Texas’ $7.2 billion loan program for gas power plants has approved two projects in two years

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Since its inception in 2023, Texas' $7.2 billion Texas Energy Fund (TEF) aimed to stimulate the construction of natural gas power plants to alleviate the state's power grid issues. However, only two projects have been approved in two years, with experts suggesting that the economic climate is unfavorable for gas-fired power plant development. The two approved loans, amounting to $321 million, would generate a mere 578 megawatts of electricity, a small fraction of the projected 62,500 megawatts needed by 2030. Additionally, several companies have withdrawn their applications due to supply chain challenges and profitability concerns.

The TEF was established following the devastating Winter Storm Uri in 2021, which highlighted the need for reliable power sources. Despite the initial enthusiasm, rising global energy demand and supply chain constraints have complicated the situation. The Electric Reliability Council of Texas predicts a doubling of energy demand by 2030, primarily driven by the transition of oil and gas operations to electric power and the growth of data centers. As cheaper alternatives like solar and battery storage gain traction, the market signals that new gas plants may not be viable in the near future, prompting legislators to extend the deadline for fund disbursement while evaluating the program's effectiveness.