Texas leaders double State Energy Fund to help meet fast-rising electricity demands

Published on July 02, 2024 by Kim Riley

© Shutterstock

As energy demands continue an unprecedented ascent, Texas will double from $5 billion to $10 billion a new state fund that offers low-interest loans to companies developing new gas-fired power plants, state leaders announced on Monday.

The newly revealed plan follows testimony last month before the State Senate Business and Commerce Committee by Electric Reliability Council of Texas (ERCOT) President and CEO Pablo Vegas, who said Texas may need 150,000 megawatts (MW) of power to drive the grid by 2030. 

“That is only six years away. Currently, Texas typically has approximately 85,000 MW of power available counting wind, solar, coal, nuclear, and natural gas,” said Texas Gov. Greg Abbott and Lt. Gov. Dan Patrick in a joint statement released on July 1. 

“If the new estimate is correct, the updated numbers provided by Mr. Vegas call for an immediate review of all policies concerning the grid,” they said.

The Texas Energy Fund, which currently provides for a $5 billion low-interest loan program to spur more dispatchable natural gas plants, has already received an overload of notice-of-intent requests from numerous companies seeking to apply for a total of $39 billion in loans.

That means the program is nearly eight times oversubscribed, according to the state leaders. 

“With the new projections for 2030, we will seek to expand the program to $10 billion to build more new plants as soon as possible,” said Abbott and Patrick.

They noted that the average plant will take three to four years to complete, while new transmission lines will take three to six years to complete. 

“Texas is currently the fastest state to approve and build new plants and transmission lines because of our low regulations and pro-business policies, but we must move quickly,” they added.

Biggest power users

The massive influx in notice of intents are mostly from large users like data centers, oil and gas companies, and hydrogen production facilities, which are all electrifying their operations, Abbott and Patrick say.

“Crypto miners and data centers will be responsible for over 50 percent of the added growth. We need to take a close look at those two industries,” Lt. Gov. Patrick tweeted on X, formerly Twitter, following last month’s committee hearing. 

“They produce very few jobs compared to the incredible demands they place on our grid,” he said. “Crypto mining may actually make more money selling electricity back to the grid than from their crypto mining operations.”

Patrick said that he’s more interested in building the state’s grid to service customers in their homes, apartments, and normal businesses and keeping costs low for them instead of for niche industries that have humongous power demands and produce few jobs. 

“We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off,” he tweeted on June 12. 

More people = more demand

At the same time, the state’s population keeps growing, according to Vargas, who in mid-June testified that ERCOT, the state’s main grid operator, predicts doubled demand for electricity in Texas over the next six years.

“All of that is putting together a picture of a very significant, different demand growth that is forcing us to really rethink how we’re looking at planning to make sure we can meet those needs and continue to deliver on the expectations of all Texans,” Vegas told committee members.

ERCOT says demand could reach around 150 gigawatts by 2030, with over a third of that growth expected to come from the Permian Basin, where oil and gas operators are converting their gas- or diesel-fueled operations to electricity. 

“With the increase in large loads projected to move to Texas, there is a need for substantial new transmission infrastructure to serve the forecasted load growth,” according to ERCOT’s recently released Reliability Needs Analysis for the Permian Basin Region. 

“To ensure the reliability needs of this forecasted load growth can be met, TSPs [Transmission Service Providers] will have to invest in local upgrades to the Permian Basin region, as well as construct multiple paths to import power into the region,” the analysis says.

To meet the forecasted load growth needs in 2030, ERCOT estimates that $9.1 billion of investment will be required, and as load continues to grow in the region, additional transmission will be required by 2038 to serve the demand.

ERCOT also says that because the Permian Basin lacks enough local conventional generation to reliably serve demand around the clock, more transmission lines will be needed to import power into the region.

According to ERCOT’s analysis, extra high voltage (EHV) transmission lines could help Texas meet the forecasted load growth needs in 2038.

“ERCOT is considering new EHV transmission lines as an alternative to only adding new 345 kilovolt (kV) in the 2024 Regional Transmission Plan and adding a 500-kV double circuit or 765-kV for reliability and to efficiently facilitate large power transfers across the system,” the analysis says.