Texas Awards NRG Third Loan from Gas-Fired War Chest

Researched by Industrial Info Resources (Sugar Land, Texas)--The Public Utilities Commission of Texas (PUCT) has awarded NRG Energy Incorporated (Houston, Texas) the third loan from the Texas Energy Fund (TEF), which includes around $7 billion to help support the construction of natural gas-fired power projects in the state.

The TEF was voted into being in November 2023, placing more than $7 billion under the discretion of the PUCT to be awarded to support new natural gas-fired generation across the state. This most recent loan from the TEF designates $562 million to NRG to cover 60% of the costs of installing a new 721-megawatt (MW) gas-fired unit at its Cedar Bayou Generating Station near Baytown. The facility includes two existing gas-fired units built in the 1970s that provide more than 1,500 MW together. The new unit is expected to begin operating in 2028. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can learn more by viewing the project report.

The loan is the third and largest loan yet to be issued from the TEF and represents the largest capacity addition of gas-fired power. The loan will run for 20 years, until September 25, 2045, at a 3% interest rate.

Despite the PUCT having access to the fund since 2024, the first loan from the TEF wasn't awarded until earlier this year, when the agency awarded the Kerrville Public Utility Board (Kerrville, Texas) up to $105 million for a 20-year term to construct a 122-MW plant in Kerrville. (See project report.)

NRG received the second TEF loan, which was awarded in August for the addition of two gas-fired units with a combined capacity of 456 MW at the T.H. Wharton Generating Station in Houston. The $216 million award provides around 60% of the plant's anticipated construction costs, as do the other TEF loans. NRG expects to complete the units next year. Subscribers can click here to learn more about the project.

The funds distributed to date have all come from the TEF's In-ERCOT Generation Loan Program, covering projects on the Electric Reliability Council of Texas (ERCOT), which covers about 90% of Texas. The NRG plants receiving loans will be part of ERCOT's Houston Load Zone, which regulators say is one of the largest demand centers on the ERCOT system.

And NRG is asking for another TEF loan for one more Houston-area plant: a 455-MW combined-cycle unit at the Greens Bayou Generating Station. Plans for adding a unit to the plant have been on the table for a number of years, but a TEF loan may provide the impetus to get the ball rolling on construction in 2026. Subscribers can click here to learn more.

While there seems to be no selected order for plants to receive a TEF loan, NRG's Greens Bayou project could be a bit later in being awarded funds as the project only entered the TEF application pool in March, following the withdrawal of a 930-MW ENGIE project earlier in the year due to equipment-procurement constraints that would have prevented the project from meeting certain deadlines for initial disbursements from the fund. Click here to see the report on the canceled project.

The PUCT initially selected 17 projects totaling nearly 10 gigawatts (GW) on the shortlist for loan consideration. The TEF's third loan brings its awarded capacity to about 1.3 GW. With a few additions, deletions and awards, a number of projects are still under consideration. Projects that were part of the initial shortlist include:

• The 460-MW Freestone peaking plant from Calpine (Houston) near Fairfield, Texas. (See project report.)
• The 570-MW Sherman Energy Center in Grayson County, being developed by Rayburn Electric Cooperative (Rockwall, Texas). (See project report.)
• Aegle Power LLC's (Houston) nearly 1,300-MW proposed plant in Harlingen, at the extreme southern tip of Texas. (See project report.)

As the projects awarded loans this year from TEF have gradually grown in size and the first round of distributions ends at the close of this year, the PUCT may be looking to unload a higher amount of funds by awarding a larger project next. In addition to the Aegle Power project, three other projects on the shortlist (excluding the withdrawn ENGIE project) each plan to bring more than 900 MW of new gas-fired power to Texas.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).