AUSTIN – Texas power regulators on Thursday selected 17 companies that will advance construction of state-funded natural gas power plants.
The Public Utilities Commission has approved plans for fossil-fuel power plants that could generate enough electricity for 2.4 million homes. If the companies prove their projects are viable, they will receive 3% loans from the taxpayer-funded Texas Energy Fund.
Texas lawmakers set up the fund in 2023 to finance about 10 gigawatts of electricity generation capacity to shore up the ERCOT power grid. It is one of countless legislative directives since the 2021 winter storm’s blackouts killed more than 200 Texans.
The fund currently has $5 billion. Governor Greg Abbott and Lieutenant Governor Dan Patrick have promised to double the funding – a possibility since the energy fund was always supposed to have $10 billion under the bill.
The commissioners approved loans totaling about $5.4 billion.
Business interest in the program has continued to be strong since the Texas Public Utility Commission opened it to proposals. The commission has received 72 applications for $24.4 billion to finance 38 gigawatts of power generation. Texas’ current peak power demand is 85.6 gigawatts.
In response to the 2021 winter storm, Republican lawmakers have prioritized the construction of new, weather-independent power plants. They have created eligibility criteria for the program that favor natural gas-fired power plants. Large-scale batteries, a rapidly developing technology in the Texas power grid, have been excluded from the application.
The projects include planned power plants by Irving-based Vistra Corp., NRG and Calpine. The planned sites are located throughout Texas.
The loans — which at 3% interest are nearly half the price of the average 30-year fixed-rate mortgage in Dallas, according to Texas United Mortgage — can finance up to 60% of a power plant’s construction costs. Lawmakers want to encourage the creation of 10 gigawatts of new natural gas-fired power plants for the ERCOT power grid that covers most of Texas.
Connie Corona, executive director of the Public Utility Commission, said regulators would favor planned power plants that could be completed quickly, were spread across the state and reduced strain on Texas’s power transmission grid.
After the PUC determines that the projects are feasible and the applicants are financially solvent, the loans will be disbursed in 2025, Corona said.
“The grant recipient will have to go through a rigorous due diligence phase where they will have to provide documentation similar to what you would receive in a mortgage application, for example,” Corona said this week as he provided an update on the Texas Energy Fund to the Senate Business and Commerce Committee.
The low-interest loan program is part of the Texas Energy Fund. The program also includes a completion bonus program that could cover about 10% of the construction costs of a power plant with taxpayer money if certain deadlines are met.
The fund also includes money for power infrastructure in areas of Texas not connected to the ERCOT grid, such as El Paso. The fund also has money set aside for the Texas Power Promise, a backup power program for critical infrastructure such as hospitals initiated by Senator Nathan Johnson (D-Dallas).
