Texas Energy Fund Program Receives Over $24 Billion in Loan Requests for Power Generation Projects

The Texas Public Utility Commission has received 72 applications for funding via the Texas Energy Fund’s “In-ERCOT Generation Loan Program.” The applications request $24.41 billion to fund 38,379 megawatts (MW) of planned dispatchable electricity generation projects in the Electricity Reliability Council of Texas (ERCOT) region.

The In-ERCOT Generation Loan Program, is one of four Texas Energy Fund programs established under the Power Texas Forward Act voted by Texans through a constitutional election in 2023. This program offers low interest loans to fund new construction or enhancements to existing dispatchable power generating assets within the ERCOT electricity area. In order to apply for a loan there is a condition that the planned project must add at least 100 MW of new generation to the ERCOT electricity network. In return, the loan program could fund up to 60 percent of the project’s cost.

In June, the commission reported that it received 125 notices of intent to apply for funding amounting to $38.9 billion for 55,908 MW of planned dispatchable electricity generation projects for the ERCOT area. Eligible entities were required to submit a notice of intent by May 31 and a completed loan application between June 1 – July 27. The response from the industry to the generation loan program, reinforces the notion that the Texas Energy Fund will be an effective tool and incentivize the required financing to bring additional on-demand electricity to Texas.

The increasing number of data centers across Texas are contributing to a surge in commercial electricity demand. Moreover, electricity demand in Texas historically follows a seasonal trend, peaking in the summer amid heat waves and in the winter during periods of below seasonal normal temperatures. During peak demand periods, the electric grid in Texas managed by ERCOT must have dispatchable power generation sources accessible, in order to satisfy domestic demand.

The commission will assess the 72 applications received over the next few weeks and determine which projects will be selected at the commission’s open meeting on Aug. 29, 2024. Initial disbursements for approved loans will be issued by Dec. 31, 2025.