KEY POINTS
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Texas granted NRG Energy a $562M loan for a $936M, 721 MW natural gas plant in Chambers County.
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The project, expected online in 2028, will supply the Texas power grid and support Texas’s rising power demand.
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The project is part of the Texas Energy Fund, already backing 1,299 MW of new dispatchable generation.
State Loan Supports New Power Generation
The Office of the Texas Governor announced Friday a $562 million loan agreement with NRG Energy to build a new 721-megawatt natural gas power plant in Greater Houston’s Chambers County.
The facility, valued at $936 million in total, is slated to begin generating electricity by summer 2028 and will supply the Electric Reliability Council of Texas (ERCOT) grid, which delivers power to most of the state.
Gov. Greg Abbott said, “This 721 MW investment in the Texas grid will ensure the state continues to meet and provide for this incredible growth with a robust, reliable supply of energy to power Texas homes and businesses.”
Larger Trend: Power Infrastructure Construction
The Texas NRG project is part of a larger trend playing out across the country. ConstructConnect reported last week that power infrastructure construction is forecast to expand sharply over the next two years.
Annual construction starts in the sector are projected to climb from $23.5 billion in 2025 to $30 billion by 2027, a 27.9% increase. The report links this growth to the rapid expansion of data centers and other power-intensive industries, which are fueling demand for new generating capacity.
Power infrastructure 5-year compound annual growth rate shown in this chart with actual construction starts through Q3 2025 and forecasted starts through 2027. These trends reflect evolving dynamics in both electricity consumption and power infrastructure investment. Image: Data and image ConstructConnect
Local and Construction Industry Impact
The Houston metropolitan area faces dual demand pressures from at least two fronts: population growth and rising consumption from power-hungry sectors such as artificial intelligence, data centers, and advanced manufacturing.
If current population trends continue, Houston is projected to surpass Chicago as the nation’s third-largest city by 2035, according to a 2024 Illinois Policy Institute analysis. That growth emphasizes the urgency of expanding the Texas energy infrastructure, a need made more evident by the February 2021 power crisis.
Winter Storm Uri left 4.5 million homes and businesses without electricity for days in 2021, which resulted in casualties and shortages of heat, water, and food.
Since then, Texas initiatives, including the Texas Energy Fund and new investment programs, have aimed to strengthen grid reliability and prepare the state for rising demand.
Jobs and Workforce Demand
Large-scale power plant projects typically involve various construction trades and contractors. Work on the Cedar Bayou expansion is expected to create significant construction employment during development and generate permanent jobs once the plant comes online in 2028.
The new unit will be built at NRG’s existing Cedar Bayou Generating Station, connecting to the ERCOT Houston Load Zone (Houston, Pasadena, and Sugar Land).
Precise construction start dates and additional project details are expected in future announcements.
“Development of the new unit at our Cedar Bayou power plant will generate significant construction jobs, and once online in 2028, will provide additional permanent jobs, enhanced grid stability, and regional economic growth,” said Robert J. Gaudette, NRG’s executive vice president and president of business and wholesale operations.
Part of the Texas Energy Fund
The loan marks the third agreement finalized under the Texas Energy Fund’s (TxEF) In-ERCOT Generation Loan Program, which offers low-interest financing for new dispatchable power.
According to the Governor’s Office, the $562 million, 20-year loan covers about 60% of project costs.
Public Utility Commission of Texas Chairman Thomas Gleeson noted the program’s broader impact. “With the 721 MW this new facility will add, the TxEF In-ERCOT Loan Program is already bringing 1,299 new MWs to the ERCOT grid...enough electricity to power hundreds of thousands of Texas homes and businesses, with more on the way,” Gleeson said.
NRG previously received a $216 million TxEF loan last month to build natural gas units in Houston. Fourteen more projects are under review in Texas, representing an additional 7,671 MW of potential dispatchable power.
Visibility into Texas power supply and consumption data is shown on a screen capture from a dashboard of the Electric Reliability Council of Texas (ERCOT) website. ERCOT oversees the flow of electricity to more than 27 million customers, covering about 90% of the state’s power demand. Image: ERCOT screen capture
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