After 140 days of legislative activity, the 89th Texas Legislature adjourned Sine Die on June 2, 2025. This session saw the highest volume of bills filed in recent Texas legislative history, yet featured a notably lower passage rate of approximately 14% — in contrast to the typical 20%. In total, the Legislature passed over 1,300 bills and joint resolutions, while over 8,000 others died in committee or failed to meet procedural deadlines. To date, Governor Greg Abbott has signed 307 of these measures into law and issued two vetoes. He has until June 22, 2025, to sign, veto or allow bills to become law without signature.
This legislative session saw considerable debate and activity surrounding power generation and clean energy, evidenced by the introduction of over 50 bills related to the industry. The subsequent update offers a high-level overview of the key legislative outcomes, successful and unsuccessful, that are relevant to the power generation and clean energy industry.
McGuireWoods and McGuireWoods Consulting will host a client webinar to discuss the developments in the recently concluded 89th Legislature next week. Watch for that invitation to follow separately.
LEGISLATION THAT PASSED
SB 6
Senate Bill 6 (SB 6) was passed by a super-majority in the Texas House and Senate and has significant implications for large load consumers (LLs), such as data centers, in the Electric Reliability Council of Texas (ERCOT) region. The bill is meant to encourage more efficient use of power within ERCOT and address potential reliability issues arising from (1) the removal of power generation from the grid by co-locating LLs with existing generators and (2) the inability of ERCOT to curtail LLs during grid emergencies, which could exacerbate the risk of widespread outages.
To address these concerns, SB 6 outlines a series of directives for the Public Utility Commission of Texas (PUCT) and ERCOT. It mandates the establishment of interconnection charges for LLs and calls for a reevaluation of the 4 Coincident Peak (4CP) methodology used in transmission cost allocation. The bill also directs PUCT to create standardized interconnection processes for LLs and establishes a formal review process for LLs seeking net metering with existing generators. Additionally, SB 6 establishes a flat study fee of at least $100,000 for initial transmission screening studies, with provisions for additional fees if more capacity is requested.
In terms of reliability, SB 6 directs PUCT and ERCOT to develop a competitive reliability service to procure demand reductions from LLs in anticipation of emergencies. It also mandates curtailment capabilities for non-critical LLs during firm load shed events and allows ERCOT to issue emergency notices requiring LLs with backup generation to either reduce load or deploy their own generation — only after all market-based services have been exhausted, treating such actions as firm load shed for price calculation purposes.
Notably, SB 6 delegates significant authority to PUCT to establish and enforce rules and standards for LLs. As such, the specifics remain unclear.
Texas Energy Fund
The Texas Legislature approved an additional $5 billion of funding for the Texas Energy Fund (TEF) for fiscal years 2025-2026, reaching TEF’s $10 billion limit in funding. While TEF will grant most of the money as low-interest loans to incentivize the development of new gas power plants, $1.8 billion out of the newly approved $5 billion will go to the Texas Backup Power Package Program. The Texas Backup Power Package Program offers financial incentives to help businesses install reliable backup power sources, including solar and storage, at facilities necessary to support the community health, safety and well-being. These businesses include critical infrastructure such as nursing homes and water treatment plants.
The Texas Legislature also passed SB 2268, enabling TEF to extend the initial funding deadline beyond Dec. 31, 2025, on a case-by-case basis, “if the commission determines that market factors necessitate [it]”. SB 2268 also splits the 10 GW capacity limit, which was previously shared between the low-interest loans and completion bonus grants, into two separate 10 GW limits. However, as both the loans and completion bonus grants still share the $7.2 billion cap, TEF will not be able to grant the full 10 GW in loans and 10 GW in grants in practice.
Legislation Impacting Battery Energy Storage Systems:
Recognizing the increasing role of battery energy storage systems (BESS) in Texas, the Texas Legislature adopted three bills related to the decommissioning of battery energy storage facilities (HB 3809), the regulation of recyclers of the components of wind, solar and energy storage projects (HB 3229), and fire safety standards for battery energy storage facilities (HB 3824).
- HB 3809 adds Chapter 303 to the Utilities Code and requires that battery energy storage facility leases include certain provisions to require end-of-term removal of the facility, including for clearing the facility’s components, proper recycling of materials and the lessee providing financial assurance for decommissioning. HB 3809 tracks the existing decommissioning laws for wind and solar projects in Texas in Chapters 301 and 302 of the Utilities Code. This bill applies only to agreements executed on or after the bill’s effective date of Sept. 1, 2025.
- HB 3824 requires new fire safety standards and testing requirements for battery energy storage facilities with a capacity of one megawatt hour or greater and a commercial operations date that occurs on or after Jan. 1, 2027. These standards and requirements are based on nationally recognized standards for battery energy storage equipment and other such standards established by the National Fire Protection Association. The requirements under HB 3824 include a written report by the battery operator and independent engineer before the commercial operation date of a battery energy storage facility, a fire safety inspection report to the municipality or county at least once every five years, and a site-specific emergency operations plan provided to the local first responder where the facility is located. The bill specifies protocols, evaluations, and recommendations that the battery operator must include in each report. Pending the Governor’s signature, HB 3824 takes effect on Sept. 1, 2025.
- HB 3229 adds Chapter 376 to the Health and Safety Code to require recyclers of renewable energy components to file annual reports with the Texas Commission on Environmental Quality (TCEQ) and post financial assurance for the cost of recycling or disposing of materials. HB 3229 effectively requires recycling facilities to report on the components received from wind, solar and battery energy storage facilities under the decommissioning requirements in HB 3809 and HB 3228.
- Recyclers must file reports with TCEQ no later than Jan. 15 of each year on inventory of materials they have taken title to and post financial assurance for 100% of the cost of recycling and disposing of components of wind, solar and energy storage projects. Penalties up to $500 per day for each violation may be imposed.
Sustainable end-of-life management for renewable energy technologies was addressed through two primary bills for solar, wind and storage technologies.
- HB 3228: Chapters 301 and 302 of the Utilities Code already contain required decommissioning provisions for solar and wind leases, and HB 3228 builds on those code sections by adding required provisions on recycling. HB 3228 requires the recycling of all components capable of being reused or recycled at the end of a wind or solar facility’s life and requires that the lessee’s financial assurance include the cost of recycling or disposing. If the Governor signs HB 3228, the changes made to Chapters 301 and 302 will only apply to wind or solar leases entered into on or after Sept. 1, 2025.
- HB 3229: Described above.
The Texas Legislature passed two noteworthy bills that established new commissions and granted additional review authority over certain matters.
- HB 14 creates a Texas Advanced Nuclear Energy Office within the Governor’s office and creates a $350 million nuclear development fund to reimburse expenses associated with the development and construction of new nuclear generation projects.
- SB 75 creates the Texas Grid Security Commission, which will evaluate and make recommendations related to grid security and resiliency.
The Texas Legislature approved two bills that address foreign participation in specific industries and introduce new regulatory frameworks and oversight mechanisms.
- SB 17 aims to regulate and restrict property acquisitions by certain foreign individuals or entities that may pose a security risk to Texas and the United States, providing legal tools for enforcement and property management in such cases. The primary countries that will be affected are China, Iran, North Korea and Russia. However, this is subject to change per the Annual Threat Assessments of the U.S. Intelligence Community and the Director of National Intelligence. This applies to all acquisitions beyond the use of energy generation. The bill’s provisions apply only to purchases or acquisitions of title to real property occurring on or after the effective date of the bill, which is Sept. 1, 2025.
- SB 2368 increases penalties for errors in Lone Star Infrastructure Protection Act filings. It establishes penalties of up to $1 million for each violation of provisions restricting transactions with certain foreign-owned companies in connection with critical infrastructure in which a business entity submits knowingly false or incomplete information to ERCOT. This measure will strengthen ERCOT’s authority to verify compliance and mitigation strategies, allow the attorney general to conduct investigations and enhance ERCOT’s employment screening practices for prospective employees applying to positions that are critical to the security of the electric grid.
Among the key legislative actions impacting the energy sector was the passage of a bill focused on targeting wind energy development.
- HB 3556 establishes a new requirement for structures taller than 575 feet (e.g., wind projects) in coastal and coastal-adjacent counties to consult with the Texas Parks and Wildlife Department (TPWD) to ensure there are no significant impacts on migratory birds. In cases of disagreement, developers are entitled to administrative hearings at the State Office of Administrative Hearings. This bill is effective immediately.
LEGISLATION THAT FAILED
Numerous pieces of legislation were introduced this session that aimed to alter the existing framework for renewable energy development and investment within the state. These bills spanned various topics, including unfavorable changes to tax incentives, permitting processes and market structures for renewable energy sources. While these measures generated discussion and debate throughout the session, they ultimately did not gain sufficient support to pass both chambers of the legislature.
- SB 819 required solar and wind projects to obtain additional permitting approvals from PUCT.
- SB 715 & HB 3356 required retroactive generation firming for solar and wind projects.
- This measure passed the Senate and the House State Affairs Committee, but was never scheduled for a hearing on the House floor.
- SB 388 established a dispatchable generation credit program, paid by generators, that specifically excluded battery energy storage as a dispatchable resource.
- SB 383 imposed a near ban on offshore wind generation off the Texas coast.
- HB 1378 required a 500-yard setback for BESS facilities in a city or county.
- HB 3056 required a 500-yard setback for solar and wind facilities in a city or county.
- HB 3722 applied a five-mile setback for wind projects from long-term aerobatic training areas used by contractors with the Department of Defense.
As Texas operates on a biennial legislative schedule, the 89th Legislative Session will be followed by an essential interim period of study, preparation and relationship building. The next regular session, the 90th Legislature, will convene in January 2027.
For more information on any of these recent legislative measures, please reach out to any of the authors or your McGuireWoods or McGuireWoods Consulting contacts.
