Texas Vote Puts Data Centers in Question
Governor-elect Gina Hinojosa campaigned on banning new data center approvals in the state that holds roughly a quarter of planned U.S. capacity, and shares of companies building AI infrastructure fell the morning after.
Cattle graze beneath high-voltage transmission lines in East Texas, March 2025.Illustration by The Good Times, based on a photo by Mxmls / Wikimedia Commons (CC BY 4.0)
Democrat Gina Hinojosa, who defeated Texas Gov. Greg Abbott, promised during the campaign to "issue a moratorium — a ban — on all data center approvals" until the Legislature passes laws to protect Texans. The Legislature meets in January, and she takes office January 19. Texas holds about 27% of the data center power capacity planned in the United States, according to Wells Fargo, so investors watched the race closely. On the day after the vote, SpaceX closed down 3.81% and Tesla 3.34%, while Alphabet rose 3.18%, Amazon 6.12% and Microsoft 6.68%. Abbott had already paused grid connections and environmental permits for data centers this year while regulators audited their power and water use. Hinojosa's plan would go further, adding union hiring, water protections, limits on nondisclosure agreements and an end to tax breaks. Elon Musk, whose companies are based in Texas, posted, "Data centers in space looking pretty appealing right now." What the pause does to projects already underway is not yet known.
"When I am governor I will issue a moratorium — a ban — on all data center approvals until laws can be passed by the Legislature to protect Texans," Hinojosa said in a video posted to X last month, The Texas Tribune reported. She called for the pause to last until lawmakers meet in January and pass "real protections so Texans can have a seat at the table to decide if and how data centers come into their communities."
Her list for lawmakers included requiring data center operators to hire union workers, protecting local water supplies, stopping companies from using nondisclosure agreements that hide project details from the public, keeping data centers from raising Texans' electricity bills, and ending tax subsidies that she said cost the state billions in sales tax revenue. She takes office January 19 and will work with a Texas House that Democrats now control.
Abbott, who once called Texas the "epicenter of AI development," began pausing data center approvals in August, first at the state's grid operator and then at the environmental permitting agency, so regulators could audit the facilities' power and water use. That audit was expected to run until December. He also demanded that data centers pay for their own electrical infrastructure and promised to seek an end to their tax breaks. Hinojosa's plan goes beyond his freeze.
Opposition had grown in Texas communities over projections of how much power the facilities could draw from the state grid and how much water they would need in a drought-prone state. A data center industry coalition said in a statement that it "looks forward to working with state leadership" to support "responsible data center growth."
Wells Fargo estimates that about 27% of planned U.S. data center gigawatts are in Texas, with Georgia at 7% and Ohio and Pennsylvania at 5% each. Democrats won or kept the governorships in all three of those states, CNBC reported. SpaceX shares ended the day after the vote 3.81% lower and Tesla's 3.34% lower, while Alphabet, Amazon and Microsoft gained 3.18%, 6.12% and 6.68%. SpaceX is building several gigawatts of data center capacity, including in Texas.
The Dow closed up more than 1,500 points on the day, while the Philadelphia semiconductor index fell about 3%.
Whether Hinojosa issues the order on her first day, how it would treat projects already approved, and what the Legislature writes in its place are still open.