Texas’ Data Center Boom Faces New Hurdles as State Support Wanes
A California developer’s ambitious East Texas project once enjoyed close ties with Governor Greg Abbott’s office, but by 2026 the relationship has soured amid growing climate concerns.
BaRupOn’s Grand Plan
In 2023, California‑based developer BaRupOn LLC purchased a 700‑acre parcel in East Texas with the intention of creating an industrial campus that would host multiple data centers, rare‑earth manufacturing facilities and its own power plants.
Initial State Support
According to Balaji Tammabattula, the company’s chief operating officer, the governor’s office worked closely with BaRupOn at the outset. Staff members recommended suitable site locations for future projects and identified county officials the developer should contact. They also encouraged BaRupOn to pursue incentives and tax breaks.
The governor’s office even assigned the codename Project Tough to the planned Liberty, Texas campus.
Changing Climate of Politics and Policy
Tammabattula noted that “Texas used to be the best place.” He added that by 2026 “it’s impossible to have [the governor’s office] respond to our emails.”
The climate surrounding data‑center construction has soured severely, creating new challenges for developers seeking state permits.
Impact on the Data‑Center Industry
Investors poured billions of dollars into Texas, attracted by a reputation for an unfussy regulatory environment and a grid that could connect projects to power faster than elsewhere. The state became a hub for artificial‑intelligence development after Governor Abbott directed such focus last year.
However, Abbott’s typical business‑first approach has shifted, leading some companies to reconsider major data‑center investments in Texas, according to analysts and developers.
Future Outlook
Developers now must navigate a more complex permitting process while addressing heightened climate concerns. The once‑rapid pipeline for data‑center expansion in Texas faces uncertainty as state support appears less forthcoming.
