Diode dropped its proposed AI data center near Cedar Creek Lake after telling Henderson County officials the project failed to meet Governor Greg Abbott’s directives and local community expectations.
June 10 guidelines from Abbott require new data centers to lower residential power bills, cover all grid infrastructure costs, add generating capacity, use water-efficient cooling, and limit neighborhood impacts such as noise.
Abbott said Diode “did the right thing” and warned other developers to withdraw projects that cannot meet the same standards for communities, natural resources and the power grid.
Texas now plans to seek legislation requiring large data centers to report annual electricity and water use and to repeal sales-tax breaks and other incentives, signaling tighter oversight of future AI-related projects.