Dive Brief:
- The Public Utility Commission of Texas on Thursday tapped 17 gas-fired generation projects totaling almost 10 GW to potentially receive 3% state-backed loans supporting their development. If all projects advance through a due diligence review, the portfolio would represent a total of $5.4 billion in loans.
- The funds are available through the Texas Energy Fund loan program, which voters approved last year to incentivize new power plants. The PUCT received 72 loan applications representing more than 38 GW in the Electric Reliability Council of Texas system.
- Regulators took other actions at yesterday’s open meeting to strengthen the state’s electric system, including adopting a reliability standard for the ERCOT region. The Texas grid “is more reliable today than it has ever been, and we know our system must continue to evolve to meet the growing demand for power,” PUCT Chairman Thomas Gleeson said in a statement.
Dive Insight:
PUC commissioners on Thursday authorized the agency’s executive director to enter into a loan agreement with selected TEF applicants who successfully complete further review, with initial loan disbursements to be made by the end of 2025.
“This is an enormous step forward in our on-going work to meet the fast-growing demand for electricity in our state,” Gleeson said.
The state’s legislature appropriated $5 billion for the TEF. While the projects selected yesterday would exceed that amount, the fund “will accrue earnings sufficient to cover the loan amounts represented by the portfolio if all advanced applicants enter into a loan agreement,” PUCT Chief Press Officer Ellie Breed said in an email.
The TEF could also double in size. In July, Texas Gov. Greg Abbott, R, said he wants to expand the program to $10 billion “to build more new plants as soon as possible.”
Projects selected Thursday are a mix of simple cycle, internal combustion or combined cycle gas turbine generators. The largest project is the 1,350 MW CPV Basin Ranch project submitted by Competitive Power Ventures and GE Vernova.
Projects were evaluated based on four criteria: the applicant’s experience and strength of financing, and the project’s technical and financial attributes, the PUCT said. Commissioners also identified five priorities for the portfolio of projects: diversity among applicant types, diversity in siting location, speed to market, ability to relieve transmission constraints, and diversity of generation resource type.
“Each application was closely analyzed, and the projects selected to advance will have the greatest impact in meeting the needs of the ERCOT grid and ensure long-term electric reliability in Texas,” Gleeson said.
“I was particularly excited to see the diversity in the projects,” Commissioner Kathleen Jackson said at the open meeting. “We know that we have an aging fleet and that we want to replace at least some of our combined cycles.”
ERCOT is expecting about 152 GW of new load by 2030. And the state has been rushing to improve grid reliability since Winter Storm Uri in 2021 caused widespread blackouts and almost 250 deaths.
Those efforts included the development of a reliability standard for most of the state’s electric grid, which regulators finalized yesterday.
“As we enhance our grid to support the future of Texas, it’s critical we clearly define the standard at which we expect the market and system to operate,” Gleeson said. “By establishing a reliability standard for the ERCOT region today, we are setting a strong expectation for the market and charting a clear path to further secure electric reliability.”
The standard specifies that outages resulting from inadequate power supply “must be expected to occur no more than once per ten years on average” and last less than 12 hours, the commission said. And the amount of electricity lost during any hour of a potential outage resulting from inadequate supply “must be expected to be less than the amount of electricity that can be safely rotated during an outage.”
The new rule also requires ERCOT to conduct a probability-based assessment every three years to determine whether the power system is meeting the reliability standard and if it will continue to meet the standard.
The PUCT also approved an estimate of the value of electric reliability to consumers in the ERCOT region, known as a Value of Lost Load. Commissioners set the VOLL $35,000/MWh, and said the figure will help regulators “evaluate potential market or reliability improvements.”
