Midterm Winners Challenge US Data Center Expansion in Texas | Magica
Midterm Winners Put US Data Center Expansion on Notice, With Texas the Key Test
Editorial Team
••📖6 min read
Goldman Sachs sees temporary halts potentially affecting about 45% of planned US data center expansion after Democratic election victories. In Texas, where approvals were already paused, the next fight is over how long restrictions last and what developers must pay for.
Goldman Sachs expects short-lived project halts potentially affecting about 45% of planned US data center expansion.
Texas's incoming governor wants protections in place before development resumes; the Republican incumbent had already paused new approvals.
Industry promises to absorb infrastructure costs offer a negotiating position, with delivery still to be demonstrated.
Democratic victories in the November 3 US midterm elections have given data center opponents new power over the places where computing capacity is being built. Investment bank Goldman Sachs expects temporary project halts potentially affecting about 45% of planned US capacity expansion, according to a post-election analysis. Its analysts expect the disruption to be short-lived.
The stakes extend beyond construction schedules. Developers face demands to protect households from electricity costs and communities from water use and other local impacts. The election strengthens those demands in major construction markets, while leaving open whether the response will be longer pauses, tighter operating conditions or a move to other states.
Goldman Sachs estimated temporary halts could affect some 45% of planned US capacity expansion, with short-lived disruption expected. The estimate does not measure cancellations. Source: Reuters via Yahoo Finance.
Texas was already restricting approvals
Texas Governor-elect Gina Hinojosa, a Democrat who has represented an Austin district in the state legislature since 2017, defeated Republican Governor Greg Abbott, who first took office in 2015. Her victory ends more than three decades without a Democratic governor and elevates a campaign critic of data centers to the state's executive office.
But restrictions did not begin with the Democratic victory. Abbott had responded to public anger by imposing a temporary moratorium on new data center approvals. His halt is tied to a state audit, follow-up reporting says. Hinojosa also campaigned against corruption and on lowering living costs; the result does not isolate voters' views on AI from those broader grievances.
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Editorial Team
The incoming governor campaigned on keeping a construction moratorium in place until legislation addresses impacts on water, electricity, air and property rights during the legislative session ending in mid-2027, according to the election report. That construction pledge and the existing pause on new approvals describe different stages of development; the treatment of projects already approved or underway remains a consequential question.
The delivery year matters. Most US data centers expected in 2027 are already under construction. Texas accounts for 41% of new US capacity expected in 2028, according to research firm SemiAnalysis, and a hold exceeding six months would bring extended delays there, the election report says.
Democrats also won the governorships in Ohio, Georgia and Arizona, the three states following Texas for new capacity in that account. The winners in Ohio and Georgia favor restrictive policies, with their details still unsettled. The report assesses that nearly two-thirds of 2028 capacity could face delays, while noting that most political analysts do not expect Democrats to block construction permanently.
That 2028 exposure is distinct from Goldman Sachs's 45% estimate, whose delivery window and calculation method are not specified in the published analysis. Neither measures canceled capacity or the share of today's operating facilities at risk of closure.
Reported stock declines as election results emerged; existing concerns about AI spending and overcapacity prevent isolating the election's effect. Source: Reuters via Yahoo Finance.
Investors face uncertainty over timing and costs
There is already a market response. US data center stocks Core Scientific and Iren fell 11.6% and 12.5%, respectively, as the Democratic sweep became apparent, the post-election analysis says. Other infrastructure and power stocks also declined. The selloff came amid existing concerns about AI spending and overcapacity, so it cannot be read as a clean measurement of the election's financial effect.
Georgia's importance is more than electoral: commercial real estate services and investment firm CBRE identifies Atlanta as the country's most active data center construction market. In Ohio, Morgan Stanley analysts see significant delay risk, including for a 10-gigawatt project involving Nvidia. Ohio had already stopped considering new data center tax-exemption requests earlier in 2026, a restriction on incentives rather than a blanket construction ban.
Opponents argue that facilities raise utility bills and provide too few jobs or tax receipts to justify state incentives. That is a dispute over how costs and benefits are distributed, not evidence that every project has the same effects. Initial returns summarized in the election report, drawing on election information service Ballotpedia, suggested about two dozen restrictive proposals had passed out of 41 data-center-related measures across 10 states.
HSBC analysts offer two alternatives to widespread moratoriums: stronger regulation and oversight, or relocation from Texas to other states. Many analysts also caution that slower construction would not necessarily signal weaker demand for AI or computing power. The economic question is therefore both how much capacity gets delivered and what conditions developers must accept to deliver it.
Power demand makes the cost allocation consequential
A December 2024 Department of Energy assessment, based on Lawrence Berkeley National Laboratory's research into US data center energy use, provides a historical baseline for the infrastructure debate. It estimated electricity use rising from 58 terawatt-hours in 2014 to 176 terawatt-hours in 2023—roughly a tripling—and projected further growth through 2028.
US data center electricity use
Annual consumption
Share of total US electricity
2023 estimate
176 terawatt-hours
About 4.4%
2028 projection made in 2024
325–580 terawatt-hours
Approximately 6.7%–12%
These figures cover data centers generally, not AI alone. The projection is not a measurement of current demand, and the national totals do not establish how much any household's bill rises.
The federal assessment also identifies ways to accommodate growth: generation and transmission investment, onsite power and storage, flexible electricity demand and rate structures intended to maintain affordability. Those options make the terms of grid access and payment central to any negotiated resumption of development.
DOE's December 2024 assessment covers all data centers. The 2028 bars represent alternative projection bounds, not additive quantities or measured demand. Source: US Department of Energy.
The next test is who pays, and whether promises become rules
Developers have begun offering a response. Infrastructure for America, an industry-backed group advocating data center development, published a November 4 pledge saying members would pay for power infrastructure attributable to their projects, disclose planned power capacity and water use, and design hyperscale facilities without evaporative cooling. These are commitments, not demonstrated results.
Texas's legislative session is the next concrete decision point: what protections lawmakers adopt, when approvals can resume and how existing projects are treated. Alongside those decisions, evidence that developers actually bear the infrastructure costs they promise to cover will help test whether stricter conditions can resolve the local objections. The available capacity forecasts cannot yet tell readers how much construction will be postponed, relocated or abandoned.
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