The Texas Energy Fund is a $10 billion subsidy program created by the Texas Legislature to help finance the development of dispatchable generation. State lawmakers established the program in the aftermath of Winter Storm Uri that led to statewide outages.
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Two new subsidized loan agreements under the Texas Energy Fund — one for a 721-megawatt natural gas power plant and another for a 460 MW plant — have been announced by the governor’s office and the Public Utility Commission.
The Texas Energy Fund is a $10 billion subsidy program created by the Texas Legislature to help finance the development of dispatchable generation. State lawmakers established the program in the aftermath of Winter Storm Uri that led to statewide outages.
NRG Project
Houston-based NRG Energy will develop the 721-megawatt plant, which will be located near Baytown. It should begin producing power for the ERCOT region by the summer of 2028, according to the PUC in a Sept. 26 release.
Under the agreement, total project costs are estimated to be $936 million. The PUC is providing a 20-year Texas Energy Fund loan of $562 million, or 60 percent of the total project costs, at a 3 percent interest rate. The loan term runs from Sept. 26, 2025, through Sept. 25, 2045, according to information released by the PUC.
NRG will build this natural gas generation facility at its existing Cedar Bayou Generating Station in Chambers County. The plant will interconnect in the ERCOT Houston Load Zone that includes Houston, Pasadena, and Sugar Land, and which comprises one of the nation’s largest metropolitan areas.
Calpine Project
The second recently announced facility, the 460-MW natural gas-fired plant, will be located near Fairfield, Texas. The Calpine Corporation will build it, and it should begin generating electricity for ERCOT before the summer of 2026.
The Texas Energy Fund is providing a 20-year loan of $278.3 million for this project, or 60 percent of the total project costs. The interest rate is 3 percent. The loan term runs from Oct. 27, 2026, through Dec. 31, 2045.
Pending Projects
The NRG and Calpine loan agreements are the third and fourth, respectively, finalized under a Texas Energy Fund-administered program that provides low-interest loans for projects that add new, dispatchable power to the ERCOT region.
In addition to the four loan agreements already approved, 13 other applications remain pending in the Texas Energy Fund’s In-ERCOT Generation Loan Program queue. These projects are moving through a due diligence review process and together would represent an additional 7,211 MW of dispatchable power for the ERCOT grid, according to the PUC.