Texas · Solar leases · Utilities Code chapter 302
What Texas requires certain solar leases to say about removal and financial assurance
Texas Utilities Code chapter 302 lists what a solar power facility lease has to say about taking the project out and backing that work with financial assurance. This page reads the text: what the lease must provide, which leases the chapter reaches, and what it leaves open.
This is general information, not legal advice. It covers Texas only and reports what the statute says. What it means for a particular lease is a question for your own attorney.
Chapter 302 of the Texas Utilities Code is about the lease between a landowner and the person, other than an electric utility, who operates a solar power facility on the land. It applies only to a facility that is a “generation asset” as Section 39.251 uses that term, and, as first enacted, only to a lease entered into on or after September 1, 2021. For those leases the chapter says the agreement must make the operator responsible for removing its facilities, including foundations and buried cable to at least three feet below grade, and must require the operator to deliver financial assurance to secure its duties under Section 302.0004. Amendments effective September 1, 2025 added recycling and disposal duties for leases entered into on or after that date. The assurance can be a parent company guaranty (the parent needs an investment grade credit rating), a letter of credit, a bond or another form the landowner reasonably accepts. It must be at least the estimated amount by which removal and restoration cost more than the facilities' salvage value, less any portion of the facilities' value pledged to secure outstanding debt, with the cost and the salvage value estimated by an independent, third-party professional engineer licensed in Texas. It is due no later than the earlier of the lease being terminated or the twentieth anniversary of the commercial operations date. A lease provision that purports to waive a right, or to exempt the operator from a liability or duty, that the chapter establishes is void. The chapter sets no dollar figure and leaves several points open, listed below.
On this page, “operator” means the chapter's “grantee.” The chapter is about what the agreement must provide. It does not set up a permit program or name an agency to enforce it.
1Which leases the chapter reaches
The chapter defines its terms narrowly. A “grantee” is a person, other than an electric utility as Section 31.002 defines that term, who leases property from a landowner and operates a solar power facility on it. A “solar power facility agreement” is a lease agreement between a grantee and a landowner that authorizes the grantee to operate a solar power facility on the leased property (§ 302.0001(1), (4)).
A “solar power facility” includes a solar energy device, and a facility or equipment used to support its operation, other than one an electric utility owns, including an underground or aboveground electrical transmission or communications line, an electric transformer, a battery energy storage facility or other energy storage facility, telecommunications equipment, a road, a meteorological tower or a maintenance yard (§ 302.0001(3)). Section 185.001 defines a solar energy device as a solar energy collector or solar energy system that provides for the collection of solar energy or the subsequent use of that energy as thermal, mechanical or electrical energy.
Section 302.0002 limits the chapter to “a solar power facility that is a generation asset as defined by Section 39.251.” That section defines “generation assets” as all assets associated with the production of electricity, and its examples include generation plants, their electrical interconnections to the transmission system, and lands (§ 39.251(3)). Section 39.251 is the definitions section of Subchapter F of chapter 39, on recovery of stranded costs, and chapter 302 borrows the term from it. Neither section names a megawatt or acreage minimum. Whether a particular project is a “generation asset” is a question for counsel.
Two bills set the dates. S.B. 760 (2021) added the chapter and says it applies only to a solar power facility agreement entered into on or after September 1, 2021. An agreement entered into before then is governed by the law as it existed before that date (S.B. 760, § 3). H.B. 3228 (2025) amended the chapter and says the amended chapter applies only to a wind or solar power facility agreement entered into on or after September 1, 2025, with earlier agreements governed by the law as it existed before that date (H.B. 3228, § 7).
| Agreement entered into | What the bills say applies | Terms in the text |
|---|---|---|
| Before September 1, 2021 | The law as it existed before that date (S.B. 760, § 3). | Chapter 302 as added does not apply. |
| September 1, 2021 through August 31, 2025 | Chapter 302 as S.B. 760 enacted it. | The removal and financial assurance terms below, without the recycling and disposal language. Two other wording differences are noted under the table. |
| On or after September 1, 2025 | Chapter 302 as H.B. 3228 amended it (H.B. 3228, §§ 4 to 6 amend it; § 7 sets the applicability). | All of the terms below, including recycling and disposal. |
The 2021 and 2025 texts differ in two places besides the recycling and disposal language. In 2021, § 302.0005(a) secured “the grantee's obligation to remove the grantee's solar power facilities located on the landowner's property as described by Section 302.0004,” where the current text secures “the grantee's obligations under Section 302.0004.” And the 2021 definition listed “a battery storage facility, an energy storage facility,” where the current one reads “a battery energy storage facility or other energy storage facility.”
Both bills say “entered into.” Neither says what happens to an older lease that is amended, extended or renewed after the cutoff date. The chapter's definition also says “lease agreement.” It does not use the words option or easement, so whether it reaches an option or a gen-tie easement is a question for counsel.
2What the lease must say about removal
Section 302.0004 lists what a solar power facility agreement “must provide.” For the duties in subsection (a), removal is to be done “in accordance with any other applicable laws or regulations” and safely.
| Item | The lease must provide | When it applies |
|---|---|---|
| Devices, transformers, substations | The operator clears, cleans and removes each solar energy device, transformer and substation (§ 302.0004(a)(1)). | In every agreement the chapter reaches. |
| Foundations | Each foundation of a solar energy device, transformer or substation installed in the ground is removed to a depth of at least three feet below surface grade, and each hole or cavity is filled with soil of the same or a similar type as the predominant soil on the property (§ 302.0004(a)(2)). | In every agreement the chapter reaches. |
| Buried cable | Each buried cable, including power, fiber-optic and communications cable, is removed to at least three feet below surface grade, and each hole or cavity is filled the same way (§ 302.0004(a)(3)). | In every agreement the chapter reaches. |
| Overhead lines | Each overhead power or communications line the operator installed is removed (§ 302.0004(a)(4)). | In every agreement the chapter reaches. |
| Recycling and disposal | The operator is responsible for collecting and reusing or recycling, or shipping for reuse or recycling, all components practicably capable of it, including the photovoltaic modules, in accordance with other applicable laws and regulations. It is also responsible for disposing of the rest at a facility authorized under state and federal law to dispose of that type of component: for a hazardous component, a facility authorized to dispose of hazardous substances, and for a nonhazardous one, a municipal solid waste landfill or other appropriate waste disposal facility (§ 302.0004(a-1)). | Agreements entered into on or after September 1, 2025 (H.B. 3228, §§ 5 and 7). |
| Roads | The operator removes each road it built and fills the holes (§ 302.0004(b)). | Only if the landowner asks. |
| Rocks and tillable ground | The operator removes rocks over 12 inches in diameter excavated during the decommissioning or removal process, returns the property to a tillable state by scarification, V-rip or disc methods as appropriate, fills each hole or cavity with soil of the same or a similar type, and returns the surface as near as reasonably possible to its condition before the digging, including reseeding pastureland with native grasses prescribed by an appropriate governmental agency, if any (§ 302.0004(c)). | Only if the landowner asks, and only “if reasonable.” |
The landowner has to ask for the roads, the rocks and the tillable ground. The request must be made not later than the 180th day after the later of two dates: the date the facility is no longer capable of generating electricity in commercial quantities, or the date the landowner receives the operator's written notice of intent to decommission (§ 302.0004(d)).
3Financial assurance
Section 302.0005 says the agreement must provide that the operator will obtain and deliver to the landowner evidence of financial assurance to secure the operator's obligations under Section 302.0004. Not every part of the section is worded as something the agreement must provide, so the table reports what the section says.
| Topic | What the section says |
|---|---|
| Forms allowed | Acceptable forms include a parent company guaranty, a letter of credit, a bond, or another form reasonably acceptable to the landowner. A guaranty needs a parent company with a minimum investment grade credit rating from a major domestic credit rating agency (§ 302.0005(a)). |
| Amount | At least the estimated amount by which the cost of removing the facilities, and restoring the property to as near as reasonably possible its condition on the date the agreement begins, exceeds the facilities' salvage value, less any portion of their value pledged to secure outstanding debt. For agreements entered into on or after September 1, 2025, the cost includes recycling or disposing of the components (§ 302.0005(b)). |
| Who estimates | The agreement must provide that an independent, third-party professional engineer licensed in Texas determines the estimated cost and the estimated salvage value (§ 302.0005(c)(1)). |
| Updates | The agreement must provide that the operator delivers to the landowner an updated estimate from such an engineer on or before the 10th anniversary of the commercial operations date, and at least once every five years after that date for the remainder of the term (§ 302.0005(c)(2)). |
| Keeping it sufficient | The agreement must provide that the operator is responsible for keeping the amount sufficient to cover the amount required by subsection (b), consistent with those estimates (§ 302.0005(c)(3)). |
| Who pays | The operator is responsible for the costs of obtaining the assurance and of determining the estimated removal costs (recycling and disposal costs too, in agreements entered into on or after September 1, 2025) and the salvage value (§ 302.0005(d)). |
| When it is delivered | The agreement must provide that the operator delivers the assurance not later than the earlier of the date the agreement is terminated or the 20th anniversary of the commercial operations date of the facilities on the landowner's leased property (§ 302.0005(e)). |
| Cancelling or transferring | The operator may not cancel the assurance before it has completed its removal duty unless it gives replacement assurance at or before the cancellation. If ownership of the facilities transfers, the security stays in place until evidence of assurance that meets the chapter is given to the landowner (§ 302.0005(g)). |
| “Commercial operations date” | The date the facilities are approved for participation in market operations by a regional transmission organization. Generation for maintenance and testing before that date does not count (§ 302.0005(f)). |
The chapter fixes the latest date for delivering the assurance: the earlier of the date the lease is terminated or the twentieth anniversary of the commercial operations date. It does not say a lease can't call for the assurance sooner.
Suppose a lease's facilities are approved for market operations on March 1, 2029. That is the commercial operations date. The updated engineer's estimate that § 302.0005(c)(2)(A) ties to the 10th anniversary is due on or before March 1, 2039, and the assurance must be delivered no later than March 1, 2049, the 20th anniversary, or the date the lease is terminated if that comes first.
Now suppose the facility stops being capable of generating electricity in commercial quantities on August 1, 2055, and the operator's written notice of intent to decommission reaches the landowner on September 15, 2055. The later of those two dates is September 15, 2055, so a request for road removal or tillable-ground restoration would have to be made no later than March 13, 2056, the 180th day after it.
4If the lease also covers storage
Chapter 302's definition of a solar power facility includes a battery energy storage facility or other energy storage facility used to support the operation of a solar energy device (§ 302.0001(3)(B)). The 2021 wording is quoted under the version table above.
Chapter 303, added in 2025 by H.B. 3809, has its own removal and financial assurance rules for battery energy storage facility agreements. Except as § 303.0004(c) provides, it applies only to an agreement that authorizes a grantee to operate a battery energy storage facility “that is not subject to Chapter 301 or 302” (§ 303.0002). H.B. 3809, § 2, says the changes in law made by that Act apply only to an agreement entered into on or after September 1, 2025.
Section 303.0004(c) says a solar power facility agreement entered into under Chapter 302 that authorizes the operation of a battery energy storage facility must include the recycling and disposal terms described in § 303.0004(b), and that the financial assurance required must be sufficient to secure the performance of those obligations “in the manner provided by Section 303.0005.” Section 303.0004(c) is one of the changes in law made by H.B. 3809. Chapter 303 counts from the “battery operation date” and requires assurance to be delivered not later than the earlier of the date the agreement is terminated or the 15th anniversary of that date (§ 303.0005(e)). Chapter 302 uses the 20th anniversary of the commercial operations date. How the two fit together in a lease that covers both is a question for counsel.
5If a lease leaves a term out
A term in the agreement that purports to waive a right, or to exempt the operator from a liability or duty, that the chapter establishes is void (§ 302.0003(a)). A person harmed by a violation is entitled to appropriate injunctive relief to prevent further violation, and those remedies are in addition to any others the law provides (§ 302.0003(b) and (c)).
The chapter says the agreement “must provide” the terms in Sections 302.0004 and 302.0005. It does not say in words that a required term missing from the lease is read into it, and it names no agency that enforces it. What a court would do with a lease that leaves a term out is a question for an attorney.
6Where each rule would show up in a lease
These are the places to look in a lease or option you were offered. They are questions, not conclusions.
- The date the agreement was entered into, and whether the parties later amended or renewed it.
- Whether the lease describes a facility associated with the production of electricity, since the chapter turns on a “generation asset.”
- Removal: whether the lease says three feet, and whether it deals with roads, rocks and tillable ground and the 180-day request.
- Recycling and disposal, if the agreement was entered into on or after September 1, 2025.
- Assurance: the form, the formula, who picks the engineer, the update dates and the delivery date.
- How the operator's notice of intent to decommission is to reach you.
Sources
Last checked . Each page below was opened that day. The Texas statutes site said its statutes were current through the 89th 2nd Called Legislative Session, 2025. Laws change, so check the current text before relying on any of it.
- Texas Utilities Code, chapter 302, Solar Power Facility Agreements§§ 302.0001 to 302.0005: definitions; applicability; waiver void and remedies; removal; financial assurancehttps://statutes.capitol.texas.gov/Docs/UT/htm/UT.302.htmOpened September 29, 2026
- Texas Utilities Code, chapter 303, Battery Energy Storage Facility Agreements§§ 303.0002, 303.0004 and 303.0005: applicability; removal; financial assurancehttps://statutes.capitol.texas.gov/Docs/UT/htm/UT.303.htmOpened September 29, 2026
- Texas Utilities Code, chapter 301, Wind Power Facility AgreementsTitle and heading only, to confirm it is a separate chapterhttps://statutes.capitol.texas.gov/Docs/UT/htm/UT.301.htmOpened September 29, 2026
- Texas Utilities Code, chapter 39§ 39.251(3): “generation assets” (Subchapter F, stranded costs)https://statutes.capitol.texas.gov/Docs/UT/htm/UT.39.htmOpened September 29, 2026
- Texas Utilities Code, chapter 185§ 185.001(2): “solar energy device”https://statutes.capitol.texas.gov/Docs/UT/htm/UT.185.htmOpened September 29, 2026
- Texas Utilities Code, chapter 31§ 31.002: “electric utility,” which the chapter 302 definitions excludehttps://statutes.capitol.texas.gov/Docs/UT/htm/UT.31.htmOpened September 29, 2026
- S.B. 760, 87th Legislature, Regular Session (2021), enrolled versionAdds chapter 302; § 3 (applies to agreements entered into on or after September 1, 2021); § 4 (effective September 1, 2021)https://capitol.texas.gov/tlodocs/87R/billtext/html/SB00760F.htmOpened September 29, 2026
- H.B. 3228, 89th Legislature, Regular Session (2025), enrolled versionAmends chapters 301 and 302; § 7 (applies to agreements entered into on or after September 1, 2025); § 8 (effective September 1, 2025)https://capitol.texas.gov/tlodocs/89R/billtext/html/HB03228F.htmOpened September 29, 2026
- H.B. 3809, 89th Legislature, Regular Session (2025), enrolled versionAdds chapter 303; § 2 (applies to agreements entered into on or after September 1, 2025)https://capitol.texas.gov/tlodocs/89R/billtext/html/HB03809F.htmOpened September 29, 2026
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