Texas is giving out $5B in loans to build natural gas power plants. Some companies say no thanks.

HOUSTON – The Houston Chronicle reports that for years, Texas politicians have fretted: What will it take for companies to build more natural gas power plants for the state’s strained power grid? As it turns out, for a growing number of developers, even the Texas government handing out taxpayer-backed loans is not sufficient. Four companies have pulled their projects from consideration from the $5 billion Texas Energy Fund, citing various financial and logistical challenges. Another project was denied loans last fall after one company listed on the application accused the other sponsoring company of fraud. In total, nearly a third of new project capacity advanced to the fund’s due diligence review process has left the program.

State lawmakers created the Texas Energy Fund in 2023 and set aside the bulk of the money to give companies low-interest loans towards building new gas-fired generation for the Electric Reliability Council of Texas power grid. The fund was advertised to voters, who approved the program as a constitutional amendment, as a way to bolster the grid after the February 2021 winter freeze caused statewide outages and killed hundreds. Then, last year, ERCOT forecasted an unprecedented increase in electricity demand in the near future as the state’s population and economy grow. Policymakers became even more adamant that Texas needs much more gas-fired power generation for use when wind or solar power isn’t available, even though natural gas is a fossil fuel contributing to climate change. At first, the Texas Energy Fund seemed popular. So many companies applied for loans that state lawmakers — at the urging of Gov. Greg Abbott and Lt. Gov. Dan Patrick — are considering appropriating another $5 billion to the program in the ongoing legislative session, so that it totals $10 billion.