Several proposed gas-fired power plant projects in Texas have been scrapped due to rising costs and supply chain challenges, despite support from a $5 billion state loan program, the Financial Times reported Tuesday.
The Public Utility Commission of Texas (PUCT) is evaluating low-interest loans worth $5.38 billion for nearly 10 gigawatts (GW) of new natural gas capacity. These projects aim to strengthen the state’s power grid managed by ERCOT, which has seen surging electricity demand.
The funding comes from the Texas Energy Fund, created in 2023 under Senate Bill 2627—also known as the Powering Texas Forward Act. The fund is designed to help build and modernize electric infrastructure across the state.
Last year, ERCOT projected that Texas electricity demand could double by 2030. However, eight projects have already been canceled or withdrawn, while some applicants have been denied funding for failing to meet due diligence standards.
Engie Flexible Generation North America, a division of French energy firm Engie, and Howard Power Generation both cited supply chain problems as their reason for pulling out. Constellation Energy Generation withdrew over uncertainty surrounding its environmental permits, and WattBridge Energy exited after predicting lower-than-expected financial returns.
These setbacks point to the challenges of adding new fossil fuel capacity—even in Texas, a state with historically strong support for natural gas and oil.
Earlier this year, Citigroup warned that the Texas Energy Fund program was “falling apart.”
The urgency to expand capacity remains. Texas faces growing demand and a stressed grid, especially after the ERCOT system collapsed during a deadly winter storm in 2021 and narrowly avoided blackouts during several recent heatwaves.
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