AUSTIN — President Donald Trump publicly broke with Texas Gov. Greg Abbott over the state's moratorium on new data center connections to the electric grid, calling the policy a mistake and warning that other states would gladly take the investment Texas turns away.
Trump made the remarks in a sit-down interview with Punchbowl News released Friday. "I saw Texas the other day sort of is against data centers," Trump said. "I think it's a mistake. And I'm not taking positions, I just think it's a mistake, because there are other communities that want it. When a community wants it, it means a lot of money is going to come into that community." He went further, suggesting the industry's economic weight could rival the state's defining resource: "For Texas to say no to data centers is a mistake in the sense that it could be bigger than oil."
Abbott announced the moratorium Monday. Under the order, state regulatory agencies must audit any data center seeking a grid connection through the Public Utility Commission of Texas and the Electric Reliability Council of Texas. The audit covers whether the facility is receiving tax breaks, how much power and water it will consume, what cooling systems it uses, what steps it has taken to reduce community impacts and who owns the facility. Projects that fail the review are to be denied grid connection.
Abbott's office defended the move Friday by pointing to the scale of the demand surge bearing down on the Texas grid. Andrew Mahaleris, the governor's spokesperson, said less than 10 percent of data centers had responded to the state's requests for power and water usage data. "Many are unaware that ERCOT is tracking a more than 500 percent increase in peak electricity demand," Mahaleris said. "This rare growth could endanger the reliability and stability of the Texas electric grid. The Governor's pause requires data centers to provide PUC and ERCOT with the required information for them to make fully informed decisions. Simply put, Texans must come first."
The dispute puts Abbott in an uncommon position. He spent much of the past year promoting Texas as the center of the country's artificial intelligence buildout. In Nov. Abbott called Texas the "epicenter of AI development" when he announced a $40 billion Google investment in the state that included data center construction. That announcement came with Abbott's full endorsement of the industry's expansion. His Monday moratorium came less than a year later.
The political pressure driving the reversal comes largely from rural and unincorporated communities where most of the planned facilities are set to be built. Residents across those areas have organized against the developments, raising concerns about water supply drawdowns, higher electricity bills and noise, light and air pollution from the large facilities. Abbott's shift reflects how those constituent complaints have grown loud enough to outweigh the pro-business posture he has maintained across three terms as governor.
The fight has also become an opening for Abbott's Democratic challenger in the governor's race. Gina Hinojosa, who has made data center oversight a central issue in her campaign, dismissed the moratorium as insufficient. "Abbott's call for a 'pause' could be for one day — and no one buys it," Hinojosa said in a statement this week. "He's taken millions from data center CEOs while giving Texans lip service to non-existent restrictions." Hinojosa did not specify a dollar figure for the contributions she referenced.
The Punchbowl News interview ran nearly an hour and covered multiple topics, but Trump's data center comments landed as a direct rebuke of a sitting Republican governor whose state has been one of the administration's most reliable political allies. Trump framed the industry in economic terms throughout, calling data centers "tremendously important for the economics" without detailing a specific federal response to Abbott's moratorium.
The ERCOT demand projection at the center of Abbott's argument is not a disputed figure. The grid operator has been tracking a demand growth curve driven by data centers, cryptocurrency mining operations and manufacturing expansions that has pushed its load forecasts to levels the state's infrastructure was not designed to handle. The 500-plus percent increase in projected peak demand is the number Abbott's office is using to justify the audit requirement before any new large load connects to the system.
The moratorium does not affect data centers already connected to the grid or those that have already completed the approval process. It applies to new connection requests going forward until the audit framework produces results that satisfy state regulators. Abbott has not set a public deadline for how long the pause will last, which is part of what Hinojosa is challenging.
The standoff places Texas Republicans in a direct line of conflict between the White House and their own constituents. Trump's position is that the economic value of the industry outweighs local concerns. Abbott's position is that the grid cannot absorb the load without information that the industry has so far declined to provide. Both men are Republicans, and neither has indicated any intent to give ground.
