Texas Energy Crisis Deepens, Nuclear Projects Rise, & Gas Projects Collapse

The energy world stands at a critical inflection point as grid operators scramble to maintain reliability in the face of unprecedented demand growth. Southwest Power Pool CEO Lenny Nickel delivers a sobering assessment: reserve margins could collapse to a dangerous 5% by 2029, down from a comfortable 24% in 2020. With generation projects unable to deploy quickly enough, SPP is forced to bet on demand response as its near-term savior against peak load projections that could nearly double to 97 gigawatts by 2035.

Against this backdrop of grid pressure, both promising developments and concerning setbacks are reshaping America's energy landscape. Dandelion Energy's partnership with Lennar brings hyper-efficient geothermal heat pumps to 1,500 Colorado homes, delivering triple the thermal energy per kilowatt-hour consumed. Meanwhile, Dow and X Energy's application for a modular nuclear facility in Texas highlights growing interest in next-generation nuclear, though regulatory timelines remain lengthy.

Texas presents a particularly troubling case study with its $5 billion Energy Fund unraveling as developers flee. Engie, Wattbridge, and Constellation have collectively withdrawn over 2.8 gigawatts of planned dispatchable generation, citing unfavorable economics and elevated risks. This exodus comes precisely when Texas needs capacity most. Simultaneously, Pennsylvania's former Homer City coal plant transforms into a massive $10 billion gas-powered data center complex, generating twice the power of its predecessor. The question remains: can demand response, innovative technologies, and strategic investments close the growing gap between soaring demand and constrained supply? Subscribe now to stay updated on how these critical energy stories unfold.

Support the show

Episode Transcript

Speaker 1 (00:00):
I've got your energy stories for this the second week
of April 2025.
With rising energy demand and asclerotic response on the
supply side, the Southwest PowerPool is looking to demand
response to bail it out, saysSPP CEO Lenny Nickel.
The grid operator projects itsreserve margin may fall as low
as 5% by 2029.
That's a steep decline from2020's 24%.

(00:23):
Access generating capacity isdwindling, nickel said, to a
point where it's becomingdangerous.
Since generation can't bebrought online fast enough, svp
is resorting to quote acomprehensive, unquote demand
response policy.
It anticipated peak load drivenby evs, electric heat pumps and
data centers, may soar from 56gigawatts last year to 97

(00:46):
gigawatts by 2035.
Longer term, more transmissionand generation, including gas,
may help, but in the short term,dr is the only resource that
can be stood up quickly andaddress the issue of peak demand
.
It's one thing to say it andanother to do it, so we'll see
how the DR programs evolve andhow quickly they can be ramped.
Speaking of heat pumps,dandelion, the country's leader

(01:09):
in geothermal heat pumps, isjoining forces with home builder
Lenar to integrate groundsource heat pumps into 1,500 new
Lenar homes in Colorado overthe next two years.
Heat pumps rock in terms ofefficiency because they suck
heating and cooling out of theearth to warm or cool homes as
needed.
For every kilowatt hour ofelectricity, you get over three

(01:33):
units of equivalent heating orcooling.
Electricity demand increases,though, but you do get one of
the biggest bangs per kilowatthour a watt hour.
Moving to Texas, dow and XEnergy Reactor Company LLC, a
modular nuclear developer, havesubmitted a construction permit

(01:53):
application to the NuclearRegulatory Commission for
Nuclear Project in Seadrift,texas.
The unit will provide power andindustrial steam.
Approval of the constructionpermit could take up to 30
months, after which constructioncould begin, assuming that the
NRC also approves X Energy'sdesign.
To date, only NuScale hasreceived NRC approval for design
of a modular nuke.
Each of these XE100 reactors isdesigned to yield 80 megawatts.

(02:18):
Also in Texas, you may haveheard of the $5 billion Texas
Energy Fund.
It's a low-interest programestablished in 2023 to entice
dispatchable gas generation toTexas.
Initial interest was strong,with developers submitting
dozens of project applications,and in August of 2024, 17
finalists were selected.
However, since then, thingshave changed.

(02:40):
Engie was the first to walkaway from its 930 megawatt
peaker plant in February, citingquote equipment procurement
constraints unquote.
Then came Wattbridge, yankingfour projects totaling 1.62
gigawatts in late March, statingquote terms offered through the
TEF program introduced risk andcosts that result in lower than

(03:01):
anticipated returns withelevated risks that result in
lower-than-anticipated returnswith elevated risks.
Unquote.
Joining the herd this past weekwas Constellation withdrawing a
planned 300-megawatt capacityexpansion to its 1.1-gigawatt
Wolf Hall 3 project.
Meanwhile, demand growth inTexas continues to soar as
reserve margins decline.
This story will be worthwatching as it continues to

(03:23):
unfold and Texas works tonavigate between that proverbial
rock and hard place.
But gas turbines are apparentlygoing where the money is.
The site of Pennsylvania'sHomer City coal plant, 50 miles
east of Pittsburgh, is beingredeveloped to serve a huge data
center complex.
The new $10 billion facilitywill employ seven GE Vernova gas

(03:45):
turbines to generate up to 4.5gigawatts of power, twice the
output of the former coal plantthat was shuttered in 2023.
The plant should startgenerating by 2027 as it is able
to exploit the existingtransmission infrastructure and
grid interconnection.
It's still not clear whetherthe data centers will be able to
purchase power behind the meter.

(04:06):
The Federal Energy RegulatoryCommission is still looking at
this type of co-locationarrangement, which they say is
going to take longer to addressthan was previously anticipated.
Well, that's all for this week.
Thanks for watching and we'llsee you again soon.