ERCOT: TEF yields its first live projects, but the turbine supply chain will limit gas buildout
ERCOT: TEF yields its first live projects, but the turbine supply chain will limit gas buildout
Texas is likely to fall short of the 10 GW Texas Energy Fund (TEF) target. A realistic landing point sits between 5.5 and 7 GW because gas plant CapEx in Texas has roughly doubled since 2023. Pin Oak Creek (460 MW) and TH Wharton (456 MW) are the only TEF projects in service today, each coming online in the last few months.
Despite this, ERCOT will still attract more new gas turbines than any other US ISO through the end of the decade, supported by the steepest demand curve in the country. But global turbine supply is finite. The biggest slice of a relatively fixed pie cannot meet ERCOT's demand growth alone. The bulk of new capacity that comes online in ERCOT through the late 2020s and into the 2030s will still come from solar and BESS.
Key Takeaways
- TEF has closed 3.5 GW across six loan agreements since June 2025. The entirety of the remaining 5.8 GW in due diligence is unlikely to close before the December 31, 2026 initial disbursement deadline.
- Capital expenditure costs for new gas plants in Texas have more than doubled since 2023. Frame CT median is up from $562/kW (2023) to a projected $1,359/kW (2030). H/J-class CCGT has moved from $898/kW to $1,852/kW.
- Texas runs 13 to 15% below the US average on EIA's reference overnight CapEx for simple-cycle peakers. Disclosed H/J-class CCGTs in Texas land roughly even with non-Texas comparables, with TEF-financed projects at the low end and regulated and BTM builds above.
- ERCOT energy demand has grown 28% since 2020, twice the rate of any other US grid. Hyperscalers and utilities are willing to pay a premium for new firm capacity.
- At the late-stage maturity tier in the ERCOT queue, solar plus BESS outnumber gas resources by 10:1, combining for 47 GW versus 4.6 GW of gas.
How close will the TEF get to its 10 GW target?
The Public Utility Commission of Texas (PUCT) has closed six loan agreements totaling 3.5 GW since June 2025. Calpine's Pin Oak Creek reached full commercial operations in spring 2026. NRG's TH Wharton received synchronization approval and is effectively online.
The online projects are Frame CT peakers with relatively short construction timelines, and their loans closed earliest among the six in late 2025. TH Wharton is a brownfield expansion at an existing NRG site, while Pin Oak Creek is a greenfield build.
Both finalized CapEx below $1,020/kW. Of the remaining four, Cedar Bayou 5 (697 MW) and CPV Basin Ranch (1,350 MW) are larger H-class CCGTs with longer turbine delivery windows. Greens Bayou 6 (445 MW) and Rock Island (122 MW) are smaller Frame CTs that closed loans in early 2026 and remain under construction.
Two deadlines also bound the program. PUCT must make initial loan disbursements by December 31, 2026, meaning without an extension, it’s unlikely projects that aren’t already in due diligence will receive a loan. Additionally, the Completion Bonus Grant drops from $120,000/MW to $80,000/MW for projects interconnected after June 1, 2026, then expires entirely on June 1, 2029.
The TEF's authorized $5.38 billion in loans supports up to $8.97 billion in total project value at the 60% maximum loan-to-cost ratio. Using Modo Energy's central CapEx projections (built from the median of recently disclosed Texas project costs by COD year), the loan pool finances 7.9 GW at $1,134/kW for Frame CTs. At $1,941/kW for H/J-class CCGTs, it finances 4.6 GW. Weighted to the shortlist's CCGT-heavy mix, the realistic landing point sits between 5.5 and 7 GW.
CapEx for new build gas resources has more than doubled, especially for longer-lead time projects
In Texas, Frame CT projects with 2023 CODs averaged $562/kW. The 2026 to 2027 cohort sits around $1,000/kW. The 2028 to 2030 cohort averages $1,250 to $1,400/kW. H/J-class CCGTs moved from $898/kW (2023) to roughly $1,850/kW across the 2027 to 2030 cohort.
