Gov. Greg Abbott announced a Texas Energy Fund loan agreement on Thursday to support the construction of a 570-megawatt natural gas power plant in Sherman, with Rayburn Electric Cooperative slated to build and operate the facility.
The project is the seventh loan finalized under the Texas Energy Fund’s In-ERCOT Generation Loan Program, which offers low-interest financing for new dispatchable generation tied to the Electric Reliability Council of Texas grid. Power from the plant is expected to come online in 2028, according to the governor’s office.
Total project costs are estimated at less than $685 million, the governor’s office announced. The Public Utility Commission of Texas is providing a 20-year loan of up to $411 million, covering up to 60% of the total cost, at a 3% interest rate. The loan term runs from June 3, 2026, through June 3, 2046.
“Texas is the energy capital of the world because we invest in the power needed to support the growth of our state,” Abbott said in a news release. “The Texas Energy Fund brings new, reliable generation online to ensure our power supply meets demand. This project is another step toward keeping our grid strong and our economy the envy of the world.”
PUCT Chairman Thomas Gleeson said the program is fulfilling the mandate voters gave when they approved the Texas Energy Fund.
“When Texas voters overwhelmingly approved the Texas Energy Fund, they gave us a mandate to secure new, reliable power generation for Texas,” Gleeson said. “The TxEF is delivering on that promise, and Rayburn Electric Cooperative’s new 570 MW power plant is proof. We are ensuring Texas families and businesses have power they can depend on for years to come.”
Rayburn will construct the facility, known as Rayburn Energy Station II, near its existing Rayburn Energy Station 1 site in Sherman. The plant will interconnect in the ERCOT North Load Zone.
“Rayburn Energy Station II represents a major milestone and strategic investment in reliability for our four Member cooperatives and the communities we serve across North Texas,” said David A. Naylor, president and CEO of Rayburn. “As our region continues to grow, investments in safe, reliable, and affordable power remain critical. We are thankful to Governor Abbott, our legislators, and the PUCT for their continued leadership and focus on strengthening the ERCOT grid. We take great pride in being the first cooperative to qualify for and achieve funding under the Texas Energy Fund.”
Headquartered in Rockwall, Rayburn is a “not-for-profit generation and Transmission Cooperative dedicated to providing dependable and cost-effective wholesale energy solutions. Rayburn serves four Member-owned distribution cooperatives — Fannin Electric Cooperative, Farmers Electric Cooperative, Grayson-Collin Electric Cooperative, and Trinity Valley Electric Cooperative — collectively serving more than 625,000 Texans in one of the fastest-growing regions in the country,” the company said in a news release.
It is the first and only electric cooperative to receive TEF funding.
Under the agreement, the facility must meet minimum performance standards set out in program rules. The PUCT administers the fund through a competitive application process and financial review.
Six additional applications are currently moving through due diligence review under the In-ERCOT Generation Loan Program, representing a combined 3,216 MW of proposed new dispatchable generation for the ERCOT grid.
