$38.9 Billion In Proposed Texas Gas Plants Overwhelm Expectations

The Public Utility Commission of Texas (PUC) said last week that power developers in the state submitted 125 formal applications under the Texas Energy Fund (TEF) for the development of almost 56 gigawatts of new natural gas power generation in the coming years. Deadline for applications was Friday, June 7, for companies, co-ops and municipalities to apply for low interest financing and grants available under the fund.

Passed into law by the 2023 Texas legislature, the TEF is a $5 billion fund established to provide incentives for new generation in Texas, including grants and low interest loan guarantees, for up to 60% of a project’s capital cost. Introduced in the state Senate by Georgetown Republican Charles Schwertner as a response to the lingering issue of a lack of dispatchable natural gas generation capacity, Lt. Governor Dan Patrick made the passage of the bill one of his top priorities for the session.

“Since Winter Storm Uri in 2021, I have been abundantly clear that we must bring new dispatchable generation (primarily new natural gas plants) to Texas to ensure we maintain reliable power under any circumstance,” Patrick said in a statement last week. “Improving our grid is essential for the Texas Miracle to continue throughout the 21st century. Texas’ economy is the 8th largest in the world, larger than most countries, and we must have reliable generation to meet ever-increasing demand.”

The response by applicants proposing 55.8 GW of new natural gas generation overwhelms the TEF goal of ensuring the installation of an additional 10 GW around the state by 2029. The applications for incentive funding total to $38.9 billion, almost 8 times the size of the fund passed by the 2023 legislature. Obviously, many of the proposals will not be approved under the current TEF terms.