Texas Backs Permian Gas-Fired Power Plant With $1.1 Billion Loan as AI Demand Soars
(Bloomberg) -- Texas is backing a proposed Permian Basin power plant fueled by natural gas with a $1.1 billion low-interest loan, the largest such project under a state program aimed to shore up supplies after widespread blackouts in 2021.
Competitive Power Ventures will use the loan from the Texas Energy Fund to construct a 1,350-megawatt combined-cycle gas plant — among the more efficient types of fossil-fuel generation — in the Permian that’s expected to start up by 2029, CPV said Thursday in a statement. That’s enough to supply about 850,000 homes in West Texas, an emerging hub for data centers to run artificial intelligence.
While the $1.9 billion project has been in development for years, “I’m not sure we would have started construction without this loan,” CPV Chief Executive Officer Sherman Knight said in an interview. Because power demand had flatlined until the last couple of years, “we don’t have the muscle memory to meet load growth in many of the markets and Texas is the first. The load growth started there.”
CPV plans to tap gas supplies from Coterra Energy Inc., Devon Energy Corp. and Diamondback Energy Inc. Multiple sources of gas will enable the power plant “to maintain consistent performance during extreme weather and other critical events,” CPV said in statement. The company also said the facility will use turbines from GE Vernova Inc. The project is also fully permitted for carbon capture, which could be added in future phases, Knight said.
Texas launched the fund to build so-called dispatchable generation — plants that can easily be turned on or off — after cascading power and gas failures during an intense winter storm in 2021 left millions of people in the dark for days and killed more than 200. The legislature appropriated $5 billion for the fund for fiscal years 2025 and 2026, with an additional $4 billion added for the following two years.
The fund is targeting the construction of about 10 gigawatts of gas plants. Those projects are intended to help keep the lights on amid the rise of renewables, which provide power intermittently, and booming electricity demand from data centers. Supply-chain bottlenecks and soaring costs had forced some projects to pull out of the Texas program.
CPV is considering building other power plants in Texas as AI accelerates strong growth in electricity demand already coming from industrial users, Knight said. He declined to say whether the developer would apply for additional loans.
“I don’t know how somebody could start honestly from scratch in this type of environment and build the relationship and the coalition needed,” said Knight.
(Updates with comment from CPV chief executive officer starting in the third paragraph.)
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