Texas Backs New Natural Gas Power Plant in Reeves County
The state-backed loan supports a 450-megawatt power project to help meet growing electricity demand.
Updated on Oct. 15, 2026 in Data Centers
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The Public Utility Commission of Texas has finalized a low-interest loan for a new natural gas power plant in Reeves County. This project will add over 450 megawatts of electricity to the ERCOT grid, enough to power approximately 110,000 homes.
Why it matters
The state requires this additional capacity to meet the rising electricity demand driven by over 400 data centers currently operating in Texas. The facility uses a quick-start design to ensure reliable power during periods of shifting energy demand.
The new facility adds 450 megawatts of capacity and is designed for quick-start operation. This contributes to a broader state effort that has already approved 4,994 megawatts of power through eight prior energy fund loans.
The players
Public Utility Commission of Texas
This state agency regulates the electric, telecommunication, and water and sewer utilities and manages the Texas Energy Fund.
Pecos Power Plant LLC
This entity is the specific project sponsor and recipient of the state-backed loan for the Reeves County power facility.
Mercuria
This is a global energy and commodities trading group that is co-sponsoring the construction of the new power plant.
Continental Resources
This is an American petroleum exploration company that is acting as a co-sponsor for the Reeves County power project.
The details
The loan for the Pecos Power Plant LLC is the ninth granted under the Texas Energy Fund's In-ERCOT Generation Loan Program. The project is co-sponsored by energy companies Mercuria and Continental Resources.
Timeline
2017: Hurricane Harvey impacted the state.
2026: Texas leads the nation for planned natural gas pipeline capacity additions.
2027: The plant is expected to begin supplying power to the ERCOT region.
The Tech Race
This development highlights the rapid scaling of energy infrastructure to keep pace with the massive growth of the data center sector. It follows the precedent of the Texas Energy Fund's In-ERCOT Generation Loan Program as the state competes to secure sufficient power for new technology.
The expansion of the ERCOT grid is designed to prevent energy shortages for residents and businesses as the state's data center footprint grows. By bolstering the power supply, the project aims to stabilize the energy market and maintain grid reliability during peak demand periods.
The takeaway
Reliable electricity is now a critical prerequisite for the continued expansion of the data center industry in Texas. Expanding natural gas capacity provides a necessary bridge for the grid as developers look for quick-start energy solutions to meet high server usage.
Further reading
Learn more about the state's power infrastructure by visiting Texas Data Centers.
Source note: This article includes information reported by The Cool Down.
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