Texas voters overwhelmingly approved a ballot proposition Tuesday establishing a billion-dollar state-managed energy fund to bolster natural gas power plant infrastructure.

Proposition 7 to create the so-called Texas Energy Fund passed in a 65% to 35% vote with more than 2.5 million ballots cast, according to the latest data compiled by the Texas Secretary of State's office. The ballot measure – which was supported by the energy industry, but opposed by environmentalists – sets aside $5 billion to guarantee low interest loans for new dispatchable power generation in the state.

"TXOGA is pleased to see infrastructure propositions to expand water, electricity and broadband pass with overwhelming support from voters," Todd Staples, the president of the Texas Oil & Gas Association, said in a statement Tuesday evening. "By voting to approve these propositions, Texans are ensuring that the Lone Star State continues to be the best place to live, work, play and raise a family."

He added that Proposition 7 will help "strengthen the reliability of our electric grid by ensuring it performs no matter the weather as well as increase the supply of electricity by encouraging additional generation."

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The measure is the final step to enact Senate Bill 2627, which Republican Gov. Greg Abbott signed into law in July. 

Under the bill, loans financed by the Texas Energy Fund must have a 20-year term and interest rate of 3%, and can be used either to upgrade existing dispatchable power generation increasing capacity by at least 100 megawatts (MW) or to construct new power generation with a capacity of at least 100 MW. A natural gas power plant with a capacity of 100 MW can power tens of thousands of homes.

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The effort to create incentives for power companies to expand natural gas power generation was designed to address growing concerns that the state's power sector doesn't have an adequate energy generation that can be quickly dispatched to provide electricity during emergency peak periods. 

According to former Public Utility Commission Chair Peter Lake, the state's dispatchable power supply grew only 1.5% between 2008 and 2020 while, in that same timeframe, the Texas population grew 24%, meaning demand is outpacing supply. The concern is particularly elevated because of Texas' growing reliance on green energy sources like wind and solar, which aren't dispatachable, and are intermittent, meaning they are reliant on weather conditions.

"The urgency to move forward with meaningful electric market reforms that will incentivize the development of dispatchable generation remains extremely high," Pablo Vegas, the current president and CEO of the Electric Reliability Council of Texas, said earlier this year.

In 2022, Texas generated 26% of all U.S. wind-generated electricity and has led the nation in that category for 17 consecutive years, federal data showed. Natural gas, though, still produces by far the largest share of electricity generation in the state.

In addition to the Texas Oil and Gas Association, ConocoPhillips, Texas Association of Manufacturers, Texas Pipeline Association and Valero Energy Corporation supported Proposition 7. And the Sierra Club, Environment Texas, Texas Advanced Energy Business Alliance and Texas Consumer Association opposed it.

"We need, and Texans want, more clean energy, not less. There is strong support for more wind and solar energy, more battery storage, more energy efficiency, and more interconnection with the national grid," said Luke Metzger, the executive director of Environment Texas. "Unfortunately, the Legislature ignored these solutions to strengthen our electric grid while protecting consumers and the environment."