Shares of companies tied to Texas data center construction fell sharply after Democrat Gina Hinojosa won the governor's race, as investors weighed her pledge to block new data center approvals until the state writes new rules.
Since Tuesday, Texas-based power producer Vistra has lost 19%, CoreWeave nearly 19%, SpaceX 12.5% and Oracle 9%. Sterling Infrastructure, a civil construction firm based outside Houston, has dropped 32%.
Hinojosa takes office Jan. 19, ending decades of unified Republican control of state government. Democrats will also hold a majority in the Texas House, which Republicans had run since 2003.
On the campaign trail, she called for a moratorium until legislators pass guardrails, including protections for household customers against higher electricity prices and more authority for local communities to restrict or attach conditions to projects.
Two weeks before the election, she faulted Gov. Greg Abbott's Batch Zero review, widely described as a pause, for still allowing new permits. When Abbott launched it this summer, the ERCOT grid had 474 gigawatts of interconnection requests, almost all from data centers, a figure he put at roughly five times peak demand.
Abbott's review is set to wrap up next month, just before Hinojosa is sworn in, leaving a narrow window for approvals. Because the legislative session runs until May 2027, her freeze could stay in place for several months.
How far the freeze reaches
The industry's biggest question is how broad the moratorium will be. Gavin Baker, a longtime SpaceX investor, called her plans reasonable, pointing to an interview in which she said the freeze would cover new permits and spare projects already permitted.
Brandt Vermillion, who leads U.S. research at Modo Energy, said an attempt to reach projects already under construction would dramatically change the picture. Modo counts about 25 gigawatts being built in Texas, 4.6 gigawatts permitted and 90 gigawatts that are only announced or have just filed grid studies.
If the policy targets only unpermitted projects, Vermillion said, developers should worry more about supply chain limits, such as securing enough chips.
He still expects tax abatements to become harder to win. Projects planning to run off the grid on reciprocating engines look far less viable, he said, particularly once Hinojosa names new members to the Public Utility Commission and the Commission on Environmental Quality, though a hyperscaler with deep pockets could still move ahead.
Tim Woodruff, Modo's data center lead, said so-called neoclouds may start leaning harder on projects in the MISO or CAISO grid regions.
A murkier demand outlook
Jefferies analyst Julien Dumoulin-Smith told clients Thursday that Texas power demand has become hard to forecast after what he called Hinojosa's surprise victory.
Joshua Rhodes, who does research at UT Austin, expects data centers to keep getting built in Texas but with far closer scrutiny. Battery storage developers, already coping with weak and volatile revenue, had been banking on rising demand, he said.
Renewable energy companies have one reason for relief: with Democrats holding the governorship and the House, the threat of bills aimed against renewables has all but vanished.
