Governor Greg Abbott has announced that a new Texas Energy Fund (TEF) loan agreement will support the construction of a 456 megawatt (MW) natural gas power plant in Houston. The facility, developed by NRG Energy Inc., is expected to start operations by summer 2026 and will serve the Electric Reliability Council of Texas (ERCOT) region.
“Texas is the top energy producer in the nation—fueling growth and innovation across our state and around the world,” Governor Abbott said. “This 456 megawatt investment in the Texas grid will help bear the load of the largest electricity demand area in the state, further ensuring reliable and affordable power for countless homes and businesses in the greater Houston area. By investing in reliable, dispatchable energy, we will build a stronger, more powerful Texas for generations to come.”
Public Utility Commission of Texas (PUC) Chairman Thomas Gleeson commented on how this project aligns with broader goals for energy reliability. “This new power plant marks another major investment in Texas and in the ERCOT grid, helping prepare our state’s power supply to meet the demands of the future,” Gleeson said. “The Texas Energy Fund is accomplishing exactly what the Governor and the Texas Legislature envisioned—securing reliable, on-demand power to fuel Texas’ rapid growth and continued success.”
Robert J. Gaudette, Executive Vice President and President of NRG Business and Wholesale Operations, noted benefits beyond increased generation capacity. “We are grateful to Governor Abbott, the Texas Legislature, and the PUC for being terrific partners in helping power Texas forward as electricity demand surges,” Gaudette said. “The development of our new units at TH Wharton is already providing significant construction jobs, and once online next year will provide additional permanent jobs, enhanced grid stability, and regional economic growth.”
The loan agreement between PUC and NRG represents only the second finalized under TEF’s In-ERCOT Generation Loan Program. This program offers low-interest loans to projects that add new dispatchable capacity within ERCOT’s footprint. For this project, estimated total costs are below $360 million; PUC will provide a 20-year loan up to $216 million—covering 60% of total costs—at a 3% interest rate from July 31, 2025 through July 30, 2045.
NRG’s planned facility will be located at its existing TH Wharton Generating Station within Houston’s metropolitan area—the fifth largest metro region in the United States—which includes cities such as Pasadena and The Woodlands. The plant must comply with performance standards set forth by program rules.
The TEF is managed by PUC using a competitive application process along with thorough financial review for each proposed project.
Currently, there are two approved TEF loans accounting for a combined capacity of 578 MW. Fifteen additional applications are under review through due diligence processes; together these represent about 8,392 MW of proposed new dispatchable generation intended for ERCOT’s grid.
More information about TEF programs can be found on the Public Utility Commission’s website.
