Two years after Texas lawmakers created the $7.2 billion Texas Energy Fund to aid in the construction of new natural gas power plants, the program has approved two projects, highlighting the economic obstacles facing gas generation in a turbulent energy market.
The two approved plants, which are financed through $321 million in low-interest loans, would add just 578 megawatts of capacity. This is far shorter than the 62,500 megawatts state regulators say Texas will need by 2030.
Another 15 applications totaling 8,392 megawatts remain under review, but several companies have already withdrawn their proposals, citing supply chain delays and weak profit forecasts.
Walt Baum, the CEO of Powering Texans, which represents Texas’ largest energy providers, commented that “it is a challenging market for natural gas developers right now, and it has been for a good amount of time.”
The Texas Energy Fund was created after Winter Storm Uri in 2021, when statewide blackouts exposed vulnerabilities in both renewable and gas-fired generation.
Because of that, lawmakers argued that Texas needed more on-demand gas plants. However, solar and battery projects have become significantly cheaper, impacting the financial case for new gas plants in Texas’ competitive market.
Dennis Wamsted, an analyst with the Institute for Energy Economics and Financial Analysis, commented that “markets speak loud and clear if you listen to what they’re saying.” “The market in Texas is saying loud and clear that gas is not going to be built any time soon,” Wamsted added.
Lawmakers extended the Texas Energy Fund’s spending deadline this spring, but skepticism persists.
State Rep. Rafael Anchía (D) called the loan program “a big government approach to influencing the energy market,” arguing that it mainly subsidizes projects companies already planned.
Despite this, supporters insist the Texas Energy Fund could play a crucial role in bridging near-term gaps in reliability.
State Rep. David Spiller (R) suggests, “we need to look at that and maybe tweak it some.”
