Texas Governor Greg Abbott announced new restrictions on data centers operating in the state, directing regulators to implement immediate safeguards for the electric grid and water resources.

Abbott instructed the Texas Public Utility Commission and the Electric Reliability Council of Texas on Wednesday to "take immediate steps" to address concerns about data center operations. The directive includes proposals for water-efficient technology requirements and consideration of repealing existing tax incentives for data center development.

The move comes amid growing concerns about the strain that large-scale data centers place on Texas's electrical grid and water supplies. Data centers require significant amounts of electricity for cooling systems and consume substantial water resources for their operations.

Under the new guidelines, data centers would need to meet specific efficiency standards for both energy and water usage. The governor's office indicated that facilities failing to meet these requirements could lose access to state tax benefits currently available to the industry.

The Texas Public Utility Commission and ERCOT have been tasked with developing specific implementation guidelines for the new restrictions. The agencies will need to establish timelines for compliance and enforcement mechanisms for existing and future data center projects.