Texas Data Center Withdraws, First Public Test of Governor Abbott's New Standards

A company called Diode has dropped its plan for a data center near Cedar Creek Lake in Henderson County, the first publicly cited project to walk away after Governor Greg Abbott's June 10 directive on how data centers should operate in Texas.

Diode notified Henderson County officials on July 22 that it would withdraw the project, one day before Abbott announced the exit and said the company "did the right thing by withdrawing." The company's letter cited Abbott's directive and community expectations.

The June 10 directive, sent to Public Utility Commission chair Thomas Gleeson and ERCOT CEO Pablo Vegas, set five operational expectations: lower residential electricity bills, full cost-allocation to data centers rather than residential ratepayers, net grid capacity addition instead of only demand, water-efficient cooling such as closed-loop systems, and local impact mitigation through setbacks, noise reduction, and neighbor consultation.

Local residents had organized against the Cedar Creek Lake site for months before the withdrawal. Abbott's announcement also previewed legislation requiring annual electricity and water reporting to the PUC and repealing sales tax exemptions and other incentives for data centers that fall short.

Abbott framed the exit as a precedent, warning that "if other data center developments refuse to meet these standards, I expect them to do the same." One voluntary withdrawal is thin evidence of an enforcement regime, and Diode's own reasons for walking away are not on the record.