Texas Governor Greg Abbott has announced a $562 million Texas Energy Fund (TxEF) loan for NRG Energy’s planned 721 MW natural gas power plant near Baytown, part of the ERCOT Houston Load Zone. Scheduled to begin operations by summer 2028, the $936 million project is designed to meet surging power demand in one of the fastest-growing electricity markets in the country.
“Texas continues to grow as more people choose to raise their families and build their businesses in the energy capital of the world,” Abbott stated. “This 721 MW investment in the Texas grid will ensure the state continues to meet and provide for this incredible growth with a robust, reliable supply of energy to power Texas homes and businesses.”
The TxEF, created under the Powering Texas Forward Act (SB 2627), authorizes low-interest loans for new dispatchable generation of at least 100 MW. The Public Utility Commission of Texas administers the fund through competitive applications and financial due diligence, with rules codified in §25.510.
Key loan terms include:
This is NRG’s second TxEF loan. In total, the program has now approved three loans, adding 1,299 MW of dispatchable generation to ERCOT, with another 14 applications under review representing 7,671 MW of potential new capacity.
PUC Chairman Thomas Gleeson emphasized the role of the program in grid reliability:
“With the 721 MW this new facility will add, the TxEF In-ERCOT Loan Program is already bringing 1,299 new MWs to the ERCOT grid—enough electricity to power hundreds of thousands of Texas homes and businesses, with more on the way.”
Robert J. Gaudette, NRG’s Executive Vice President and President of Business and Wholesale Operations, said the Cedar Bayou expansion would bring,
“significant construction jobs, permanent employment, enhanced grid stability and regional economic growth,” crediting the Governor, Legislature, and PUC as “great partners in helping power Texas forward as electricity demand surges.”
The loan program reflects Texas’ broader strategy to ensure grid resilience after the 2021 Winter Storm Uri outages. By law, the TxEF cannot be used for storage projects or natural gas pipelines, but it prioritizes natural gas and other dispatchable generation to stabilize ERCOT’s growing renewable-heavy grid.
ERCOT’s Houston Load Zone—covering Houston, Pasadena, and Sugar Land—is the fifth-largest metro area in the U.S. and one of ERCOT’s most demand-intensive regions. With peak loads rising, the addition of nearly three-quarters of a gigawatt of natural gas generation will help balance variability from wind and solar while meeting industrial demand along the Gulf Coast.
