AUSTIN, Texas — Next month, Texans will decide the fate of 14 constitutional amendments state lawmakers approved for the Nov. 7 ballot. One would create a state fund with the goal of building new natural gas power plants. Lawmakers set aside $5 billion to incentivize companies to build gas-powered plants with low-rate loans and completion bonuses. But two Texas energy experts aren’t sure the amendment will do much to improve the power grid.
“I don't think the $5 billion can be assumed that it's going to be beneficial,” said Ed Hirs, an energy fellow at the University of Houston. “The only way this actually benefits the grid is if people use the money to build new power plants, and there's no quid pro quo required here.”
Hirs suggests that power plant owners could use the money to improve old sites instead of building new ones, which he says the state needs.
“During the really hot days in Texas when the wind doesn't blow, or on those really cold days, perhaps when we don't have any sunlight, or we have extended bad weather across the state, we need to have some of these natural gas-fired power plants available to step in and step up when required,” Hirs said. “We have no new power plants. And so at some point, the voter and consumer in ERCOT is going to get fed up with this lack of executive leadership by the elected leaders in Austin. We're spending billions and billions and billions, and we're not seeing a whole lot in return.”
Over the summer, Texans were asked several times to conserve energy.
“The Legislature again dodged any responsible action in the ‘23 session, as they did in the ‘21 session,” Hirs said. “We are at a point where we do not have enough dispatchable power plants–coal, nuclear, natural gas–to carry the load.”
Hirs suggests lawmakers should have contracted to build 5,000 to 10,000 megawatts worth of generating power and then auctioned it off to the private sector once it was done.
"To have helped our grid today and for this winter, we needed to have started building power plants after the ‘21 legislative session. And still, they haven't addressed it,” Hirs said. “When the new CEO of the California Independent System Operator took office in September of 2020 after that horrible summer, he instantly contracted for 5,000 megawatts of new natural gas fired power plants to shore up his grid. Those plants are now online. Texas had that opportunity, and we failed to act.”
Another energy expert, Beth Garza, says the bill lawmakers did pass could have actually delayed companies from starting to build new plants until they know the results of the constitutional amendment election in November.
“If I have access to very low interest capital, then I'm going to wait and compete for that, right, rather than forging ahead and developing on my own,” Garza said. She’s a senior fellow at the R Street Institute.
Calls to “fix the grid” grew louder after hundreds of Texans died in February 2021. Gas-powered plants failed during that year’s freeze. Texas had the supply, but it couldn’t perform.
The Legislature did not provide incentives for gas plants to weatherize, but Lt. Gov. Dan Patrick and others said that adding more dispatchable power to the grid was essential to making it more reliable.
Even if Proposition 7 does pass in November, and a company intends to build a new gas-powered plant with the money, the experts say it’ll be years before that capacity comes onto the grid.
“Asking government to make big changes never happens quickly,” Garza said.