HOUSTON — State lawmakers recruited potential investors Tuesday to build new natural gas plants to keep the Texas grid running during extreme weather.
The state’s grid operator, ERCOT, saw its 10 highest energy demand records all set in August 2023 during the second-hottest summer on record in Texas history.
While solar and wind energy helped the grid stay afloat during those days, lawmakers are concerned about extreme winter weather, like the February 2021 freeze that killed more than 200 people, because energy usage is typically highest at night when the sun’s not shining.
Inside a conference room at The Houstonian Hotel on Tuesday morning, potential investors from around the country with more than $2.2 trillion in assets attended the Texas Power Grid Investment Summit.
“It’s only $10 billion to transform the state of Texas to be the most resilient power source, to become the most resilient growth state in the United States,” BlackRock CEO Larry Fink said.
BlackRock is a major investment management company. Fink invited potential investors to the Texas Power Grid Investment Summit after previously traveling to Texas twice to meet with Lt. Gov. Dan Patrick.
Fink had initially reached out after Patrick prioritized Senate Bill 13 in the 2021 legislative session, which placed BlackRock on a blacklist of companies deemed not friendly to fossil fuel.
Patrick said Fink asserted his support for fossil fuels and willingness to do more, which sparked the idea for the conference.
“You know all the people with the money,” Patrick said while recalling their conversation. “Would you put together a conference and bring them all to Houston?”
Patrick believes natural gas plants haven’t been built recently because of federal incentives for renewables.
In November 2023, Texas voters approved $10 billion in low-interest loans and other incentives to build new dispatchable power plants, like natural gas, after state lawmakers signed off first.
“I’ve done it enough, lieutenant governor, in my career, that I can detect the real deal,” Houston Mayor John Whitmire, who served as a state senator at the time of the vote, said. “If you look around this room, Larry, this is the real deal. There’s enough firepower in this room to make a difference.”
Patrick, along with senators Paul Bettencourt (R-Houston) and Charles Schwertner (R-Georgetown) told reporters they’re optimistic investors will bite.
“There are pension funds all over the country that want to invest,” Patrick said. “So, they want a good return on their money, and so, whether it’s this plan they adopt or they come back and say, ‘Well how about this and how about this?’ We now have the people at the table in a way we would have never had without this conference.”
KHOU 11 Energy Expert Ed Hirs said Tuesday he doubts the recent incentives will be enough because ERCOT’s market model hasn’t changed to reward reliability.
“The owners of those plants won’t get a return on investment,” Hirs said. “The gas plants are not being paid to be ready to come online. It’s difficult to keep paying to keep that equipment operating, to keep the employees in place when we know that year by year by year, they’re gonna be used less and less and less.”
Both Hirs and Patrick said it’ll take about four years to get a natural gas plant up and running.
Applications for that new state low-interest loan program open in June.