Texas Strikes Ahead with $5.38B in Loans for 10 GW of New Dispatchable Energy Initiatives

The Public Utility Fee of Texas (PUCT) has shortlisted 17 largely gas-fired “dispatchable” era initiatives—a mixed 9,781 MW—that may advance to obtain $5.38 billion in loaned funds underneath the Texas Vitality Fund (TEF) In-ERCOT Mortgage Program.

The 17 proposed new initiatives within the PUCT’s mortgage portfolio, chosen from 72 functions, now proceed to a “due diligence” section wherein the TEF administrator “will consider whether or not every applicant can sufficiently help the fabric assertions in its utility,” the PUCT stated in a memo on Aug. 29.  After the diligence section, which is scheduled to span between 4 to eight months, the fee will enter right into a mortgage settlement with profitable candidates. First preliminary mortgage disbursements might be awarded by Dec. 31, 2025, the regulatory physique stated.

A Mortgage Program Established to Enhance Dispatchable Capability

The PUCT’s alternatives mark a major step for the TEF In-ERCOT Mortgage Program, which was established underneath the Powering Texas Ahead Act following a constitutional modification permitted by Texas voters on November 7, 2023. The PUCT authority stems from SB 2627, which Texas enacted in July 2023 as a part of its efforts to shore up the state’s energy sector within the wake of the Winter Storm Uri, the lethal February 2021 storm that prompted a mean 34 GW of unplanned era outages throughout the Electrical Reliability Council of Texas (ERCOT) grid for greater than two consecutive days.

SB 2627 establishes a low-interest mortgage and grant program of as much as $7.2 billion (of a legislated whole of $10 billion) for “dispatchable” era. The time period underneath Texas regulation refers to “energy sources primarily underneath human management (e.g., pure fuel, coal, and nuclear) versus variable sources that depend upon pure forces (e.g., wind and photo voltaic), which are positioned throughout the ERCOT energy area.”

The TEF loans, which should have a time period of 20 years with an rate of interest of three%, could also be used to both finance upgrades to current dispatchable era amenities that enhance capability by at the least 100 MW or fund the development of recent dispatchable era initiatives with a minimal capability of 100 MW. Eligible new initiatives, notably, additionally qualify for a completion bonus grant of as much as $120,000 per MW if interconnected by June 1, 2026, or as much as $80,000 per MW if interconnected earlier than June 1, 2029.

Majority of Initiatives Are Fuel-Fired

The PUCT on Thursday famous it acquired 72 functions—requests to finance a mixed 38.4 GW—for loans totaling $24.41 billion. “The initiatives chosen to advance at present would supply dispatchable energy era and reliability advantages to a number of areas of the state,” the PUCT stated.

Mortgage functions had been evaluated primarily based on the “applicant’s expertise and energy of financing in addition to the proposed venture’s technical and monetary attributes,” it stated. As well as, “commissioners recognized 5 priorities for growing a portfolio of initiatives to advance to the subsequent section of the overview course of: range amongst applicant sorts, range in siting location, pace to market, capacity to alleviate transmission constraints, and variety of era useful resource sort.”

Nearly all of the 17 initiatives are easy cycle, adopted by inner combustion engines, after which mixed cycle fuel generators. Among the many largest chosen initiatives is CPV Basin Ranch, 1,350-MW energy plant proposed by Massachusetts-based Aggressive Energy Ventures (CPV) and GE Vernova close to Barstow in Reeves County. NextEra and Aegle Energy have individually proposed a 1,292-MW mixed cycle producing facility, the Aegle Energy Technology Station positioned in Harlingen, Texas. 

Desk: Texas public utility commissioners chosen 17 initiatives representing a complete of 9,781 megawatts (MW) of proposed new dispatchable energy era initiatives and a complete requested mortgage quantity of $5.38 billion.

Hull Avenue Vitality, by wholly owned subsidiary MPH Bastrop Peakers, LLC, has proposed a 1,080-MW peaking facility on the current Bastrop Vitality Heart website in Cedar Creek to offer “dependable service provider energy to the ERCOT grid.” Houston-based EmberClear Administration and investor associate Jupiter Island Captial had submitted two mortgage functions, every for a 900-MW fast-response fuel plant: one in Austin County and the opposite in Wharton County, however it’s unclear which one the PUCT picked.

ENGIE Versatile Technology filed for the 483-MW Spenser peaking energy era facility in Denton County. ENGIE stated it anticipates the plant may be transitioned to hydrogen because the market matures. Rayburn Electrical Coop filed for a 570-MW peaking producing facility in Sherman, Texas, a facility it stated can be “mandatory to fulfill the increasing power wants of its member cooperatives whereas additionally bettering energy grid reliability in North Texas.”

WattBridge Vitality, an unbiased energy producer, filed for the 600-MW Longleaf Producing Station in Angelina County. Calpine has proposed the Freestone Peaking Vitality Heart, a 430-MW peaking facility in Freestone County.  In the meantime, LS Energy Fairness Advisors had filed for the 527-MW Jack County Technology 3, although the PUCT’s mortgage is for a 490-MW facility.

Whereas NRG Vitality filed for 3 shovel-ready amenities—the 721-MW Cedar Bayou 5 in Baytown, the 455-MW Greens Bayou 6 in Houston, and the 456-MW THW facility in Houston—the PUCT chosen the THW, a peaking facility. “We observe the THW GT venture is shovel-ready as NRG has the required ERCOT interconnection research, environmental permits, and water rights to begin development instantly. This plant will enhance energy grid reliability and supply a bonus for potential companies contemplating expansions or relocations in Texas,” NRG stated.

ERCOT Faces Growing Load Progress and Grid Challenges

The PUCT’s alternatives arrive as ERCOT is managing hovering demand amid a comparatively reasonable summer season. On Aug. 20, the Texas grid operator recorded a brand new summer season peak demand of 85,559 MW, surpassing the earlier excessive of 85,508 MW set on August 10, 2023. “The warmth dome that we skilled for the higher a part of the 2023 summer season was not in place this 12 months, and in order that’s been a giant driving change from one 12 months to the subsequent,” stated ERCOT CEO Pablo Vegas.

“As well as, we’ve additionally seen the useful resource combine proceed to evolve over the past 12 months. We’ve seen important additions of power storage sources, photo voltaic sources, and wind sources, with a number of additions additionally on the thermal aspect, the fuel aspect. All of that has helped to contribute to extra constant, I’d say much less shortage circumstances through the peak interval of the summer season, like we skilled final 12 months,” he stated.

Vegas in April underscored the grid’s dire must adapt and plan in a different way to fulfill future electrical energy demand on the grid, unveiling what he referred to as a “New Period of Planning.” The measure, he stated, was mandatory, on condition that ERCOT estimates a further 40 GW of load progress by 2030 (over the subsequent 5 years) in comparison with final 12 months’s forecast. The load progress will probably be pushed by giant industrial initiatives, elevated electrification, and the speedy growth of information facilities and cryptocurrency mining operations, he stated.

On Aug. 20, throughout ERCOT’s final board of administrators assembly, David Maggio, ERCOT’s principal of Market Design & Analytics, emphasised the necessity for extra dispatchable era in Texas in mild of an ongoing deal with renewables and storage applied sciences. Whereas he famous that there was “some incremental enhance within the quantity of fuel applied sciences within the ERCOT market,” he pressured that “the main target has continued to be renewables and storage.” The dialogue about balancing the grid’s power combine with dependable, dispatchable sources primarily targets growing a framework that ensures a steady funding and a provide of energy to fulfill the rising demand, he stated.

“One of many fascinating details is that it does seem that a number of the [loan application projects] are beginning to present up within the [interconnection queue],” he stated. “However I feel key, taking a look at this simply from the quantity of numbers [of applicants], is clearly there’s curiosity and that is enticing for at the least a subset of oldsters who wish to spend money on era sources within the ERCOT area.” 

“This is a gigantic step ahead in our ongoing work to fulfill the fast-growing demand for electrical energy in our state,” PUCT Chairman Thomas Gleeson stated. “Every utility was intently analyzed, and the initiatives chosen to advance can have the best impression in assembly the wants of the ERCOT grid and guarantee long-term electrical reliability in Texas.”   

—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).