Putting the FUN in the Energy Fund
What is the Texas Energy Fund and is it helping anything?
On Wednesday, the House State Affairs Committee held an organizational meeting to hear testimony from a number of state agencies. One of the state agencies to present testimony was the Public Utility Commission of Texas. Representative Rafael Anchía questioned Public Utility Commission of Texas Chairman Thomas Gleeson about the effectiveness of the Texas Energy Fund in increasing the state’s capacity for electrical generation.
What is the Texas Energy Fund?
The Texas Energy Fund was a package of legislation passed during the 88th Legislative Session in 2023. It was voted on favorably on a statewide ballot, completing its passage in the fall of 2023.
The Texas Energy Fund (TEF) provides an initial $5 billion to the Public Utility Commission of Texas (PUC) that is to be offered as low interest loans to entities who wish to build “dispatchable generation” to be connected to the ERCOT grid (ERCOT stands for Electric Reliability Council of Texas).
Dispatchable generation refers to generation that can be switched on and operated for a specified amount of time primarily under human control. The legislature considers thermal generation like natural gas and coal “dispatchable” and considers renewable generation like wind and solar “intermittent”. Dispatchable generation is prioritized in the name of stabilizing the grid, an effort that began after Winter Storm Uri destabilized the electric grid across the state, causing loss of life and property damage.
Energy advocates have argued for a more expansive definition of dispatchable generation, hoping that battery storage, which can be paired with renewable generation to make it more dispatchable, can also be included.
PUC solicited proposals for projects to be funded through the Texas Energy Fund and received applications in early 2024. The agency selected an initial set of applications to move forward in the process in August 2024.
Since the original projects were selected to move forward, two have dropped out. Energy company Aegle’s application was removed by PUC after it was revealed that their leadership was convicted of fraud by the U.S. Department of Justice.
A second company, Engie, retracted their application this month, announcing that supply chain issues would make it impossible to source the needed component parts to build the facility within the required timeline for the TEF.
Some Texas Energy Fund money was to be set aside to fund reliability projects like backup power and microgrids at critical facilities like hospitals and nursing homes. This provision of the bill, called the Texas Power Promise, was introduced by Senator Nathan Johnson.
The remaining projects, when completed, could add more than 7500 MW to the ERCOT grid.
The legislature appropriated $5 billion in funds for the Texas Energy Fund in 2023 and is considering whether to appropriate a second $5 billion during this legislative session.