Governor Greg Abbott has announced a $216 million low-interest loan from the Texas Energy Fund (TEF) to support the construction of a 456-megawatt natural gas facility at NRG Energy’s existing TH Wharton Generating Station in Northwest Houston.
The loan, issued through the Public Utility Commission of Texas, will cover up to 60% of the project’s estimated $360 million cost, with a 3% interest rate over 20 years.
The plant is scheduled to begin operations by summer 2026 and will serve the Electric Reliability Council of Texas (ERCOT) Houston Load Zone, one of the state’s highest electricity demand areas.
The facility, which serves Houston, Pasadena and the Woodlands, seeks to reinforce power reliability as the region’s power demands rise alongside more housing developments, data centers and the surge in artificial intelligence (AI) use. NRG expects the project to create construction and permanent jobs while enhancing grid stability.
Following grid failures during the 2021 winter storm, voters in 2023 created the TEF to ensure reliable energy supply, and the shift toward dispatchable natural gas generation is part of that strategy. The creation of facilities such as the one in Houston reflects a move away from reliance on intermittent sources like wind and solar and toward on-demand power generation that can respond quickly during emergencies. The $216 million project is a portion of TEF’s total appropriation of $5 billion initially, with another $4 billion added for 2027–28 to support up to 10 gigawatts of capacity.
A number of proposed projects estimated to generate a total of five gigawatts have since been withdrawn or denied, highlighting challenges developers have faced under the TEF’s financial and timeline requirements.
With this loan, the TEF has now funded two projects totaling 578 megawatts, with 15 more applications in progress, which will create an estimated additional 8,392 megawatts of proposed capacity.
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