Texas energy regulators have finalized rules for a new $10 billion program to incentivize the construction of natural gas power plants.
The Dallas Morning News reports that the Public Utility Commission approved final rules for the Texas Energy Fund, a taxpayer-backed program approved during the 2023 legislative session. The program will provide up to 10% reimbursement for natural gas power plants completed by June 1, 2026, and 6.7% for those completed by June 1, 2029.
The program will only support on-demand natural gas power plants and is not open to renewable energy plants, such as solar and wind power.
The program targets power plants with capacities of at least 100 megawatts and excludes upgrades to existing plants. It also extends to plants providing power exclusively to large-scale industrial sites, under the condition that they can contribute to the ERCOT grid if needed.
“Our state continues to experience incredible growth as more families and businesses choose to call Texas home,” PUCT Chairman Thomas Gleeson said in a news release. “Our supply of reliable, on-demand electricity must keep pace to meet this growing demand. Today’s rule adoption is another important step to implement the Texas Energy Fund and incentivize the construction of high-quality, dispatchable power generation for the Texas grid.”
This move comes amidst a growing demand for electricity in Texas, projected to nearly double by 2030 according to ERCOT. Despite the rise in renewable energy sources like solar power and batteries, there’s concern over the lack of development in on-demand power from sources like natural gas.
Several major power companies, including NRG, Vistra Corp., and Calpine, have shown interest in the program, which also offers low-interest loans. The application process for loans begins in June, with the completion reimbursement program slated to open in 2025.
The Texas Energy Fund was originally proposed as a backup generator plan by Lt. Gov. Dan Patrick and Sen. Charles Schwertner, but it has shifted toward incentivizing natural gas power plants.
Lawmakers have already allocated about $7.2 billion for the Texas Energy Found, and about $5 billion has been appropriated.
