What is going on in Texas? For all the talk that Texas Governor Greg Abbott is a principled Republican, he certainly reversed his free-market stance when it came to AI and hyperscale data center projects once polling showed how unpopular they are with his base. Abbott signed an executive directive requiring all kinds of roadblock-style regulations before any AI data centers can connect to the state’s grid.
I am not saying it is right or wrong; I am just pointing out Abbott’s failure on the issue. Though I would suggest that government-managed energy monopolies and corporate tax subsidies always distort the free market, and he should just stand aside.
Government subsidies started this quagmire, especially in the Texas energy crunch over the years.
Subsidizing Artificial Demand: For years, state and local governments lured tech conglomerates with massive tax abatements and subsidized utility infrastructure. Luring energy-intensive industries with taxpayer dollars created an artificial surge in power demand that the grid was never designed to absorb organically.
Socializing the Cost: While tech firms received tax breaks, everyday homeowners faced rising electricity bills and threats of rolling blackouts. Taxpayers were effectively forced to subsidize the energy footprint of private tech corporations.
Regulatory Monopolies Choke Supply: Instead of allowing private energy suppliers to build new power plants quickly, state-regulated utility monopolies and complex permitting bureaucracies prevented new energy generation from coming online to meet demand.
The solution to the AI energy crunch is not government moratoriums or more regulation—it is free-market energy competition. This has been proven over and over again, most recently proven by the White House with its 90-day suspension of the Jones Act. Here is what state and local government should be doing for their constituents and for the betterment of the United States:
Eliminate Corporate Welfare: End all state and local tax abatements for data centers. Tech companies should pay the true, unsubsidized market price for the electricity they consume.
Deregulate Private Power Generation: Allow data center operators to build, own, and operate on-site power generation—such as small modular nuclear reactors, natural gas turbines, or microgrids—without bureaucratic hurdles or forced integration into state utility grids.
Open Energy Markets to Competition: Remove government-protected utility monopolies, allowing private energy entrepreneurs to compete freely to generate and sell electricity.
Who Should Pay for AI’s Energy Footprint? Should tech corporations be allowed to build their own off-grid power plants, or should government regulators control grid access?
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