The audit and verification of data centers ordered by Gov. Greg Abbott will involve about 250 to 300 projects, most of which are data centers, state grid operator officials told the Public Utility Commission on Friday.
The officials’ testimony also highlighted just how data significant the buildout is: The 200 gigawatt of future demand accounted for by the projects that will be audited is more than twice the ERCOT grid’s peak demand record set last month.
It will take the Electric Reliability Council of Texas “several months” to audit the projects, which must be completed before any data center can be approved for connection to the state grid, according to Abbott’s Aug. 3 directive to ERCOT and the PUCT. ERCOT had already planned on assessing large load projects seeking to connect to the grid as a part of a process already underway, but Abbott’s audit order moves up the checks to first priority and adds some more requirements, officials said.
“With the governor’s letter, what we’re really doing is moving that verification process now to the front of the line before we begin the interconnection study process,” said Chad Seely, general counsel and senior vice president of regulatory policy for ERCOT.
Friday’s meeting of the PUCT was the first public discussion the state regulator and state grid operator have had since Abbott ordered the pause on data center approvals amid public backlash to the accelerating buildout of the facilities statewide.
The meeting clarified that the audit is limited to projects under consideration in ERCOT’s “Batch Zero” study, or the process the grid operator has been undertaking since the start of the year. The study aims to organize its grid approval process as more than 1,800 individual projects — 90% of which are data centers — overwhelmed the queue in recent years.
Projects were previously studied and approved on an individual basis, but the crush of requests for energization has forced ERCOT to introduce a new process of studying and approving the projects in batches.
The work involved in Abbott’s audit directive was already planned under the Batch Zero study — it just adds a few more standards data center projects have to meet, ERCOT officials said. Spot checks were going to be conducted on the 250 to 300 projects eligible in the first batch of projects moving through the queue, and ERCOT is now planning to simply conduct those checks now before moving ahead with the rest of the study.
“The goal of the verification audit is to provide more certainty and confidence in the Batch Zero process,” said Thomas Gleeson, chair of the PUCT.
While Abbott’s order was limited to data centers in the queue, a “handful” of the projects that will be audited are traditional large-load energy users, like a factory, ERCOT officials said.
ERCOT, last week, was supposed to notify developers of projects that are being included in the first batch study, but that notification was put on hold at the request of ERCOT following Abbott’s Aug. 3 letter. Seely said ERCOT is still aiming to complete its study of the first batch of projects by its original deadline of April.
Both ERCOT and representatives of data center companies have stated many of the more than 1,800 projects in the queue, totaling more than 474 gw of potential demand, are unlikely to come to fruition because those projects lack elements such as financing and companies that have agreed to lease server space from the data center, if constructed. However, the size of the queue has prevented ERCOT from issuing demand forecasts for the grid, making it unclear just how many will actually be built and energized in the coming years.
Experts call the Batch Zero study a first-of-its-kind effort by a U.S. grid operator to formalize an approval process better equipped to address data centers’ energy demands.
Since Abbott ordered the audit, at least 43 companies constructing data centers have issued public comments in support of Abbott’s approach.
Abbott, in his own news release, has touted each of the companies’ announcements, saying his directives will address public concern around the facilities.
“I established clear guardrails to ensure data centers protect our electric grid, conserve our water, respect our neighborhoods, and pay their own way,” Abbott wrote in a statement accompanying the latest group of companies to sign off on the approach, issued shortly before the PUCT meeting began Friday. “They must not pass costs on to Texas families or interfere with their quality of life.”
Abbott’s Aug. 3 letter said the audit should ensure data center developers provide information on tax breaks they will receive; power use and generation; water use and cooling operations; efforts to reduce impacts on local communities; and ownership of the facility. Any projects that fail Abbott’s ordered “comprehensive verification and audit” should be denied connection to the grid, the governor said.
Abbott in June also directed the PUCT to ensure data center interconnections to the grid will result in reduced electricity rates for residential customers and that data centers pay the cost of any new transmission infrastructure needed to serve them.
Closely tied to the data center controversy is ERCOT’s plan to build massive 765 kilovolt transmission lines across much of the state, aimed at relieving growing transmission congestion caused by growing energy demand.
Residents living along the lines’ proposed routes, three of which extend hundreds of miles from the eastern half of the state to the Permian Basin, have been frustrated by the PUCT’s approval process for the lines, arguing it is too short for landowners to participate in the process.
Following a Senate interim committee hearing in late July that featured hours of testimony by residents opposed to the transmission lines, several legislators and Lt. Gov. Dan Patrick called on the PUCT to deny any certificate of convenience and necessity application, or CCN, by transmission companies to build the 765 kv lines until the Legislature can meet to revise its approval process. A denial of the CCN would effectively kill the project, although the companies could refile their application to start the process anew.
“The only remedy to this is denial of all applications of CCN, thus allowing the Legislature, the peoples’ representatives, to take up this issue in the next legislative session,” state Rep. Brad Buckley, R-Salado, told the commissioners Friday.
Officials from ERCOT testified during the July committee hearing that without the transmission lines, the Permian Basin could face rolling blackouts by next summer.
On Friday, commissioners discussed the latest developments in the transmission line buildout but made no formal decision about any individual application.
More than 20 landowners living near the proposed routes attended the meeting to testify in opposition to the lines.
This article first appeared on The Texas Tribune.
Topics Texas