Several planned gas-fired power plants in Texas have been shelved as energy firms pull back due to supply chain disruptions and rising costs, according to a report by the Financial Times on Tuesday.
Eight projects aiming to tap into a $5.38 billion low-interest loan program under the Texas Energy Fund have now been withdrawn or canceled. The fund, created by the Texas Legislature in 2023 through the Powering Texas Forward Act, is intended to support nearly 10 gigawatts of new gas-fired capacity to strengthen the state’s electricity grid.
The Public Utility Commission of Texas (PUCT) is currently assessing which projects will receive backing from the fund. However, some developers, including Engie Flexible Generation North America and Howard Power Generation, have already withdrawn due to “supply chain constraints,” as noted in PUCT filings and a review by the Houston Chronicle.
Other companies have cited regulatory and financial hurdles. Constellation Energy Generation backed out due to uncertainty over permits from the Texas Commission on Environmental Quality (TCEQ), while WattBridge Energy abandoned its plan citing lower-than-expected returns.
The canceled projects underscore the mounting challenges companies face in adding new natural gas capacity, even in a pro-fossil fuel state like Texas. The situation has prompted concerns that the Texas Energy Fund initiative is faltering. Citigroup analysts earlier this year described the state’s program as “falling apart.”
The urgency for new power generation in Texas remains high. In 2023, ERCOT, the state’s grid operator, warned that electricity demand could double within six years. This follows a series of grid reliability issues, including the 2021 winter storm collapse and multiple summer power shortages.
Without rapid progress on new capacity, experts warn that the state could face more frequent and severe energy shortfalls.
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