Texas House Passes Chapter 313 Replacement, Excluding Renewable Energy Companies

The Texas House of Representatives approved a replacement bill for the Chapter 313 tax break, but renewable energy companies need not apply.

Chapter 313, a popular corporate incentive, was aimed at luring large companies to Texas by discounting local school district property taxes. When it was allowed to expire late last year amid accusations it amounted to corporate welfare, Gov. Greg Abbott vowed to renew it, saying in February that it was a factor in Texas losing a “massive” computer chip factory project to New York, the Texas Tribune reported.

The House passed House Bill 5, or the Texas Economic Development Act, on Friday. Rep. Todd Hunter, a Republican from Corpus Christi, authored the bill that would serve to replace Chapter 313 — and specifically excludes renewable energy companies, Community Impact reported.

“Between us, I have no problems with the renewable industry, ... but in this bill, they are not [included],” Hunter said May 4 on the House floor, noting that excluding renewable energy companies helped get more stakeholders on board with the bill, according to Community Impact.

Texas has already attracted several companies focused on renewable energy or decarbonization. 

The state leads the nation in solar capacity growth and is expected to become a leader in adding battery storage this year. Swift Current Energy, a renewable energy company, announced plans last week to build a 195-megawatt solar farm in Calhoun County. Carbon Clean, a UK-based carbon capture company, set up its U.S. headquarters in Houston in March.

Amy Chronis, Deloitte’s Houston managing partner, previously told the Houston Business Journal that there is momentum building around energy hubs in the U.S. from private equity firms looking to invest in cleantech, and Houston is one of the places where money is flowing.

But the Texas Legislature seems to be following the guidance of Abbott, who said in March that renewable energy companies should not be allowed to apply for the Chapter 313 replacement. Abbott said renewable energy is not as dependable as natural gas and goal, adding the state should focus on “dispatchable power” that will prop up the state’s power grid. 

House Speaker Dade Phelan has named HB5 as one of his top legislative priorities. The bill would provide incentives for projects including national and state security, supply chain infrastructure and manufacturing that require “an investment in a school district in Texas of more than $1B,” Community Impact reported.

Following House approval, the bill now heads to the Senate.