FOURWEEKMBA EXPLAINER · FROM THE NEWSROOM · UPDATED 14 NOVEMBER 2026
The short answer: In the US, states and their towns hold five levers over where AI data centers get built and what they cost: permits and zoning, grid and power costs, tax incentives, water, and state land. Each lever has a different owner. Towns vote on zoning. Grid operators and utility commissions decide who connects and who pays. Legislatures write tax breaks. States own land. After the November 2026 elections, all five moved at once. Texas shows the scale: its grid operator, ERCOT, is studying 194.3 GW of new large loads, 2.1 times the grid’s record peak. Builders have started to answer, mostly by paying for their own power and sharing more data with the towns that host them.
Free to share with a link to this page. Figures from ERCOT board materials for the 14-15 September 2026 meeting. The 194.3 GW total and the 2.1x ratio are our arithmetic. These are connection requests, not plants.
An AI data center needs four things a state can give or hold back: permission to build, a grid connection, cheap land and water, and, often, a tax break. For years most states competed to give all four. In 2026 the politics turned.
The turn showed first in towns. On 3 November 2026, voters faced 41 local data center measures, Ballotpedia counts. Limits won in 40 of the 41 contests. Then it reached governors. In Texas, Governor-elect Gina Hinojosa ran on a promise to pause data center approvals until lawmakers pass new protections. She takes office on 19 January 2027.
The levers below are the tools those officials can use. They work at different levels, so a project can clear one and still stall on another.
Our newsroom’s lever map, 6 November 2026. The link from each lever to a builder response is our reading; companies did not say each response was made because of a given lever.
Lever 1: permits and zoning
Who decides: county boards, city councils, local ballots and state permit agencies.
This is where most fights start. Of the 41 local measures on the 3 November ballot, 17 asked to ban data centers and 4 asked to pause them, by our count of Ballotpedia’s descriptions. Five of the bans applied only above a 25-megawatt line. Three Maine towns voted on short moratoriums of six months or 180 days.
States can pause permits too. On 3 August 2026, Texas Governor Greg Abbott ordered an audit of data centers seeking grid connections. The Texas Tribune reported that pauses followed at the grid and then at the state’s environmental permit agency, with the audit expected to last until December. Some Texas county officials had complained that state law gave them little power to regulate data centers, the Tribune also reported.
Hinojosa wants to go further. “When I am governor I will issue a moratorium — a ban — on all data center approvals until laws can be passed by the Legislature to protect Texans,” she said in an October video, as the Tribune reported.
Measures listed by Ballotpedia. The four groups are our count of its descriptions.
Lever 2: grid and power costs
Who decides: the grid operator and the state utility commission. In Texas that is ERCOT and the Public Utility Commission.
This is the biggest lever, because power is the scarcest input. ERCOT’s “Batch Zero” study sorts every request for a large load, meaning 75 MW or more. In September it kept 362 projects with 194.3 GW, of which 66.4 GW counts as base load. It excluded another 302.2 GW across 373 projects. The grid’s record peak demand is 91,134 MW, set on 22 July 2026. ERCOT has paused energizing new large data centers until its audit is done. Its two reports are due to the commission by 10 December 2026.
Texas already has a law on this. Senate Bill 6, passed in 2025, sets the 75 MW threshold. It lets ERCOT order large loads to switch to backup power or cut use in an emergency. It also asks the commission to check that transmission charges “appropriately assign costs.”
The fight is over who pays. Hinojosa says she will direct the commission “to freeze the rates residential customers pay until we have laws to ensure that data centers and other high-load users pay for themselves.” OpenAI, a builder, asks for much the same rule: “State utility commissions should require large electricity customers to cover the costs they add to the grid.”
Lever 3: tax incentives
Who decides: state legislatures, plus local tax deals.
In Texas, House Bill 2712, law since June 2015, created a temporary sales and use tax exemption for large data center projects. Hinojosa’s campaign says it gave hyperscale data centers “20-year tax breaks,” and ending such subsidies is on her list for lawmakers. Texas also uses grants: the governor’s office gave SpaceX a $30 million Texas Enterprise Fund grant for the first phase of its Terafab chip plant, a project of more than $16.8 billion.
Tax deals are rarely on local ballots. Only one of the 41 measures, in Perry, Ohio, dealt with them. It asked hyperscale developers who seek special tax breaks to post financial guarantees, and it passed with 87%.
Lever 4: water
Who decides: localities and state water agencies.
Water rules are mostly local. On the 3 November ballot, Grove City, Ohio, asked for a public vote on any project above 50 acres, 20 MW of peak demand or 500,000 gallons of water. Protecting water supplies is also one of Hinojosa’s priorities for lawmakers, the Tribune reported.
Lever 5: state land
Who decides: state agencies that own land, such as parks or land boards.
This lever is the least used, but it can be decisive near a single site. In Texas, the Parks and Wildlife Commission had been due to discuss a possible sale of about 1,300 acres of Boca Chica State Park, near SpaceX’s Starbase. Hinojosa said she asked for any action to wait until she takes office, the San Antonio Current reported, and the item came off the agenda.
How builders have responded
Response
Who
What they said
Pay for power
Google
For its first Wyoming campus, a $17 billion project: “We will pay for 100% of the power we use, and when we build data centers, we’ll cover the infrastructure needs directly driven by our growth.”
Pay for power
OpenAI
At campuses it owns and runs: “We’ll pay the full cost of the electricity we use and the infrastructure needed to serve us.” It also offers financial assurances if a project shrinks or stops.
Flex on demand
OpenAI
Its deal with Georgia Power lets the utility cut up to 1,000 MW to its Effingham County campus at times of high demand.
Save water
Google, OpenAI
Google says its Wyoming site “will be air-cooled to minimize strain on local water resources.” OpenAI promises a water plan per campus and closed-loop or low-water cooling.
Disclose
OpenAI
Will “publish site-level water and electricity use” and “will not use non-disclosure agreements (NDAs) with public officials.”
Pay locally
OpenAI, Google
OpenAI: a $4.8 million grant for free school meals for all 14,000 students in Effingham County, Georgia, and $6 million for childcare in Pike County, Ohio, with SB Energy. Google expects “hundreds of millions of dollars in local property taxes” for Laramie County and its school district.
Use buildings already permitted
Nvidia, Verizon
Nvidia pitched converting old telecom buildings, The Information reported. Verizon’s Dan Schulman called its central offices “power-ready, already permitted,” RCR Tech reported.
Sources: Google and OpenAI posts of 5 November 2026; The Information and RCR Tech as reported in our newsroom. No builder response so far deals with state land.
The pattern: most answers target power and local trust. Few target permits head-on, except by moving into buildings that already have them.
What to watch
10 December 2026: ERCOT files its audit and community impact reports. Final Batch Zero decisions are due in December.
12 January 2027: the 90th Texas Legislature opens. The last day to file bills is 12 March.
19 January 2027: Hinojosa takes office.
31 May 2027: the regular session ends, 132 days after her inauguration.
Other states: watch utility commission rate cases, tax-break bills and local moratorium votes. They use the same five levers.
FAQ
Can a state stop an AI data center?
It can slow or block one through the levers it controls: permits, grid connections, tax terms, water and land. Texas has already paused new large data center connections while ERCOT runs an audit.
Who decides if a data center can connect to the grid?
The grid operator and the state utility commission. In Texas that is ERCOT and the Public Utility Commission, under rules set by laws such as Senate Bill 6.
How big is the Texas data center queue?
ERCOT kept 194.3 GW of large loads in its September study, 2.1 times the 91,134 MW record peak, by our arithmetic. These are requests, not plants.
Do data centers get tax breaks?
Often. Texas has exempted large data center projects from sales and use tax since House Bill 2712 in 2015. The incoming governor wants to end such subsidies.
How are AI companies responding?
Google and OpenAI have pledged to pay the full cost of the power they use. OpenAI also promises to publish site-level water and power use and to stop NDAs with public officials.
Did voters really reject data centers?
On 3 November 2026, limits on data centers won in 40 of 41 local ballot contests, Ballotpedia reports. The one exception was Harwood, North Dakota.
Sources: ERCOT Board materials, 14-15 September 2026 (Batch Zero Update; CEO Update); Texas Senate Bill 6 (89th Legislature) enrolled text; Texas Legislature Online, HB 2712 (84th Legislature); Ballotpedia, Data center-related ballot measures, 2026; Gina Hinojosa campaign pages (data centers; affordability); The Texas Tribune, 4 November 2026; San Antonio Current, 6 November 2026; Office of the Texas Governor, SpaceX Grimes County release; Google, “Wyoming data center”, 5 November 2026; OpenAI, “Setting a new standard for responsible AI infrastructure”, 5 November 2026; Texas Policy Research legislative calendar; FourWeekMBA newsroom reports linked above. Figures marked as ours are our arithmetic. Quotes are verbatim from the sources named.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
