81 Generators Seeking Subsidies from the Taxpayer Funded Texas Energy Fund

Texas Lt. Gov. Dan Patrick recently responded to the significant number of applicants seeking government subsidies to build new natural gas-fired electric generation plants. In a May 31 statement, he said, “As of this morning, 81 applicants representing over 41 gigawatts of dispatchable power generation projects have applied for the competitive low-interest loan program provided through the Texas Energy Fund (TEF) to keep up with our growing state.”

Patrick, Texas’ Lt. Governor since 2015, has been a strong proponent of the Texas Energy Fund, proposed by the Texas Legislature and approved by voters last year.

When fully funded, the Texas Energy Fund would provide money taken from the state’s general fund to investors and other entities seeking to build natural gas generation. According to the Houston Chronicle, $7.2 billion would be available for loans and completion bonuses for generation plants, $1.8 billion would be available for small-scale microgrids, and $1 billion for infrastructure outside of the Electric Reliability Council of Texas (ERCOT) region, which supplies energy to about 90% of Texans.

Along with many business and financial interests, Patrick took part in the Texas Power Grid Investment Summit back in February. In his statement, he noted that at the summit, “we pushed to strengthen our grid by encouraging the building of natural gas plants either by direct investment or by taking advantage of the incentive plan we passed in SB 2627 by Sen. Schwertner, R-Georgetown, and by the number of applicants we have seen so far, I believe we have achieved our goal.”

The subsidies made available in the Texas Energy Fund are in response to the rapid growth of renewable energy in Texas. According to ERCOT, “Between 2016 and 2024, over 35 gigawatts (GW) of solar PV and 7 GW of battery are projected to be installed in the ERCOT system.” The reason this is problematic is because as more wind and solar generation increases on a grid, it becomes less reliable. An ERCOT report examining this issue noted, “Every class of non-dispatchable and energy-limited resource exhibits declining reliability value with penetration.”

“I have been abundantly clear that we must bring new dispatchable generation (primarily new natural gas plants) to Texas to ensure we maintain reliable power under any circumstance,” said Patrick, Lieutenant Governor.

One of those circumstances is significantly increasing the cost of electricity to Texas taxpayers and consumers through subsidies to electric generators. In addition to the Texas Energy Fund, a program implemented last year by the Public Utility Commission of Texas, the ERCOT Contingency Reserve Service, was estimated to have increased the cost of electricity to Texans in 2023 by $12 billion. Total subsidies from federal, state, and local subsidies for traditional and renewable generators last year totaled about $19 billion.