Energy experts are skeptical investors will find Patrick’s pitch attractive. “I don’t think we’ll see any new net additions to the portfolio” of Texas’s gas power plants, energy economist Ed Hirs told KUT. That’s partly due to the abundance of cheap renewable power already on the grid, which already met 26 percent of the state’s electricity demand in 2022. Given that and headwinds like higher interest rates, companies could find it difficult to pay back a state loan along the 30- to 40-year timelines typical of such projects. “Maybe one or two of the generator companies will take old units and scrap them and use some of this money to build new ones, but I don’t expect to see a net gain.”
It’d hardly be out of character for Texas to socialize its energy system. For decades, the Texas Railroad Commission—an oil and gas regulator—led a cartel that essentially controlled the global price of oil by strategically throttling production, in some cases enlisting the National Guard to pry men from pumpjacks; the Organization of Petroleum Exporting States was modeled on it. As a Senator, Lyndon Baines Johnson was instrumental in bringing the New Deal’s rural electrification administration to the Texas Hill Country. As energy secretary under Donald Trump, former Texas Governor Rick Perry proudly proclaimed, “There is no free market in the energy industry.”
While a boom of new gas plants likely won’t fix what ails Texas’s grid, this approach may hold lessons for renewable energy advocates. Not unlike Patrick’s prized gas power plants, offshore wind projects have struggled to take off in the United States, despite a generous suite of federal and state subsidies. Energy developers like the Danish state-owned firm Ørsted have demanded ever-more generous payouts from public coffers so that they can furnish potential investors with the kinds of reliable returns they expect from fossil fuels. Failing that—under pressure from rising interest rates and supply chain woes—Ørsted recently opted to exit several offshore wind markets and lay off hundreds of employees. The basic dilemma is a challenge for private investment–driven approaches to decarbonization like the Inflation Reduction Act. Such policies theorize the energy transition can be powered by turning its necessary inputs into return-generating assets that any investor would be thrilled to finance. Without a continued stream of public subsidies, though, offshore wind probably isn’t going to happen at scale.