Why Existing Projects Cannot Be Stopped
After the political turnover in Texas, markets worried that AI computing buildout would be blocked. New Governor Gina Hinojosa said 2027 computing construction is completely unaffected and existing projects can be completed, which some read as a market overreaction. But existing projects can proceed mainly due to legal and physical realities, not policy concessions. In Texas, projects that have obtained building permits, passed environmental reviews, signed local tax abatement contracts, and broken ground are difficult to halt retroactively by executive order alone, otherwise facing unconstitutional litigation and political risk; the new governor's real power lies in the future incremental market.
2027 Safe, 2028 Exposed
Industry research data show that of data centers expected to come online in the U.S. in 2027, nearly three-quarters have already broken ground. Within the Texas grid, about 11 to 12GW of capacity is in a safe zone of already under construction or committed, a legacy dividend from land acquisitions and contracts signed over the past two years, so 2027 computing online speed is expected to be unaffected. Risk is concentrated after 2028: of planned new U.S. computing capacity for 2028, as much as 90% has yet to break ground, with Texas accounting for nearly 30%. According to November 2026 statistics, Texas data center reserve pipeline reaches 154GW, but only 17% is operating or under construction, with over a thousand projects still in announced or early planning stages. Once a mandatory review moratorium is imposed in the first half of 2027, cases pending environmental review, grid interconnection, and local permits could all be frozen, with 2028 to 2030 delivery schedules facing delays and repricing.
New Rules and National Backlash
The new rules require ending tax subsidies, with data centers paying their own bills; propose no-harm proof for electricity and water bills, ensuring no higher residential electricity bills and no seizure of rural and irrigation water, with water rights contracts potentially deemed void in droughts; mandate hiring union-certified skilled labor; and prohibit local governments from signing transparency-limiting non-disclosure agreements. Texas previously granted generous sales tax exemptions, forgoing over $1 billion per year, while localities also granted property tax abatements. External costs will shift back to operators in the future, with environmental reviews and grid-connection negotiations likely more cumbersome and expensive.
This regulatory wave did not start with Democrats — former Republican Governor Greg Abbott had already paused some grid interconnections and environmental reviews under rural voter pressure. Bloomberg reported that nearly 40% of planned U.S. data center capacity is located in states signaling tighter regulation or review moratoriums, including Texas, Georgia, Ohio, Michigan, New Mexico, New York, and Oregon. Once completed, a data center needs only 20 to 40 full-time employees, yet consumes water and power resources long term, and Dallas Fed models also show material impact on wholesale electricity prices, with local backlash crossing party lines.