In 2021, the Texas state Legislature knew it had a problem with the electric grid. A February storm knocked out power for 4.5 million homes and businesses when electricity demand overtook supply, leaving many in the dark for weeks. In the years since, weather-induced power outages have continued across the seasons.
The Electric Reliability Council of Texas, or ERCOT, which operates Texas’ main power grid in isolation from other states, warned in 2024 that it was facing a new challenge: skyrocketing energy demand from industrial growth, manufacturing and data centers meant the state needed to nearly double its electricity capacity – fast.
When state lawmakers met in Austin in 2025, the dual challenges of ensuring the grid withstands weather-related outages and that developers build enough new resources to power future growth loomed large. The 89th biennial legislative session officially ended Monday, June 2. Its results show that, while Texas lawmakers are focused on adding more power to the grid, they disagree on which type of energy technology is the best fit. Moreover, energy experts remain deeply skeptical of whether any of the actions taken in Austin will be enough to solve the Texas electric grid’s problems.
What energy source is growing fastest in Texas?
Lawmakers in the Texas House of Representatives defeated three Senate-approved bills that both industry and environmental groups worried would slow down renewable energy development.
Wind and solar have grown faster than any other resource on the Texas grid, displacing some coal power generation, while natural gas has increased slightly and nuclear has remained steady. Batteries have played an increased role in recent years, soaking up extra solar power during the day and discharging it as needed — typically as the sun sets and electricity demand remains high.
“There is absolutely no question that the grid relies upon renewables and batteries to get us through tight spots, but we don’t have enough yet,” said Ed Hirs, an energy economist and lecturer at the University of Houston, in an interview with Straight Arrow News.
One of the failed bills, Senate Bill 715, would have required wind and solar facilities to contract with power plants or battery operators capable of supplying backup power when the sun isn’t shining or the wind isn’t blowing. Proponents, such as the influential Texas Public Policy Foundation, argued that this would help stabilize power supply and reduce costs that arise from price volatility caused by the ebb and flow of renewable energy production.
Why did the anti-renewable bills fail?
SB 715 faced heavy opposition from business groups, which worried it could jeopardize their existing power supply contracts and increase costs. The Dallas Morning News reported in May 2025 that the Texas Association of Manufacturers, the Texas Oil and Gas Association and the Texas Association of Business joined forces with renewable energy groups in an effort that stopped the legislation from passing the Texas House.
Two other bills that would have placed additional fees, regulations and permitting requirements on renewable energy also failed to pass the House before the legislative session adjourned. Luke Metzger, director of the nonprofit Environment Texas, praised legislators’ actions in an interview with Straight Arrow News, calling the three bills together “industry killers” that would have “ground new [renewable] energy development to a halt.”
Metzger also highlighted what he views as positive legislative action: SB 1202, which makes it easier to build rooftop solar in cities by allowing certified third parties to conduct permit reviews and instituting deadlines for cities to issue permits. “By making solar less expensive and easier to obtain, we expect it will increase the number of people who go solar,” he said.
The measure was sent to Texas Gov. Greg Abbott’s desk on May 28.
Will loans for gas plants work?
To handle growing electricity demand, lawmakers passed a bill to manage large electricity loads from new industries.
They also doubled the size of the Texas Energy Fund, created in 2023, with an additional $5 billion allocation to attract developers that want to build new natural gas power plants. The low-interest loan program seeks to shore up the power supply with 10 gigawatts of new gas-fired power generation that can ramp up its output to the grid as needed, including when renewable production falls.
However, after initially selecting 17 projects to move forward in the review process in August 2024, at least seven have either been denied or have withdrawn their applications. Additionally, the state docked $7.3 million from the contract with consulting firm Deloitte to manage the fund after the company failed to recognize a fraudulent application during an initial due diligence phase.
Although he agrees wholeheartedly that the ERCOT grid needs more gas power plants, Hirs said, “The Texas Energy Fund has failed in its initial purpose.”
The fund is only intended to cover a portion of expenses, and companies need to find the majority of the capital investment elsewhere. Supply chain constraints mean it can take five years for developers to obtain turbines for new power plants. Hirs said this makes banks and investors wary of making commitments, especially when so many renewables coming online can charge lower prices for electricity.
The $5 billion added to the fund in 2025 includes $1.8 billion for backup power at critical facilities, such as hospitals and government campuses, to help withstand power outages. This can include batteries.
To better manage new electricity demand, lawmakers passed SB 6, a top priority of Lt. Gov. Dan Patrick who oversees the Texas Senate. The bill requires new large electricity users, such as data centers and factories, to pay higher fees. Any facility needing 75 megawatts or more of electricity will need to pay $100,000 upfront to connect to the ERCOT grid and invest additional sums for building new transmission lines and backup power.
Will Texas build nuclear and geothermal plants?
Texas lawmakers also passed several bills to encourage more nuclear and geothermal power.
One bill will establish the Texas Advanced Nuclear Energy Office under Abbott’s purview to help bring new nuclear reactors to the state. The office will offer developers technical assistance in the planning and permitting processes. Legislators allocated $12 million for the office to provide grants for planning purposes and $120 million to assist with construction. Larger funding allocations failed to pass.
Geothermal energy, a nascent technology with broad support, got a slight boost from lawmakers who want to make it easier for geothermal projects to navigate state regulations. Both chambers passed a bill exempting geothermal wells from certain fees that oil and gas drillers have to pay and clarifying which rules apply to geothermal.
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Author: Ally Heath
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