11 GW of gas-fired power plants eyed for Texas

By Jack Burke30 April 2021

Plan addresses state’s power woes, company said

In a letter to Texas officials, Starwood Energy said it is interested in developing 11 natural gas-fired power plants totaling 11 GW in the state.

Starwood Energy said its plan addresses two key issues facing the state: limited dispatchable power generation and the need for additional reliable, non-intermittent generation to support long-term demand growth. Starwood Energy believes its plan will create a single point of accountability to manage emergency energy issues in ERCOT in a cost-effective and transparent manner.

Starwood Energy proposal to invest US$8 billion in power infrastructure in the state of Texas.

The state’s energy problem came to a head after nearly half the state’s power generation was knocked out during a February freeze. The storm killed more than 100 people and left about 4.5 million Texans without power for days,

The company said the new power sites would include ample natural gas storage, located across Electric Reliability Council of Texas (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,” the company said in its letter to state officials.

Billionaire Warren Buffett’s Berkshire Hathaway earlier pitched a plan to spend US$8 billion to build 10 new natural gas-powered plants in the state.

“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,” the company said.

Starwood Energy would invest over US$8 billion to develop and build these facilities, as well as provide credit support to ERCOT, and would request that the PUCT approve a regulated rate of return not to exceed 9.0%. 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.

“Starwood Energy is excited about the opportunity to partner with the Board and PUCT to help it improve reliability on the ERCOT grid and prevent future energy crises,” the company wrote.

The Starwood Energy currently operates and controls more than 6 GW of natural gas-fired power generation in the U.S. including 550 MW of natural-gas fired generation in ERCOT’s West Zone. Starwood Energy is prepared to use its vast relationships and resources to support ERCOT and PUCT as it seeks to address issues uncovered during February 2021.

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