Morgan Stanley Research Report Interpretation: Texas Policy Shift Blocks 474GW Grid Connection, Revaluation of Energized Assets Imminent

Texas Governor-elect Gina Hinojosa's promised moratorium on new data-center approvals threatens to stall ERCOT's 474GW interconnection queue—over five times the state's record peak demand, with data centers accounting for 90% of new load requests—potentially freezing the Batch Zero transmission review and indefinitely delaying grid access for unbuilt projects. Morgan Stanley's Stephen Byrd notes siting authority rests with states, not Washington, and the policy shift is splitting the U.S. into pro- and anti-compute jurisdictions: Ohio's Amy Acton poses similar hurdles to a 10GW NVIDIA-linked cluster and Amazon's 1.5GW Fayette County project, while Pennsylvania and Louisiana remain more permissive. The bank's sum-of-parts revaluation of existing assets—excluding any future data-center contracts—puts Vistra at $180/share versus $140, NRG at $129 versus $96, and Talen at $430 versus $357, implying 20-34% upside, while Constellation's $249 estimate excludes potential PJM nuclear co-location deals and the bank keeps its $378 target. Developers relying on ERCOT queues face re-rating risk, including Galaxy Digital's 830MW Helios II (previously assigned 95% on-time probability) and Cipher Mining's Colchis sites, whereas behind-the-meter providers such as Williams (gas turbines deliverable in 18-24 months), Bloom Energy fuel cells, and Kentucky-based TeraWulf are insulated. The key caveat is whether Hinojosa's executive order becomes permanent: watch the 2027 PUCT commissioner appointments and ERCOT's final Batch Zero approval list after audit, since a Republican legislature aligned with oil, gas, and business interests may push back on a full buildout freeze.