Senate Bill No. 1754 aims to prohibit certain taxing units in Texas from entering into agreements that would exempt renewable energy facilities from ad valorem taxation. The bill introduces new sections to the Local Government Code and the Tax Code, specifically Sections 380.005, 381.006, and 312.0022. These sections define "renewable energy facility" and clarify that the prohibition applies only to facilities that sell energy or ancillary services at wholesale for a power grid. The governing bodies of municipalities, counties, and development boards are restricted from exempting the value of real property and tangible personal property associated with these renewable energy facilities during the term of any such agreement.

The bill specifies that the definitions of renewable energy facilities include qualifying battery energy storage facilities, solar power generation facilities, and wind power generation facilities. It establishes that the prohibitions on tax exemptions will only apply to agreements entered into after the effective date of the Act, which is set for January 1, 2026. This legislative change is intended to ensure that renewable energy facilities contribute to local tax revenues, thereby impacting funding for public services.

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