Investment group proposes to build 11 gas-fired plants in Texas

May 4, 2021

The investment group penned a letter to the Public Utility Commission of Texas proposing big investments in Texas by constructing 11 gas-fired power plants.

Starwood Energy Group, an investment company that develops and owns power generation assets, has proposed to the Public Utility Commission of Texas to build 11 natural gas-fired power plants in the state totaling 11 GW. The company has constructed and operated over 1 GW of wind generation and 550 MW of gas-fired generation in the Electric Reliability Council of Texas and 6 GW of natural gas-fired power generation in the U.S.

Starwood Energy’s plan would address two issues facing ERCOT: limited dispatchable power generation and the need for additional reliable, non-intermittent generation to support long-term demand growth. The company is pitching an $8 billion investment to develop and build the power plants. In a letter addressed to the Electric Reliability Council of Texas Board of Directors, dated April 23, the company said it would like to provide credit support to ERCOT and that the Public Utility Commission of Texas approves a regulated rate of return not to exceed 9%.

“Starwood Energy believes the impact to ERCOT customer bills would be small, while providing customers with long-term reliability and cost effective insurance against future blackouts,” read the letter.

“Starwood Energy is interested in developing, building and owning 11 new natural gas-fired power plants totaling 11 GW of new generating capacity, with ample natural gas storage at each site, located across ERCOT and subject to ERCOT’s control. These power plants will be highly efficient, state of the art and will have dual-fuel and black start capabilities,” reads the letter. “To finance such a portfolio, Starwood Energy would create a regulated company that would hold the assets and recover a PUCT approved regulated rate of return on the investment. Any revenues, net of any fuel cost and variable operating costs, generated when the facilities operate would be returned to ERCOT for distribution to ERCOT customers. ERCOT will have full rights to dispatch the facilities as and when necessary to maintain the system reliability and for other purposes. We are open to different structures such that this effort is consistent with the law and market design and does not harm existing generators.”