Another natural gas plant expansion being built south of Dallas

Audio By Carbonatix

(The Center Square) – Another company has been awarded a Texas Energy Fund loan agreement, this time in Freestone County south of Dallas. It’s the fourth loan agreement announced this year after a new law went into effect. 

Under the agreement, Calpine Corporation will build a 460-megawatt natural gas power plant in Fairfield, Texas. It’s estimated to begin generating power for the Electric Reliability Council of Texas (ERCOT) power region before next summer.

The natural gas generation facility is already under construction adjacent to Calpine's Freestone Energy Center in Freestone County. It will interconnect in the ERCOT North Load Zone, which includes the Dallas-Fort Worth metroplex.   

“Calpine is proud to demonstrate our commitment to Texas with our new Pin Oak Creek Energy Center in Freestone County,” Calpine EVP of Commercial Operations Caleb Stephenson said in a statement. “This 460-megawatt, state-of-the-art facility is designed to start within minutes and will deliver safe, reliable power exactly when Texans need it most. We’re grateful for the leadership of Governor [Greg] Abbott and the Texas Legislature and for their dedication to keeping energy reliable and affordable for all Texans. Calpine is excited to keep investing in Texas to support our growing communities.”

Calpine is a Fortune 500 company based in Houston. It’s the largest generator of electricity from natural gas in the U.S., providing more than 27,000 MW of electricity that powers 27 million homes, it says.

“Texans across our great state are benefiting from the reliable, affordable power that the Texas Energy Fund is helping add to the state grid, with hundreds of megawatts coming online,” Abbott said. “This 460 MW investment will further grow our power supply and keep prices affordable for homes and businesses in North Texas. We will ensure continued reliability for all Texans as we add more power and fortify the state grid.”

“The Texas Energy Fund has now brought nearly 1,800 megawatts of new, reliable power generation to the state of Texas – and there’s more on the way,” Public Utility Commission of Texas (PUC) Chairman Thomas Gleeson said. “We are investing in the future of every region of our state and strengthening the foundation for continued electric reliability and growth.”

Three other agreements were signed with the Kerrville Public Utility Board and NRG Energy, Inc. The first loan agreement was signed with the Kerrville PUB to build a new 122 MW natural gas power plant in Colorado County. Two agreements were signed with NRG Energy, Inc. to build a 456-MW natural gas power plant in Houston and a 721 MW natural gas power plant at its Cedar Bayou Generating Station in Baytown, outside of Houston, The Center Square reported.

The PUC administers the TEF, which provides low-interest loans for projects that add new, dispatchable power to the ERCOT region. It also oversees ERCOT, which manages the Texas grid.

In 2023, the Texas legislature created the Texas Energy Fund Loan Program and allocated $5 billion to it. Voters overwhelmingly approved a constitutional amendment in a November 2023 election to support the fund, including supporting “the construction, maintenance, modernization, and operation of electric generating facilities.” This included authorizing grants and low-interest loans administered by the PUC financed through the fund. 

This year, the legislature appropriated $5 billion to fund the TEF for fiscal years 2025-2026 and an additional $4 billion for fiscal years 2027-2028.

According to the PUC-Calpine loan agreement, total project costs are estimated to be $464 million. The PUC is providing a 20-year TEF loan of $278.3 million, or 60% of the total project cost, at a 3% interest rate. The loan term runs from Oct. 27, 2026, through Dec. 31, 2045. The facility must also meet minimum performance standards outlined in the loan program rules.  

There are currently 13 TEF applications being considered in a due diligence review process, the PUC said. Combined, they represent an additional 7,211 MW of proposed, new dispatchable generation for the ERCOT grid.