Duke Energy will build, own and operate the Los Vientos I Windpower Project in Willacy County, 20 miles inland from the Gulf of Mexico.
The decision to move ahead with the project was announced after the it secured a 25-year power-purchase agreement (PPA).
Duke Energy will sell all of the output from the wind farm and associated renewable-energy credits to CPS Energy under the terms of the 25-year agreement.
Construction of Los Vientos I, sited on 30,000 acres of leased land, will start in the fourth quarter of 2011 and the project is scheduled to achieve commercial operation in December 2012.
Duke Energy is also developing a second phase of the Los Vientos wind farm in the region, but is yet to secure a PPA for it.
According to Windpower Monthly's Windicator, Texas had 10.1GW of wind capacity at the end of July.