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Houston City Hall in Houston, Wednesday, Aug. 12, 2026.<\/p>\n
Jacob Lujan\/Houston Chronicle<\/p>\n
The city of Houston will chip in a projected $11 million in tax incentives for\u00a0a new natural gas power plant to be built and operated by NRG Energy<\/a>.\u00a0<\/p>\n The proposal, which Houston City Council passed unanimously Wednesday, will be the city\u2019s largest active tax abatement, and required the council to waive a city rule prohibiting tax incentives from going to energy generation projects. City officials, meanwhile, pointed to ongoing concerns about the stability of the Texas grid<\/a>, particularly as a rash of new power-hungry data centers creates a political firestorm across the state<\/a>.<\/p>\n READ MORE:\u00a0NRG Energy awarded $370M taxpayer-funded loan to build natural gas power plant in northeast Houston<\/a><\/p>\n Article continues below this ad<\/p>\n The 10-year deal will lower the annual property tax bill on the new $570 million facility in far northeast Houston by roughly $1.1 million annually. The 455-megawatt \u201cProject Moonshot\u201d will be a \u201cpeaker\u201d plant, generating more energy during periods of high demand.\u00a0<\/p>\n The city funds join a $21 million property tax break\u00a0NRG\u00a0has already secured from Galena Park\u00a0ISD and a $370 million loan the project has received from the Texas Energy Fund<\/a>. That taxpayer-backed program, which gives low-interest loans to help build new power plants, was created after the state power grid failed during Winter Storm Uri in 2021, killing hundreds.<\/p>\n NRG has said its plan hinges on government support. Without it, \u201csites outside of Texas would have to be prioritized,\u201d the company told the state in its loan application<\/a>, mentioning alternative NRG facilities the company could expand in New York and other states.\u00a0<\/p>\n The plant will add capacity to power 110,000 homes per year, and NRG representatives told the council at a committee hearing in February that it could lower or stabilize utility bills in the Houston area. <\/p>\n Article continues below this ad<\/p>\n But the company has also said in its state loan application that the facility will specifically\u00a0help \u201cattract investment and industries that rely heavily on energy, such as heavy or advanced manufacturing and data centers\u201d because of its ability to power up quickly. NRG also last year announced\u00a0plans to build out a separate suite of brand-new gas plants<\/a> to supply data centers.<\/p>\n \u201cWe are growing rapidly, and with that growth comes a greater need for reliable energy and additional power generation, especially as the grid continues to face strain,\u201d Mayor John Whitmire\u00a0said in a statement.<\/p>\n The abatement is set at 50%, meaning the city still will collect a projected $11 million in property taxes from the facility over the next decade. The plant, to be built next to a group of existing\u00a0NRG facilities, would generate roughly 500 construction jobs and 14 full-time jobs once it is operational in 2028, company leaders told the council.\u00a0<\/p>\n AI BOOM: NRG Energy to build four natural gas power plants to supply data centers in Texas, elsewhere<\/a><\/p>\n The key question, said Nathan Jensen, a government professor at the University of Texas-Austin, is whether the company would have chosen to build the plant without the city\u2019s support.<\/p>\n Article continues below this ad<\/p>\n \u201cIs that extra piece of incentive really going to swing that project?\u201d said Jensen. \u201cBecause if not, then you’re just burning tax revenues for no benefit.\u201d\u00a0<\/p>\n The project\u2019s benefit to Houston residents\u2019 utility bills may also be difficult to measure against the statewide power grid at large, Jensen said.<\/p>\n An atypical tax break<\/p>\n The abatement was approved with little discussion on Wednesday, and city leaders had previously signaled support.<\/p>\n \u201cObviously I would prefer not to give an abatement, but unfortunately they did have other choices,\u201d Council Member Fred\u00a0Flickinger said last week, when the item first appeared on the agenda. \u201cOf all the abatement deals that have come before us, I thought this one was the best one.\u201d\u00a0<\/p>\n Article continues below this ad<\/p>\n The deal\u2019s projected annual price tag will be more than double the next-biggest active abatement, according to\u00a0the city\u2019s annual audit<\/a>. Houston\u2019s eight other active abatements totaled $1.6 million in tax breaks in fiscal year 2024.<\/p>\n The abatement is also atypical among the city\u2019s existing tax deals, which generally have gone to large-scale facilities operated by major employers, like a corporate hub for the engineering firm\u00a0Halliburton or distribution centers for Kroger and United Parcel Service.<\/p>\n