The Public Utility Commission of Texas (PUCT) has taken a significant step in bolstering the state’s electric grid by awarding its first grant under the Texas Energy Fund (TxEF) Completion Bonus Grant (CBG) Program. The $22.56 million agreement with the Lower Colorado River Authority (LCRA) supports the 188-MW Timmerman Power Plant Unit 1, a new natural gas-fired facility in Caldwell County. This marks the operational launch of Texas’s performance-contingent funding mechanism, designed to accelerate dispatchable generation projects connecting to the Electric Reliability Council of Texas (ERCOT) grid before June 1, 2029.
Timmerman Unit 1, featuring 10 high-efficiency Wärtsilä 50SG natural gas reciprocating engines, delivers approximately 190 MW of fast-start peaking capacity. The plant, connected to the ERCOT grid in August 2025, can start within 45 seconds and reach full output within five minutes. Under the CBG grant structure, LCRA may receive annual payments of up to $2.256 million over a 10-year period, contingent on the plant’s operational performance during a June-to-May “test period.”
“This LCRA power plant will help us both meet the needs of today and prepare our grid for the future,” said PUCT Chairman Thomas Gleeson. The agreement underscores Texas’s commitment to incentivizing the rapid construction of reliable power plants amid growing energy demand.
The launch of the CBG program comes as Texas faces extraordinary demand growth and increasing pressure to expand dispatchable capacity. ERCOT’s president and CEO, Pablo Vegas, warned at the grid operator’s September 2025 board meeting that rapid demand growth, driven by data centers, industrialization, and electrification, combined with winter “tail events,” poses a “real and present risk” to the system. Unlike summer peaks supported by solar additions, winter conditions rely on thermal and long-duration resources, highlighting the need for dispatchable capacity.
ERCOT’s latest quarterly stability assessment shows 6,000 MW of proposed generation planning to connect during January through March 2026, including over 3,000 MW of energy storage, 1,000 MW of gas, and 2,000 MW of solar. Notably, three of the four gas units expected to connect are part of the Texas Energy Fund proposals, leveraging state-backed incentives to accelerate dispatchable additions.
The efforts reflect substantial progress in Texas’s legislative push to fund dispatchable capacity following Winter Storm Uri in 2021. The Texas Legislature passed Senate Bill 2627, known as the Powering Texas Forward Act, establishing the Texas Energy Fund (TxEF) with $9 billion in funding through fiscal year 2028. Since its launch in 2024, the fund has allocated $2.3 billion for loans supporting 3,109 MW of new generation for the ERCOT grid and selected 10 projects totaling $621.65 million to strengthen reliability for nearly 400,000 Texas customers outside ERCOT.
The largest TxEF component is the In-ERCOT Generation Loan Program, offering 20-year loans at a fixed 3% interest rate to build or expand dispatchable generation of 100 MW or more. As of Oct. 30, 2025, the PUCT has approved five loan agreements totaling $2.3 billion for 3,109 MW of new generation capacity. These projects include natural gas facilities by Kerrville Public Utility Board, NRG Inc., Calpine, and Competitive Power Ventures, with operations scheduled between summer 2026 and 2029.
The PUCT began accepting In-ERCOT loan applications on June 1, 2024, and the submission window closed on July 27, 2024. The first loan agreement was signed on June 25, 2025. Currently, 12 additional applications representing 5,861 MW of proposed dispatchable generation are in due diligence review, indicating a robust pipeline and continued developer interest. The PUCT must make initial disbursements for each approved In-ERCOT loan by Dec. 31, 2025, unless it grants an extension due to market factors affecting project schedules.
This news underscores Texas’s proactive approach to ensuring grid reliability amid growing demand and highlights the potential for state-funded incentives to accelerate the development of dispatchable generation projects. The successful implementation of the CBG program and the In-ERCOT Generation Loan Program could set a precedent for