The Texas state legislature is debating bills that would affect the power sector.

The proposals fall into five broad categories: a new permitting regime for wind, solar and battery energy storage projects, new transmission infrastructure costs and reliability requirements for large load customers like data centers, a potential requirement that at least 50% of electricity on the ERCOT grid must be sourced from gas and other dispatchable power plants, changes in existing taxes on renewable energy projects, and new fire safety and decommissioning requirements for battery storge projects.

The current legislative session runs through June 2, 2025.

Wind and Solar Permits

Senate Bill 819 would require solar and wind projects with generating capacities of at least 10 megawatts that connect to the grid on or after September 1, 2025 to undergo a permitting process with the Public Utility Commission of Texas.

The commission could deny interconnection to projects that fail to meet new application criteria to be developed by the PUCT or that the commission believes would cause substantially more harm than benefit to the state. The PUCT would have to act on permitting requests within 180 days or else projects would be considered to have been approved.

Applicants would have to share site plans showing compliance with setbacks, undergo environmental impact reviews with the Parks and Wildlife Department, prepare fire mitigation plans, and notify county judges within 25 miles of projects of the permit applications.

A potential consequence is developers could have to change facility designs and amend existing contracts to account for any delays in project timelines, setback requirements and shifting project economics from changes imposed on projects during permitting.

Permit applicants would have to provide the PUCT with project contracts to demonstrate compliance with surety bond and decommissioning obligations. Documents filed with the PUCT can be made public. Public disclosure of sensitive contract terms in leases and power purchase agreements could become an issue for developers.

The bill has already passed the Senate and is being considered by the House.

Large Customers

SB 6 would impose a greater share of transmission infrastructure costs on large-load customers like data centers, green hydrogen and ammonia production facilities and factories, and it calls for mechanisms to ensure these customers contribute to grid reliability.

Large-load customers asking to connect to the grid or increase capacity on existing interconnections would have to disclose anything that might delay or lead to withdrawal of the interconnection requests. This applies to customers requiring at least 75 MW of capacity. The PUCT has discretion to choose a lower threshold.

Customers would also be subject to fees, transmission screening studies and requirements to post financial security.

Non-critical large-load customers and customers with their own generating sources that are on the customer side of the electricity meter would be required to reduce demand on the grid and make on-site backup generating facilities available to ERCOT to help with load shedding during emergency events like bad storms.

Exemptions would be permitted for facilities where an offload would create life-threatening conditions or for natural gas facilities deemed “critical” by the Texas Railroad Commission.

Utilities serving customers interconnected after December 31, 2025 and taking transmission voltage services would be required to install or cause customers to install equipment allowing curtailment during emergencies when the grid must knock customers off the system to stabilize grid frequency. The bill also directs ERCOT to work on competitively procuring demand reductions from large-load customers in advance of foreseeable emergency conditions.

New large-load retail customers that want to connect to the grid and are co-located with operating power plants would be subject to conditioned net metering arrangements. Such customers would be affected only if the interconnection would expand total load at a single site above a PUCT-determined demand threshold. Arrangements would be subject to approval by the local utility. Approval could be withheld for “reasonable cause.”  The commission would have 180 days to review, approve, deny or impose additional conditions on the arrangements.

Retail customers with behind-the-meter power sources would have to reduce or make available capacity during unspecified “certain events.”  Such customers would have to reimburse ERCOT for any stranded or underused transmission assets resulting from behind-the-meter operations.

SB 6 passed the Senate and is being considered by the House.

Dispatchable Generation

SB 388 would direct the PUCT to create a dispatchable generation credits trading program.

Power generators that do not produce enough dispatchable power (as determined by the PUCT) would have to buy credits so that 50% of the total generating capacity installed in ERCOT after January 1, 2026 is non-battery energy storage dispatchable generation.

There would be penalties for failure to comply. Standalone battery energy storage systems would be exempted.

The program would be implemented only if less than 55% of all new generating capacity installed in ERCOT after January 1, 2026 comes from dispatchable generation.

Delays caused by equipment procurement constraints have slowed construction of new dispatchable power plants lately, making it more likely that the program would be triggered. Several developers have withdrawn natural gas projects from the Texas Energy Fund loan program—a program intended to increase dispatchable generation development—because of these complications.

Another bill, SB 715, would require all existing and new power plants to procure backup power generation so that they can be immediately available if called on during periods of reliability risk. Generators could either secure backup generation directly or contract with other dispatchable resources. This bill would most directly affect renewable energy projects and could negatively affect project economics.

SB 388 passed the Senate and is being considered by the House. SB 715 is set for a Senate vote. The House companion bill, HB 3356, is also progressing in the House.

Taxes

SB 419 would increase the useful lives of existing and future utility-scale solar energy facilities from 10 to 35 years for property tax appraisal purposes and lead to higher property tax valuations.

Another bill, SB 714, directs ERCOT to write rules and operating procedures to offset market “distortion” caused by federal renewable energy tax credits. The bill is supposed to ensure that costs imposed on the system by sales of electricity that is eligible for federal production tax credits are “paid by the parties that impose the costs.”  The only example of “costs” provided are the “costs of maintaining sufficient capacity to serve load at the summer peak demand caused by the loss of new investment from below-market prices.”

These bills demonstrate a continued focus by the legislature on counteracting perceived market distortions caused by federal tax credits. Both bills remain in Senate committees.

Battery Storage Systems

SB 1824 would impose on batteries virtually the same facility removal and related financial assurance requirements that exist currently for wind and solar projects.

New site control agreements for battery storage facilities would be required to incorporate standard facility removal, restoration and recycling provisions. Project owners would have to provide landowners proof of financial assurance sufficient to cover decommissioning. It is unclear whether the requirements would apply to options-to-lease agreements entered into before the proposed effective date, September 1, 2025, where the lease option is exercised after that date.

Another bill, SB 1825, would impose fire safety standards and testing requirements on utility-scale battery storage facilities connected to the grid after January 1, 2027. Affected operators would be required to collaborate with independent engineers to create fire safety readiness reports. The reports would have to be updated every three years and include plans for training and working with local first responders to address emergency events.

Both SB 1824 and 1825 are in Senate committee.