Texas Froze Data Center Grid Connections and Found 474 Gigawatts of Ghost Demand
Texas has stopped connecting new data centers to its grid. The order came from Governor Greg Abbott in late August, and ERCOT acted within hours, suspending the study process that developers had been waiting on. The Public Utility Commission now has to audit what is sitting in the queue before anything else moves.
What’s in the queue is the story. Requests from data centers and other large loads have gone from roughly 48 gigawatts in 2023 to more than 474 gigawatts. Texas set its all-time record peak demand at 91,089 megawatts this July. So the queue is more than five times everything the state has ever drawn at once, on its hottest afternoon, with every air conditioner running. Around ninety percent of it is data centers.
Nobody in the industry thinks 474 gigawatts is real. The polite term is ghost demand.
Here is how it happens. Filing an interconnection request costs almost nothing. A developer with a site option and a slide deck can file, and a developer shopping the same project across four counties can file four times. Queue position has value, since being early in line means being early to power, so the rational move is to file everywhere and decide later. None of those filings requires a signed customer, secured financing, or a commitment to build. The queue fills with optionality and the grid planner has to treat it as demand.
The result is a planning document that can’t be planned against. Thomas Gleeson, who chairs the PUCT, put the problem simply: when you don’t know what’s real, you don’t know what to build. Overbuild and ratepayers cover transmission that serves nobody. Underbuild and the reliability margin goes.
Texas is the loudest case, not the only one. Pennsylvania’s governor signed an order on August 18 tightening permitting for any data center load above 25 megawatts, with disclosure requirements about who the end user actually is. Of more than a hundred data centers proposed in that state, about twenty have filed for the permits they’d need to proceed. Across ten of the largest utilities in the Midwest, Mid-Atlantic and South, requests total something like 270 gigawatts. There’s no common standard for how any of these numbers get reported; some utilities count only signed contracts, others count phone calls.
The fix isn’t complicated, and it’s the same fix used in every other queue that fills with free options. Charge to enter. Ohio raised its study fees and watched reported demand at one large utility fall by more than half almost immediately, which tells you roughly what the filings were worth. Deposits, proof of funding, disclosure of ultimate ownership rather than the shell affiliate on the paperwork. Texas is asking for all of that, plus water plans and any tax incentives claimed.
ERCOT wants the audit finished by December so the results can feed the next long-term load forecast.
Two things follow. The first is that every AI capex projection built on interconnection queue data has been reading a number that includes duplicates and vapor, and the correction is coming from grid regulators rather than from equity analysts. The second is quieter. Gas midstream operators committed billions to serving this buildout in the same week the freeze landed. That capital assumes the queue eventually clears. If the audit finds that most of the 474 gigawatts was never going to be built, the interesting question isn’t what happens to the data centers. It’s what happens to everyone who priced their assets off the forecast.