S.B. No. 1754 introduces new provisions to the Local Government Code and the Tax Code regarding the taxation of renewable energy facilities. Specifically, it prohibits municipalities, counties, and development boards from entering into agreements that would exempt a portion of the value of real property or tangible personal property associated with renewable energy facilities from ad valorem taxation. This prohibition applies to facilities that sell energy or ancillary services at wholesale for a power grid and includes definitions for various types of renewable energy facilities, such as solar and wind power generation facilities, as well as qualifying battery energy storage facilities.

The bill amends Chapter 380 and Chapter 381 of the Local Government Code, as well as Chapter 312 of the Tax Code, to include these prohibitions. The changes will only apply to agreements made on or after the effective date of January 1, 2026. This legislation aims to ensure that renewable energy facilities contribute to local tax revenues, thereby impacting the financial resources available to municipalities and counties.

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