CALGARY, Alberta (June 18, 2025) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS company that leverages generative AI across its solutions, has released a report that analyzes how rising capital costs and supply chain delays have affected natural gas-fired power projects under the Texas Energy Fund (TEF). In the report, EIR evaluates the economics of these plants, including what power prices are needed to make these new gas-fired projects feasible.
“Several TEF-backed projects are now posting unlevered, after-tax internal rates of return (IRRs) below 10%, roughly half of what returns were before supply chain constraints drove new gas-fired capex to more than double that of 2023 figures. To make these projects viable, developers would need to see flat power prices at roughly a 50% premium from today’s 7-year forward power price curve,” said EIR Analyst Corianna Mah.
“With new build economics under pressure, some developers may pivot from new construction to acquiring existing assets. M&A values, while elevated, are still well below what it costs to build new gas-fired plants in today’s market,” Mah said.
“However, the economics of new gas builds remain highly uncertain, and are heavily dependent on whether incentives for battery storage – a key competitor to gas for load – strengthen or weaken, and whether or not gas-friendly policies prevail.”
Key takeaways from the report:
- EIR estimates the unlevered after-tax IRRs of TEF natural gas-fired power projects have unlevered after-tax IRRs of 3%-28%, a sharp drop from pre-2025 levels as capital costs have surged by as much as threefold. Several project withdrawals have been linked to costly supply chain constraints that no longer support development.
- At least four active projects in the program are at risk of withdrawal due to challenging economics, according to EIR’s analysis. They would need power prices of ~$80/MWh to realize a 10% return, an almost 50% premium over the 7-year average forward power price.
- Given the challenges of new natural gas builds, EIR believes more companies in the TEF may exit to pursue M&A opportunities instead. M&A multiples this year have reflected strong premiums relative to historical trends but far below the $2-$3 million/MW values cited in recent earnings calls for new gas generation.
- Uncertainty over battery incentives and gas regulations delays investment in new gas plants. Increased battery support or new natural gas restrictions could render more gas projects unfeasible.
EIR’s analysis pulls from a variety of products including Enverus FOUNDATIONS® | Power & Renewables and Enverus Energy Transition M&A.
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About Enverus Intelligence® Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.
