Renewable investors and sponsors in Texas breathed a sigh of relief last week after the 89th Texas Legislature failed to pass a suite of bills that could have dramatically slowed development in the sector.

Despite the traction of measures hindering renewables across two prior sessions,industry insiders tell Infralogic their confidence in the state’s energy sector remains unshaken.

The three so-called ‘anti-renewable’ bills, Senate Bills 388, 715, and 819, targeted both new and existing non-dispatchable energy generation across the state — in other words, solar, battery, and wind projects. They were called anti-renewable bills by market participants and environmental activists alike.

Requirements of the bills included that half of the new generation in ERCOT would have to be dispatchable starting in 2026; that non-dispatchable plants would have to pay fees for energy from dispatchable generation; and that solar and wind projects would be subject to new siting requirements and public approval processes.

The bills, which passed the state Senate earlier this year, would have been a gut punch to the state’s renewables sector if they had been signed into law, Bryan Clark, a partner at the law firm Bracewell who focuses on energy matters, told Infralogic.

“A combination of the bills together would have made development of renewable projects difficult, if not economically unfeasible, in Texas,” said Clark.

After passing in the Senate, the bills were sent to committees in the House. One bill advanced past the House State Affairs Committee but was never scheduled for a floor vote.

“It is interesting that one perceived anti-renewable bill made it out of the House committee, further than other bills in previous sessions. It came quite close. That could possibly indicate a higher likelihood for this type of bill to pass in the next session, or the one after,” Winston Skinner, a partner focusing on energy regulation at Vinson & Elkins, told Infralogic.

Bills targeting renewables in Texas are not new. A bill similar to SB 819 passed in the Senate during the previous legislative session in 2023 but failed to advance through the House.

The reappearance of the legislation indicates significant apprehension among certain lawmakers regarding the role of renewables on the Texas power grid, partly driven by ongoing concerns about widespread outages experienced during Winter Storm Uri in 2021, Clark said.

That perception remains, despite regulator findings that failures of gas infrastructure during the storm were a major contributor to the blackouts.

“A key point made is that options for new dispatchable power are currently limited,” said Skinner. “New gas plants face a significant turbine backlog. Even if the state wanted to buy every gas turbine generator on the market, it could not and it would not accomplish one of the stated legislative goals of equalizing the amounts of new thermal and renewable resources. That’s just the reality of the production capacity.”

This was the message that stakeholders conveyed to the Senate and House, Skinner said.

A sizable group in the legislature and business community believes an “all-of-the-above” approach is essential for meeting energy needs in the near term. This sentiment, according to Clark, appears to have slowed the legislation from progressing in the state’s House of Representatives.

Back to business

While the market did not see a widespread retreat from renewables, dispatchable generation achieved its successes. The Texas Energy Fund increased its loan pool by USD 5bn to finance new gas plants across ERCOT, raising the total to USD 10bn in low-interest loans available, as part of the state budget.

Deals are still being closed in the ERCOT region, with agreements signed even when these bills remained a potential threat.

Last month, TPG Rise-backed Intersect Power closed a USD 1.923bn project financing for a portfolio of solar and storage projects in Texas. The financing supported the Quantum I and II solar and storage portfolio, consisting of two 320 MWac solar and two 640 MWh co-located 2-hour battery energy storage facilities in Haskell County, northwestern Texas.

“The expectation was that the bills wouldn’t pass, driving confidence in the market. People generally believed they would die out. It could have been more noise than substance, but people were talking about it,” the project finance head at a commercial bank told Infralogic. “Deals were still happening, but questions remained about the bills’ impact on projects.”

Stacey Kusters, US head of Cubico Sustainable Investments, told Infralogic that these bills and possible future bills do not sour the firm’s outlook on solar opportunities in the state.

Kusters said she sees the legislative efforts as an attempt to solve reliability concerns, rather than any explicit animus against renewables.

“I think they’re just trying to solve a problem,” Kusters said, noting that she would not be hesitant to pursue future opportunities in the Lonestar State.

Clark said he senses that the feeling throughout the Texas renewables sector largely mirrors Kusters’.

“With the non-passage of these bills, the sense about at least the solar industry is that they’re going to be still able to move forward,” Clark said.

Restrictions for Data Centers

While the anti-renewable bills fizzled out in the House, Senate Bill 6 was passed. This bill focuses on regulating large industrial energy customers, including data centers, which have increasingly sought to develop projects in Texas.

“Senate Bill 6 did make it across the finish line, pending the governor’s approval. It is a pretty significant bill, but in some ways, it codifies some existing practices,” said Skinner.

Senate Bill 6 mandates that energy customers with sites needing over 75 MW pay upfront for interconnection studies costing a minimum of USD 100,000, and disclose any other projects in the state. These large-load customers must also provide financial security in amounts set by the Public Utilities Commission of Texas (PUCT) in future rulemaking.

“When you are talking about projects over 1 GW, these financial requirements are a relative drop in the bucket. But for the entities engaged in speculative data center development, where they submit projects for 15 different sites and maybe one ultimately gets built, that’s where this bill pays significant dividends,” said Skinner.

The bill will result in significant enhancements to the transmission planning process by discouraging speculative practices and ensuring that large loads have a minimum level of financial backing, thereby filtering out less serious loads, Skinner continued.

The bill also requires large loads to obtain PUCT approval for co-location with existing generation under net metering energized after 1 September 2025. This will make sure no MWs are removed from the system for new loads unless the utility completes a load-serving study, and the PUC approves or does not deny the application within 180 days.

The Kill Switch

When the bill was passed in the House, the legislature added the ‘kill switch’ provision, giving interconnecting utilities the direct, and ERCOT the indirect, ability to cut off power to these large load customers in case of an electricity shortage.

According to the bill, large load customers must either activate their backup generation or reduce their load, with a 24-hour notice period beforehand.

However, the market seems to be taking the dramatically named provision in stride.

Just as the bill was brought to the House floor, Blue Owl Capital, Primary Digital Infrastructure and Crusoe closed a USD 7.1bn construction loan with a JP Morgan-led consortium for the second phase of a joint venture to fund a data center at the Lancium Clean Campus in Abilene, Texas.

“So far, the new data center bill hasn’t made any waves in the market,” said a renewable developer looking at several power purchase agreements and behind-the-meter deals with data centers for its future wind and solar projects in West Texas.

“Texas is still ahead of plenty of other markets when it comes to building data centers.”