A Texas initiative to finance new natural gas-fired power plants with $5 billion in public loans is facing challenges as several proposed facilities are withdrawing from the program, jeopardizing the state's efforts to address increasing electricity demands.

The projects that have pulled out of the program could have provided 4.6 gigawatts of electricity, which is sufficient for approximately a million homes in Texas. Developers attribute their decision to pull out to uncertainties in costs and difficulties in acquiring equipment, even with the offering of low-interest state loans. Some developers have also cited stringent deadlines and terms within the program as issues.

Lawmakers promoted the fund as a means to encourage the development of gas-powered plants in response to the decline in wholesale electricity prices due to the prevalence of affordable solar and wind power in the state. The CEO of Vistra Corp., Jim Burke, emphasized the challenges of constructing power plants when electricity prices are low or negative, making it financially difficult to proceed with construction.

The setback faced by the Texas Energy Fund, launched in response to escalating power demands in Texas driven by population growth and economic expansion, was unexpected. Despite Texas advocating for a diversified energy approach, the fund's supporters argued for the necessity of gas-powered plants to ensure consistent power generation without relying solely on solar and wind, which are variable energy sources.

Initially, 72 project proposals were submitted for the fund, of which 17 projects capable of generating a total of 9.8 gigawatts were selected to undergo further evaluation. However, one of the significant projects, a 1.3-gigawatt plan by Aegle Power, was rejected shortly after selection for including utility giant NextEra Energy Inc. as a sponsor without NextEra's knowledge or consent, according to official documents.