A data center can sound like an easy economic win: construction jobs, tax revenue, a modern industry and a place in the artificial intelligence boom. The harder question is who pays when the project needs huge amounts of electricity, water, land, tax incentives and local services.
That question became harder to avoid after Texas Gov. Greg Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas on August 3, 2026, to audit data centers moving through ERCOT's interconnection process before more projects are approved to move forward.
The directive is not just a Texas story. It is a useful checklist for any community being asked to welcome an AI data center before residents can see the full cost, grid and water tradeoff.
The short answer
Before supporting a data-center project, ask whether the operator is paying its own way, where its power and water will come from, what protections neighbors get, and what happens if the promised jobs or tax revenue fall short. A project is less risky when those answers are specific, public and enforceable before approval.
Why Texas hit pause
Abbott's letter said ERCOT was considering about 474 gigawatts of requests to connect to the Texas grid. The letter said that was more than five times the state's record peak electricity demand for ERCOT, and that about 90% of the new power requests were data centers.
The governor told PUCT and ERCOT to conduct a comprehensive verification and audit of data centers advancing through the interconnection process. Projects that fail to comply with PUCT and ERCOT requirements, or state law, must be denied connection to the Texas grid, according to the directive.
The state asked for details that many towns should want before a vote: tax incentives, expected power use, peak demand, on-site generation, water sourcing, cooling systems, noise mitigation, light controls, setbacks, traffic improvements, emergency-response coordination and ownership.
That list matters because a data center is not just a building full of servers. It is a long-term claim on local infrastructure.
The questions to ask first
1. Is the company paying its own way? Ask for the total value of tax abatements, grants, discounted land, utility upgrades and other public help. Then compare those public costs with enforceable local benefits, not just headline investment numbers.
2. Will ordinary ratepayers subsidize the power buildout? A project may promise to create its own power or buy enough energy to cover its load. Residents should still ask whether new transmission lines, substations, backup capacity or grid upgrades will flow into broader utility rates.
3. What is the peak demand, not just the annual average? Annual electricity use can hide the stress a facility puts on the grid during high-demand hours. Texas specifically asked for projected annual and peak electricity consumption because reliability is often tested at the peak.
4. Where will the water come from? Some data centers use water for cooling, while others rely more heavily on air-cooled or closed-loop systems. The important question is whether the project uses water needed by local homes, farms or businesses, and whether reuse or non-potable water is part of the plan.
5. What exactly protects neighbors? Noise, light, traffic, generator testing and construction disruption can turn a quiet industrial promise into a daily nuisance. Setbacks, noise limits, lighting rules, traffic plans and complaint-response requirements should be written into approvals.
6. Who owns and controls the project? Local officials should know whether they are dealing with the long-term operator, a shell company, a landlord, a power developer or a project that may be sold after approval. Ownership matters when residents need accountability years later.
7. What happens if the economic promise changes? Data centers can involve large construction payrolls but fewer permanent jobs than residents expect. Communities should ask what benefits are guaranteed if hiring, tax revenue, power sourcing or project timing changes.
The bigger power problem
The U.S. Energy Information Administration projected in May that server electricity use will grow across the commercial building stock, with standalone data centers driving much of the increase. EIA estimated that servers alone accounted for 7% of commercial-sector electricity consumption in 2025 and projected that data-center server electricity use could grow to 22% to 33% of commercial building electricity use by 2050 across its cases.
The International Energy Agency's 2026 energy and AI report said data-center electricity consumption grew 17% in 2025 and projected global data-center electricity demand rising from 485 terawatt-hours in 2025 to about 950 terawatt-hours in 2030. The IEA also warned that planning and regulatory systems are being stretched by the wave of data-center applications.
Those figures do not mean every data center is bad for a town. They do mean the old approval script is too thin. A local board should not treat power, water and community impacts as side details to be figured out later.
Why opposition is spreading
Data Center Watch reported that at least 75 data-center projects worth about $130 billion were blocked or delayed in the first quarter of 2026, calling it the largest single-quarter concentration on record. Its report described opposition groups spanning 49 states and said communities increasingly organize around energy, water, land-use and ratepayer concerns.
That does not prove every opposition campaign is right. It does show that communities are learning to ask more precise questions. The companies that can answer them early may have an easier path than those that arrive with promises and missing details.
What to do with this
If a data center is proposed near you, start with public documents, utility filings, zoning packets and the developer's written commitments. Ask officials to post the power, water, tax-incentive and mitigation details before hearings, not after approval.
Then separate two questions. The first is whether the project could bring real benefits. The second is whether the deal protects residents if the costs are higher, the jobs are fewer or the infrastructure burden lasts longer than promised.
The bottom line: a community does not have to choose between accepting every AI data center and blocking every one. It can insist that the project show its math before the town signs up for the bill.
