Texas’s $7.2 Billion Gas Gamble That Went Nowhere
In 2023, Texas lawmakers promised a bold fix to the state’s fragile electric grid. After Winter Storm Uri left millions without power and caused hundreds of deaths, legislators created the Texas Energy Fund (TEF), a $7.2 billion pot of taxpayer-backed loans and grants to build new natural gas plants. The program’s legal foundation is the Powering Texas Forward Act, better known as SB 26271, which the Public Utility Commission of Texas explains on its TEF program page2.
Two years later, almost nothing has been built. Billions of dollars remain untouched, projects have been denied or withdrawn, and developers are quietly walking away. The Texas Energy Fund is proving to be less a tool for reliability and more a case study in how political bailouts for fossil fuels fail in practice.
This is not just a Texas story. It is a warning about how entrenched fossil fuel interests use crisis and fear to funnel public money into outdated infrastructure, while ignoring cleaner, cheaper, and more reliable solutions that are already scaling.
When Winter Storm Uri hit in February 2021, the results were catastrophic. More than 4.5 million people lost power and the grid operator ordered massive load shed to prevent collapse. The official federal investigation is unequivocal: a joint report from FERC and NERC documents that freezing and fuel issues caused about 75.6 percent of unplanned outages and that natural gas–fired units represented 58 percent of generating units with unplanned outages or failures3, 4.
Despite those findings, lawmakers doubled down on gas. In 2023 they passed SB 2627 creating TEF loans and completion bonuses to build new gas plants1, and the PUCT stood up program rules and FAQ guidance2.
The TEF was supposed to unleash a wave of new construction. Governor Greg Abbott and other state leaders touted it as a reliable foundation for the grid. In theory, billions in taxpayer-backed financing would make projects irresistible to developers.
Instead, the opposite happened.
As Canary Media summarized, the market signal in Texas is clear: even with public support, builders are backing off gas projects because the economics and logistics look unfavorable10.
Building a gas plant is expensive and slow. Developers must secure turbines, fuel contracts, water rights, and environmental permits, all while facing interest-rate and supply-chain risk. By the time a plant is online, costs can overshoot projections.
Meanwhile, solar and battery storage have become dramatically cheaper and faster to build. Lazard’s 2025 Levelized Cost of Energy analysis shows solar and wind remain among the lowest-cost new generation, while batteries are increasingly competitive for peak support11. The National Renewable Energy Laboratory’s 2025 update shows modeled four hour systems with capital costs in the $147 to $339 per kWh range across scenarios12. Reuters’ coverage of the 2025 Lazard report underscores the widening cost gap with new gas builds13.
ERCOT, the Texas grid operator, runs an energy-only, competitive market. Power plants earn revenue when they generate, not for simply existing. That model favors fast-build, low-cost resources and storage that can arbitrage prices.
Texas has been adding solar and batteries at record pace, reshaping price formation. ERCOT’s official Resource Capacity Trend Charts and Capacity, Demand and Reserves materials document the surge in solar and storage and the evolving outlook14, 15. The Texas Comptroller likewise notes ERCOT estimates of about 9.3 GW of installed battery capacity as of Oct. 31, 202416. The Independent Market Monitor’s 2024 State of the Market details how these additions have influenced operations and prices17, 18.
The TEF was sold as a reliability solution. Yet during Uri the dominant failures were freezing and gas fuel supply problems, not an absence of additional gas plants3, 4.
In the next major cold event across the Eastern Interconnection, Winter Storm Elliott in December 2022, FERC, NERC and ERCOT again documented the central role of fuel and weather issues in driving outages and derates, with extensive lessons learned and recommendations19, 20.
If gas cannot compete economically or operationally, why did Texas create a $7.2 billion fund for it?
Politics. The gas industry in Texas is powerful and well connected. After Uri, lobbyists framed the crisis as a renewable problem despite federal findings. Legislators felt pressure to act, and TEF became a convenient way to direct public money to fossil projects while claiming to defend reliability.
The program’s early track record shows friction rather than progress. Coverage of project denials and withdrawals, along with PUCT’s own program updates, paints a picture of a fund struggling to convert dollars into timely, bankable projects8, 9, 21.
While TEF has struggled, Texas has quietly become a renewable energy powerhouse.
These resources are cheaper, faster to deploy, and more flexible. ERCOT’s own materials and the independent market monitor point to a system that is moving toward a mix heavy on renewables, storage, and smarter operations rather than large, slow, fuel-dependent thermal builds.
The Texas Energy Fund fits a familiar pattern. When coal plants stumbled, “clean coal” subsidies followed. When oil and gas faced headwinds, carbon capture and fossil-based blue hydrogen were branded as climate solutions. The results were delays and cost overruns that diverted public money from proven measures.
Today, the same pattern is visible with TEF. A large public fund aimed at natural gas is under-delivering in a market that is rapidly shifting to faster, cheaper, cleaner options. The lesson shows up repeatedly in the data and the docket filings5, 8, 9, 10.
The cost of false solutions is not abstract. Taxpayer dollars that could support community resilience, grid weatherization, or distributed clean energy are instead parked in a program with few results. Communities face ongoing outage risks, rising bills, and pollution from gas infrastructure, while the climate impacts of heat, drought, and storms intensify.
Reliability does not come from doubling down on the resource that failed most during Uri. It comes from building a grid that is flexible, decentralized, and resilient.
The Texas Energy Fund was supposed to secure the grid with billions in new gas. Instead, it has exposed the weakness of propping up fossil fuels in a market that has already moved on.
Solar, wind, and batteries are beating gas on cost, speed, and flexibility. Federal and reliability reports show gas was the biggest failure during the crisis that triggered TEF, not the savior. Texans are left paying for a bailout that has not delivered.
The path forward is clear. Fund the solutions that are working now. Weatherize what we have. Scale storage and demand response. Build transmission and distributed resilience. The data from ERCOT and the economics from Lazard and NREL point in the same direction11, 12, 14, 15.
If Texas, the heart of the fossil fuel industry, is seeing gas projects stall even with $7.2 billion in support, then the future is obvious. The age of gas is fading, even in the Lone Star State. The smart choice for reliability and for the climate is to invest in the clean technologies that are already proving themselves every day.