NRG Energy is investing in the future of Texas’ power grid with a $216 million loan from the Texas Energy Fund to expand its T.H. Wharton natural gas plant in Houston.
The state-backed financing, which covers 60% of the project cost at a 3% interest rate over 20 years, es expected to add 456 megawatts of dispatchable capacity by summer 2026. This is to address surging demand from AI data centers and rapid population growth.
As renewables dominate headlines, NRG Energy is banking on a growing consensus that Texas’ grid reliability hinges on fast-response resources. Natural gas plants, unlike solar, wind, or even batteries, can provide sustained backup during extreme conditions, a lesson learned from the 2021 winter storm.
With ERCOT projecting peak demand to double to 150 GW by 2030, NRG Energy is turning to gas-fired generation as a revenue driver in a market where reliability commands a premium.
The investment comes as NRG Energy’s Texas operations posted $512 million in Adjusted EBITDA in 2025’s second quarter, which is fueled by strong retail margins and favorable weather. The company generated $914 million in free cash flow before growth investments in the first half of the year, returning $941 million to shareholders through buybacks and dividends.
NRG Energy is also gearing up for a $10 billion acquisition of LS Power, adding 13 GW of gas capacity and a 6 GW commercial and industrial virtual power plant (VPP) platform.
The combined portfolio could integrate AI-driven demand forecasting with dispatchable gas, ensuring grid stability while monetizing distributed resources like rooftop solar and storage.
Despite the positive out, there are concerns that could be challenging.
Battery storage is projected to dominate growth, and regulatory shifts could pressure fossil assets. However, NRG Energy argues that their hybrid approach, which pairs AI-optimized VPPs with flexible gas, reduces stranded asset risk.
