review aligns with practices it already uses across its portfolio, including paying the energy costs associated with its facilities so they do not increase local utility bills and, since 2019, committing to build data centers that consume no water once operational. The Blackstone portfolio company also said its approach to new data centers and power solutions is intended to strengthen the ERCOT grid. “We support policies that encourage responsible development, protect resources, ensure ratepayers see benefits of energy investments on their utility bills, and foster strong partnerships with the communities where data centers operate,” Co-CEOs Tag Greason and David Robey said.
Compass Says Developers Should Prove They Can Pay, Perform, and Stay. Compass Datacenters explicitly backed Abbott’s directive while arguing for a higher bar on project credibility as well as grid and community impacts. The Dallas-based developer said it funds its own grid infrastructure, voluntarily reduces load during storms, heavy weather, and unplanned outages, and uses closed-loop cooling that recycles water once facilities are operating. It also said developers should demonstrate sufficient financial backing to complete projects and have credit-rated customers to fill them, while utilities should conduct interconnection studies transparently and on time.
“The questions our industry is being asked are fair ones,” Compass said, pointing to whether data centers pay their own way, strengthen the grid, use water responsibly, protect neighboring communities, and disclose ownership. “On each count, our answers are the same. We agree, and we already operate that way.” Founder and CEO Chris Crosby put the company’s position more pointedly: “Just measure every developer by the same yardstick.”
Montera Wants ERCOT to Separate Real Projects From Speculative Ones. Houston-based Montera Infrastructure also backed Abbott’s standards and said it will provide the disclosures required through the state review, including information on power use, water consumption, and community impacts. The hyperscale data center developer also supports annual reporting of electricity and water use to the PUCT, funds the full cost of its own interconnection agreements, and uses closed-loop cooling systems.
More pointedly for ERCOT’s enormous large-load queue, Montera urged the PUCT and ERCOT to move quickly through the review “to distinguish committed, development-ready projects from speculative proposals.” Founder and CEO Eanna Murphy said the company welcomes “rigorous and transparent standards,” arguing that responsible development requires certainty for communities, utilities, customers, and developers.
Power Companies See a Manageable Test of Project Credibility
Power companies operating in Texas, meanwhile, have generally treated Abbott’s directive less as a disruption than as a test of whether proposed large loads are commercially credible, adequately financed, and matched with the infrastructure and generation needed to serve them.
AEP Says 45 GW of Texas Load Is Batch Zero-Ready—With Nearly $2B in Credit Support. In its second-quarter earnings call on July 30, American Electric Power (AEP) said AEP Texas submitted 45 GW of projects into Batch Zero, forecast through 2032, all backed by fully executed letters of agreement (LOAs) and nearly $2 billion in cash or collateral collected over the previous month for load commitments in ERCOT. “This represents all the required credit support for the full 45 gigawatts included in AEP Texas’ Batch Zero filing,” CFO Trevor Mihalik said. Texas is AEP’s largest load-growth market. The utility has 69 GW of contracted load additions across its footprint through 2030, 45 GW of which is in AEP Texas alone. AEP said its LOA framework requires customers to “secure land, complete interconnection studies, provide detailed load forecasts and fund the associated infrastructure investments.”
AEP endorsed ERCOT’s batch framework. “We view the recent approval of ERCOT’s batch framework as a meaningful step forward. The new framework is designed to better distinguish committed projects from more speculative requests and provide greater visibility into the timing of large load opportunities,” Mihalik said. The utility’s $78 billion five-year capital plan was originally sized around 13 GW of Texas interconnections. Mihalik said the revised 45-GW pipeline could increase Texas-related capital spending by “a multiple” of that base, with roughly 100 GW of additional Texas load beyond Batch Zero already visible behind the current filing.
Chairman and CEO William Fehrman separately said AEP is projecting up to $16 billion in fixed-cost offsets for residential customers across its Vertically Integrated Utilities as new large loads backed by take-or-pay electric service agreements come online. AEP said those offsets have already supported residential base-rate reductions in Ohio, while Indiana Michigan Power plans to file for a base-rate decrease.
Constellation Says Abbott’s Questions Are Reasonable, Batch Zero Delays Manageable. On its second-quarter earnings call on Aug. 6, Constellation Energy said it holds Texas assets acquired through the Calpine deal, including projects in ERCOT’s Batch Zero process. Senior Executive Vice President and Chief External Affairs and Growth Officer David Dardis said the information Abbott has requested is reasonable and should not materially delay projects. “Governor Abbott has asked for some pretty reasonable information to be included as part of Batch Zero. We think all that information can be provided quickly, and we don’t think it should be a meaningful delay in ultimately moving through that process and getting answers quickly,” Dardis said. “So we see this as a temporary measure here that we think is manageable by the industry, and we look forward to working with the Governor and the PUCT.”
Dardis also said he did not view the audit as a retreat from Abbott’s support for data center development, while linking the review to constituent pressure ahead of the midterm elections. “Governor Abbott has been very clear that he is a champion for responsible data center development in the state of Texas,” he said. “He understands its importance for Texas competitiveness and ultimately, American competitiveness.”
Chairman, President and CEO Joe Dominguez pushed back on generalized claims about data center water consumption. “There’s some fanciful kind of numbers out there about the use of, for example, water and things,” he said, adding that some customer designs could put water consumption “on the level of a restaurant or a large store for data centers.” Dominguez said the review could help distinguish more efficient projects from others. “I think they’re the right questions to be asked, not all data centers are the same,” he said.
Constellation also pointed to current ERCOT market conditions as a timing mismatch between supply additions and anticipated data center demand. The company noted it agreed to sell the Brazos Valley Energy Center to LS Power for $860 million, or about $1,420/kW, to satisfy the final Department of Justice requirement associated with its acquisition of Calpine. Dominguez said the price paid “in spite of recent ERCOT weakness” reflected buyers’ longer-term expectations for efficient gas-fired generation. He also attributed current ERCOT softness in part to batteries reaching the grid before much of the anticipated data center load. “The battery storage and other things you’re talking about started earlier and they’re arriving on the grid earlier than the load is,” Dominguez said. Most of the expected data center buildout, he added, remains under construction and has yet to connect. “I think the market will start to tighten up as the data centers get built and you start to see the market come into more or less equilibrium.”
NRG Says Its “Bring Your Own Power” Model Answers Abbott’s Concerns. Houston-based NRG Energy, meanwhile, in its second-quarter earnings call on Aug. 4, argued that Abbott’s directive validates the commercial structure it has been building for large data center loads. NRG said it is aligned on principal commercial terms with a “leading global cloud and AI hyperscaler” on a 1.2-GW combined-cycle gas plant in Texas, with potential to expand the relationship to 2.4 GW. Commercial operations are targeted for late 2029. “The developments in Texas over the last 24 hours reinforce why that approach matters,” President and CEO Robert Gaudette said. “States want the economic growth that data centers can bring, but they also expect new demand to bring new supply, support the infrastructure it requires and strengthen, not strain the power systems and the communities that make it possible.”
NRG calls the framework “Bring Your Own Power” (BYOP). Under the contemplated structure, an availability-based capacity payment would recover NRG’s $3.2 billion investment and support its targeted 12% to 15% pretax unlevered internal rate of return, independent of how much the data center runs. Fuel and operating costs would be recovered separately, and the customer’s obligations would be backed by an investment-grade parent guarantee. NRG said the project is designed to bring more new generation to Texas than the roughly 1-GW data center load is expected to require and could reduce the incremental transmission needed to serve it.
Asked directly whether Abbott’s Aug. 3 directive changes the project’s timeline, Gaudette said it does not. “Our project answers those questions,” he said. “It is the right project to meet the concerns of the communities and the elected officials because it doesn’t strain the grid and because it also can reduce the need for some transmission out there.” Gaudette pointed to the late-2029 commercial operation date, adding: “So I think we’re okay.”
The project would be the first 1.2-GW block of 5.4 GW of turbine and engineering, procurement, and construction (EPC) capacity NRG has secured through 2032 through agreements with GE Vernova and Kiewit. NRG said its broader development pipeline is more than twice that secured capacity. At full operation, the initial 15-year project is expected to generate at least $500 million in annual adjusted EBITDA and approximately $375 million in annual free cash flow before growth, implying a build multiple of roughly six times on $3.2 billion of investment, or $2,700/kW. NRG also has about 2 GW of upgrade opportunities across its PJM fleet. Gaudette said less than half of that capacity could move through the centralized procurement at the $555/MW-day cap, depending on how the cap is applied, while bilateral discussions are underway for the full 2 GW.
Gaudette also cautioned against reading too much into weak ERCOT forward prices. “The ERCOT market is not valuing anything right now. Prices are low. They’re low out the curve,” he said. “But what we’ve seen in markets over the last couple of decades is until it’s real, it’s not.” He said continued additions of battery storage and solar generation could weigh on the market through 2027 and possibly into 2028, while the timing of data center development will determine when conditions tighten. “ERCOT needs generation in the medium term because we can’t get back to the place where we were 5 years ago,” Gaudette said. “You don’t need all 500 gigawatts. You don’t even need 1/3 of that to really tighten this market up to a place where everybody will be grateful that they have generation to support their customer loads.”
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
