The Texas Energy Fund selected 17 gas-fired power plant projects as possible recipients of $5.38 billion in low-interest loans, the Public Utilities Commission (PUC) of Texas announced Aug. 29.

The 17 proposed projects would add 9,781 megawatts in power generation to the electric grid and will be distributed throughout the state, with four located in the Permian Basin.

The proposals will move on to the next round of the selection process. The state will make the first loan payments by the end of 2025.

State voters approved the fund in a November 2023 vote. The state legislature created the fund as a way to boost the reliability of Texas’ electric grid, which suffered numerous, prolonged blackouts in the years leading up to the vote.

The fund could reduce scarcity pricing for natural gas but would also increase demand and overall natural gas prices, according to an analysis by S&P Global. The additional power generation would require about 1 Bcf/d of additional natural gas for the state, which burned about 7.1 Bcf/d in July.

The Texas PUC received 72 program applications for projects totaling about $24 billion. The original applications were private until the Aug. 29 announcement naming the 17 advancing to the next round. The state is now going over the selected proposals in a due diligence phase. All projects that reach the state's requirements will receive a portion of the fund.

The selected applicants includes NRG Energy, Constellation Energy and NextEra. Independent power producers take up 13 spots in the applicant group. Eleven of the 17 are already in the ERCOT grid interconnection queue, with proposed commercial start-up dates prior to the end of 2028.

In an analysis of the applications, Evercore ISI said the loans were positive for the companies involved for two reasons: First, the funds would bolster investment opportunities and long-term growth plans. Second, the selection round pared the number of applicants from 72 to 17, assuaging investor concerns for an overbuild.

Texas Gov. Greg Abbot has said he would like to expand the low-interest loan program to $10 billion.

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