AUSTIN, Texas — AUSTIN, Texas — Governor Greg Abbott confirmed on July 23, 2026, that the technology firm Diode has decided against building a proposed data center near Cedar Creek Lake in Henderson County. In a formal notice sent to local officials, the company stated that the initiative failed to satisfy the administration’s recent guidelines or the expectations of the surrounding residents.
Abbott emphasized that any entity wishing to operate large-scale computing facilities in Texas must adhere to strict new criteria. The governor noted that Diode’s proposal fell short of these requirements. "This project did not," Abbott said regarding the standards, adding that "Diode did the right thing by withdrawing their project."
The decision follows a directive issued on June 10, which instructed the Public Utility Commission and ERCOT to enforce specific operational benchmarks for new facilities. These rules require developers to ensure their grid connections help lower residential electricity costs. Furthermore, companies must cover the full cost of necessary electrical infrastructure to avoid placing financial strain on general ratepayers.
Additional requirements mandate that new centers contribute to the state’s total power generation capacity rather than simply increasing load. Developers are also expected to utilize water-conserving systems, such as closed-loop cooling technology, and implement distance buffers and sound mitigation techniques to limit disturbance for neighbors.
Looking ahead, Abbott plans to introduce legislation that would codify these expectations into law. The proposed measures include requiring large data centers to submit annual reports on their electricity and water usage to the Public Utility Commission. The governor also intends to eliminate sales-tax exemptions and other current financial benefits previously available to the industry.
