Texas Gov. Greg Abbott on Aug. 4 announced the second Texas Energy Fund (TEF) loan agreement will fund a 456 megawatt natural gas power plant in Houston.
The plant, being built by NRG Energy, is currently slated to begin operations by Summer 2026 and will serve the Electric Reliability Council of Texas power region.
The loan agreement between the PUC and NRG is the second finalized under the TEF’s In-ERCOT Generation Loan Program, which provides low-interest loans for projects that add new, dispatchable power to the ERCOT region.
Under the loan agreement, total project costs are estimated to be less than $360 million. The PUC is providing a 20-year TEF loan up to $216 million, or 60% of total cost, at a 3% interest rate. The loan term runs from July 31, 2025, through July 30, 2045.
NRG will develop the natural gas facility at its existing TH Wharton Generating Station in Houston. The facility is under construction and is currently slated to begin operations by Summer 2026.
The project will interconnect in the ERCOT Houston Load Zone, one of the largest electricity demand centers in Texas, including Houston, Pasadena, and The Woodlands. This area makes up the fifth largest metropolitan area in the United States.
Under the loan agreement, the facility must meet minimum performance standards, as outlined in program rules.
The Texas Energy Fund is administered by the PUC through a competitive application process and rigorous financial review of proposed projects.
In addition to the two loan agreements already approved, which together represent 578 MW, there are currently 15 applications to the TEF In-ERCOT Generation Loan Program that are active and moving through a due diligence review process. Together, they represent an additional 8,392 MW of proposed, new dispatchable generation for the ERCOT grid.
The Kerrville Public Utility Board, a Texas public power utility, made history recently with the first project to execute a loan agreement under the Texas Energy Fund, following a ceremonial signing held June 25 with leadership from the Public Utility Commission of Texas in Austin, Texas.
Alongside the TEF loan agreement, KPUB finalized the issuance of tax-exempt revenue bonds, completing the utility’s full financing strategy for its generation project.
With funding secured, KPUB is now set to begin construction on its 122-megawatt natural gas-fired facility. The electric utility’s generation plant will be located in Colorado County, approximately 10 miles south of Columbus, Texas, and about 75 miles west of Houston.
