Jun 2024

Houston Chronicle: Sugar Land, Texas A&M, developers answer Texas' call for new natural gas power plants

The push from state leaders to build new natural gas power plants to connect to the power grid operated by the Electric Reliability Council of Texas is is gaining traction.

Encouraged by a $10 billion funding bill passed last year, a handful of municipalities and quasi-governmental agencies have joined private developers in support of natural gas-fired power plants that if built would add more than 55 gigawatts to the Texas grid, nearly doubling ERCOT’s installed gas capacity.

Lt. Gov. Dan Patrick, a key supporter of the Texas Energy Fund approved by voters in November to back low-interest loans mostly for building new natural gas power plants, said Friday that he and the state Senate would continue to fight for more gas-fired power generation.

“Since Winter Storm Uri in 2021, 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,” Patrick said a statement. “By the number of applicants we have seen so far, I believe we have achieved our goal.”

Developers have filed 125 notices of intent to apply to the Texas Energy Fund, requesting $38.9 billion in financing for 55,908 megawatts of proposed generation, according to the Public Utility of Commission of Texas, the state’s utility regulator.

Those seeking a loan to finance up to 60% of the cost of their project were required to file a notice of intent by Friday before applications opened Saturday. One megawatt can power about 250 homes in the hottest summer days, according to ERCOT.

Among those taking advantage of the funding source are the city of Sugar Land and the Texas A&M system. Both have offered up land to developers that would use the loans to build natural gas plants.

“When we went out to try to attract companies here, honestly the very first question they asked us was, ‘Okay, that's great, would love to come down to Texas. But what about power? What are we doing to stabilize the grid?’” said Alba Penate-Johnson, assistant director of Sugar Land’s economic development and tourism team.

Sugar Land city leaders have approved a land lease to build a $146 million natural gas power plant at a mixed-use business park at 1 Circle Drive, a former prison site acquired by the city in the mid-2000s. The city asked developers to submit proposals to build on the site and plans to announce the selected developer later this year, Penate-Johnson said.

Sugar Land would like the power plant to provide flexible power services to the ERCOT grid and be able to provide backup power to certain facilities in case of a grid failure, she said.

Texas A&M is also making some of its vast real estate holdings available to gas power plants.

After the creation of the Texas Energy Fund, A&M Chancellor John Sharp said several legislators and private companies called him suggesting the university’s land would be ideal for a network of natural gas power plants because its campuses are located near where generation is most needed.

Those conversations led to A&M inviting developers to submit proposals to build gas-fired plants on dozens of parcels with existing power lines and gas pipelines it owns across the state. The university is specifically seeking peaker power plants, which are typically activated a few days each year during periods of high electricity demand.

“There’s a gas line that goes right through the middle of the A&M San Antonio campus. We had kind of looked at that as a problem, and I’m not sure it’s a problem anymore. It might wind up being a blessing,” Sharp said.

Sharp and Joe Elabd, Texas A&M’s vice chancellor for research, both envision the peaker plants built on Texas A&M land would be able to supply backup power to campuses in case of a grid failure, which would help the university avoid losing hundreds of millions of dollars of research as it did during the 2021 freeze.

“We really are an agent of the state,” Elabd said of the A&M system, which manages eight state agencies, including the Texas Division of Emergency Management.

The impetus behind the land rush is what Gov. Greg Abbott, state legislators and the PUCT say is the need for dispatchable resources, those that can adjust their output of electricity at ERCOT’s command.

Not all agree that more natural gas — the burning of which generates climatewarming emissions — is the best or primary solution to Texas grid woes. A report from the nonprofit American Council for an Energy-Efficient Economy last year found that expanding energy efficiency and demand response programs could help balance the Texas grid faster and cheaper than building new power plants.

Generation resources of all types failed during the February 2021 freeze, which left hundreds dead and many across Texas without power for days. Failures in natural gas production and distribution exacerbated the power outages, according to a University of Texas at Austin report.

Read the full article on Houston Chronicle, here.

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