Texas's $5 billion loan program for gas power plants is struggling due to cost uncertainties

From Yahoo Finance: 2025-04-05 10:00:00

Texas’s $5 billion public loan program for new natural gas power plants is struggling as proposed facilities drop out, jeopardizing efforts to meet rising electricity demand. These projects could have powered a million homes but face cost uncertainties and equipment procurement challenges. Critics question the fund’s focus on gas after the state’s gas plants failed during a 2021 storm.

Lawmakers established the Texas Energy Fund to address growing power demand from a booming population and economy. However, the fund’s projects are facing setbacks as developers withdraw due to cost uncertainties and program risks. Data center growth and electrification are driving demand, but turbine production delays may slow down gas power plant construction.

Constellation Energy Corp. and WattBridge Energy withdrew nearly 2 gigawatts of projects from the fund, citing cost uncertainties and program risks. The Public Utility Commission of Texas has 16 proposals under review for $4.5 billion in loans, with 12% of original project applications withdrawn or rejected. Analysts question the fund’s future and gas generation prospects.

Critics are questioning the Texas Energy Fund’s focus on gas, given the state’s past gas plant failures during a severe winter storm. Despite controversies, lawmakers are expected to double the fund’s size in the current session. Turbine manufacturers are struggling to meet demand, indicating delays in gas-fired plant construction due to supply chain issues.

The debate over how to meet rising electricity demand is playing out across the country, driven by data center growth and electrification trends. Data center developers seek locations with quick access to electricity supplies, emphasizing speed to market. The fund’s challenges highlight the complexity of balancing energy needs and environmental concerns in the power sector.



Read more at Yahoo Finance: Texas Attempt to Kickstart New Gas-Fired Power Is Stumbling