Texas is considering building a reserve fleet of natural gas-fired power plants at a potential cost of $18bn, as part of a package of bills meant to avoid blackouts like those that hit the state in February 2021.
The Texas Senate last week voted to approve the package of bills, which include the plan to build the gas-fired reserve fleet, increased charges on renewable energy producers and new restrictions on how much wind and solar generating capacity could be built in the state each year.
Texas lieutenant governor Dan Patrick (R) said the package is part of the state's response to the 2021 blackouts and would quickly allow the state to build "dispatchable" power plants. The package "levels the playing field" between dispatchable plants and renewable energy sources, Patrick said.
But power plant owners that operate in the competitive market managed by the Electric Reliability Council of Texas (ERCOT) say the requirements would be counterproductive and end up discouraging investment in power plants. Having the state pay for a fleet of power plants "abandons the competitive market," the industry group Texas Competitive Power Advocates wrote last week.
The Senate's energy bill package — which has yet to be taken up by the Texas House and would need Texas governor Greg Abbott's (R) signature — include new requirements for half of power generating capacity built in the state after this year to be dispatchable. It would also require wind and solar generation to pay more for maintaining the grid and end the state's renewable power program.
But the most contested part of the package is Senate Bill 6, which would create an "energy insurance program" intended to build 10GW of gas plants that would stay in reserve for use in emergencies, while also offering low-interest loans to new and existing gas plants. The capital costs for building the power plants is likely to be $18bn, according to estimates from state-affiliated utility the Lower Colorado River Authority.
Critics say the reserve fleet would undermine price signals in ERCOT, where generators say they depend on the high electricity prices that occur during times of scarcity to earn a profit. Berkshire Hathaway, which proposed building the reserve gas fleet in 2021, had the only witness in favor of Senate Bill 6 during a legislative hearing last month.
