Recent legislative developments in Texas—specifically Senate Bills 878 and 819—propose significant changes to the development of renewable energy projects that have not yet secured Chapter 312 tax abatement agreements. Kroll’s Site Selection & Incentive Advisory practice is providing this alert to current and prospective clients with renewable energy projects under development in Texas and the ERCOT grid and stands ready to assist your team with tax incentive pursuits.
Tue, Mar 25, 2025
Texas Legislation Alert: Secure Incentives on Renewable Energy Investment Before Enactment
Role of Chapter 312 Agreements
By securing a Chapter 312 agreement, you not only preserve the valuable property tax abatement benefits that have facilitated billions in renewable energy development in Texas but also mitigate any potentially adverse impacts of these legislative changes.
SB878
This bill proposes tighter restrictions on the use of public funds for economic development programs under Chapters 380 (City) and 381 (County) of the Local Government Code in Texas preventing 380 and 381 agreements from being used to rebate ad valorem property tax. Without an active Chapter 380/381 agreement in place, municipalities and counties would be precluded from granting abatements that many projects currently rely on to reduce operational costs and increase ROI.
SB819
This bill introduces a permit system for renewable energy generation facilities with a capacity of 10 megawatts or more, requiring detailed applications and environmental impact reviews. It also imposes annual environmental impact fees and establishes a “cleanup” fund to address the environmental effects of these facilities. Additionally, the bill prohibits tax abatements for certain renewable energy properties, potentially affecting their financial viability.
We strongly advise that all active renewable energy projects evaluating Chapters 312, 380, and 381 agreements in Texas expedite those pursuits and plan to secure them well before the September 1, 2025 effective date of such legislation. Taking proactive steps now will help improve your project's financial viability and prevent potential delays or additional costs arising from these proposed legislative changes.
Our team is ready to provide you with tailored guidance and assist in expediting the process. Please contact us at your earliest convenience to ensure that your project remains on solid footing as the legislative environment evolves.
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