Some big names in the world of finance, Texas energy and politics met Tuesday in Houston to talk about the state’s power grid. The goal of the event, called the “Texas Power Grid Investment Summit,” was to attract investors to build natural gas power plants in Texas.
The summit was hosted by Lt. Gov. Dan Patrick and BlackRock, the world’s largest investment firm. Patrick and BlackRock CEO Larry Fink shared opening remarks, but have found themselves at odds over energy policy in the past.
A few years ago, Patrick helped pass a law getting Texas to divest public funds from BlackRock and other firms because of their environmental and socially focussed financial strategies.
After that divestment push, BlackRock went into damage control and began touting the billions it still puts in the industry. Patrick said Fink reached out to him directly, and the two began talking.
Both men want something from each other. Fink wants to get off the blacklist. Patrick wants BlackRock to help find backers for more power plants in Texas, which he says will bolster the grid.
Fast forward to Tuesday, where they shared the stage at the Houstonian Hotel.
Incentives or more?
At the event, the audience heard from both men about opportunities to invest in Texas power generation. Those opportunities include $10 billion in incentives and bonuses to encourage power plant construction proposed by lawmakers and approved by voterslast year.
At times the sales pitch almost took the tone of an auction or, as Patrick joked, a “timeshare presentation.”
“We estimate in this room there’s $2.2 trillion,” Fink told the crowd. “We only have to put $10 billion to work, so can we get it done? Can we start raising hands?”
“In all seriousness,” he said, “I think we can find a solution.”
Not everyone is so sure.
Ed Hirs is an energy economist at the University of Houston and longtime critic of Texas’ deregulated energy market. He says the way the Texas market is structured won’t provide a steady return to power plant operators, making plant construction bonuses ineffective.
He said he believes the fact the summit was held in the first place proves his point.
“If you’ve got $2 trillion worth of investors and they’re looking for a deal … they wouldn’t have had this summit; there would already be power plants being built,” he said. “All of these guys are sharks. There not going to miss an opportunity to make a profit.”
Speaking to reporters after the event got underway, Lt. Gov. Patrick and some of his allies in the state Senate said they were optimistic that outreach and the state incentives would bear fruit.
If they didn’t, Patrick said, the state would have to take more direct action.
“If we can’t get an incentive program to attract investors to build, then the state will have to build [the power plants] ourselves and then subcontract out for someone else to run it,” he said.
“That’s the last card you want to play,” he said later, acknowledging there would be “pushback” to the plan.
Similar plans for a state-funded fleet of natural gas plants have failed to pass in the last two regular legislative sessions.