Sherman is about to get a major new player in the power game, with a 570-megawatt natural-gas plant headed to town after state officials signed off on a low-interest loan this month. Rayburn Electric Cooperative plans to build the Rayburn Energy Station II right next to its existing facility, with an estimated price tag of about $685 million. State projections say the plant could generate enough electricity to serve roughly 500,000 people, and the target is to have it online in 2028.
State loan covers most of the tab
Governor Greg Abbott and the Public Utility Commission of Texas have approved a Texas Energy Fund loan of up to $411 million to help bankroll the Sherman project. The PUCT is offering a 20-year loan at a 3% interest rate, a package that covers about 60% of the projected cost. In a press release from the Office of the Texas Governor, Abbott cast the financing as part of a broader push to shore up grid reliability as electricity demand keeps climbing.
Permits spell out how the plant will run
Permit filings with the Texas Commission on Environmental Quality describe Rayburn Energy Station II as a peaking facility built around ten simple-cycle turbines that together provide a nominal 570 MW of capacity. The paperwork lays out emissions controls, continuous emissions monitoring (CEMS) and Title V operating requirements. It also places the new build at the existing Rayburn Energy Station site in northeast Sherman and specifies allowable emissions and monitoring steps under federal and state rules.
Data centers are cranking up Texas power demand
The timing is no accident. The plant is arriving as a wave of planned data centers reshapes Texas power planning. The Texas Tribune analysis identified at least 248 planned facilities around the state, with several mega-campuses eyeing enormous amounts of electricity. Among the standouts were an Abilene campus that could use up to 1,200 MW and a site outside Amarillo that could demand as much as 11,000 MW, figures that have regulators and local officials scrambling to plan for both power capacity and water use.
What it could mean for Sherman and North Texas
State leaders said the loan makes Rayburn the first electric cooperative to qualify for Texas Energy Fund money, and the agreement includes performance standards that the PUCT is set to enforce. "Rayburn Energy Station II represents a major milestone and strategic investment in reliability," Rayburn President and CEO David A. Naylor said in a release from the Office of the Texas Governor, which also notes that the loan term runs from June 3, 2026, through June 3, 2046.
Next steps and the bigger grid picture
Construction and permitting are expected to continue over the next two years as Rayburn works toward connecting the plant to ERCOT's North load zone and hitting the 2028 in-service target. As first reported by FOX 4 News, officials see the Sherman project as one of several recent moves by state leaders to bring more dispatchable generation online while data center developers scout for capacity across Texas.
