The Texas Energy Fund (TEF), approved by voters in 2023 through Proposition 7, is moving from planning into implementation with the announcement of its first two project awards. Administered by the Public Utility Commission of Texas, the TEF provides up to $10 billion in funding, including $7.2 billion dedicated to constructing or upgrading large-scale dispatchable generation facilities. The program’s goal is to strengthen ERCOT’s supply of on-demand power and meet growing demand in high-load areas.
The first TEF loan, announced in June 2025, will support the Rock Island Generation Project, a 122 MW natural gas facility to be developed by the Kerrville Public Utility Board in Colorado County, about 10 miles south of Columbus. The plant will interconnect to the South Texas Electric Cooperative’s Rock Island substation, serving the ERCOT South and Houston Load Zones. The project will receive up to $105 million from the TEF, representing a portion of its estimated $175 million total cost. The loan will carry a 3% interest rate over 20 years, and the plant is scheduled to be operational by June 1, 2027.
The second loan, announced in August 2025, goes to NRG Energy for two new natural gas units totaling 456 MW at the company’s existing TH Wharton Generating Station in Houston. This is the largest TEF loan to date, with up to $216 million in financing, covering roughly 60% of the project’s $360 million cost. Like the Rock Island loan, it will carry a 3% interest rate over 20 years, with repayment scheduled through July 2045. The facility is expected to be online by summer 2026, helping to meet rising electricity needs in the Houston Load Zone, where demand is being driven by data center expansion, AI computing, and extreme weather pressures.
Together, these projects represent tangible progress for the TEF and its mission to expand dispatchable generation capacity. Both target high-demand regions and use favorable financing terms to encourage investment in reliable power infrastructure. While nearly one-third of the originally identified 17 TEF-backed projects have been canceled or withdrawn due to cost and logistical hurdles, these two awards demonstrate forward momentum in bolstering Texas’ grid reliability.