Energy Storage

Texas Enacts New Law Imposing Decommissioning and Financial Assurance Requirements on Battery Energy Storage Projects

By Scott Deatherage · S Deatherage Law, PLLC · June 17, 2025

On May 29, 2025, Texas Governor Greg Abbott signed House Bill 3809, a law that imposes significant new obligations on non-utility operators of battery energy storage system (BESS) facilities entering into lease agreements on or after the effective date of September 1, 2025.

This legislation provides requirements for decommissioning and financial assurance for energy storage leases similar to those already required for wind and solar leases.

1. Mandatory Decommissioning Provisions in Lease Agreements

H.B. 3809 amends the Texas Utilities Code by requiring comprehensive decommissioning obligations in all covered BESS lease agreements after the effective date:

• Full facility removal: Lessees must safely dismantle and remove battery units, transformers, substations, utility lines, communications lines, and supporting infrastructure such as buried cables and overhead lines down to three feet below the surface.
• Site restoration: Leases must include obligations to fill holes, remove roads and large rocks, and return the site to a tillable condition upon request from the landowner.
• Recycling and disposal: Lessees must recycle or properly dispose of all practicable facility components in compliance with applicable environmental regulations.
• Timing of landowner requests: Landowners must request these decommissioning measures within 180 days of receiving notice of decommissioning or the facility’s end of commercial life.

These requirements apply to facilities that are not owned by electric utilities.

2. Financial Assurance Requirements

To ensure that BESS operators meet their decommissioning obligations, the new law requires that leases include financial assurance provisions that meet the following requirements:

• Acceptable instruments: Parent guarantees (with investment-grade credit), letters of credit, bonds, or other landowner-approved forms.
• Sufficiency of coverage: The financial assurance must cover the full cost of removal, recycling/disposal, and site restoration, net of salvage value and any pledged collateral value.
• Independent evaluation: Cost and salvage estimates must be provided by a third-party engineer licensed in Texas. An initial estimate is due by the facility’s 10th year of operation, with updates required at least every five years thereafter.
• Deadline for assurance: Lessees must deliver the financial assurance no later than the earlier of the lease’s termination or the 15th anniversary of commercial operations.

3. Enforcement and Non-Waiver Provisions

The new law does not permit a contractual waiver of these statutory obligations, and any such waiver would be void. Landowners may seek injunctive relief and other legal remedies in the event of non-compliance.

What This Means for Developers and Landowners

H.B. 3809 sets a new compliance baseline for BESS developers and landowners. The law extends to BESS facilities requirements for decommissioning and financial assurance similar to those that apply to solar and wind facilities in Texas.

For a deeper, provision-by-provision analysis of the law, see our companion article: Texas Enacts Comprehensive Decommissioning Requirements for Battery Energy Storage Systems.

About S. Deatherage Law, PLLC

At S. Deatherage Law, PLLC, we provide experienced legal counsel on energy and infrastructure projects across Texas and other states, with a focus on contract negotiation, regulatory compliance, environmental matters, and project development. We advise developers, landowners, and stakeholders navigating emerging legislation like H.B. 3809 and its implications for battery energy storage, solar, wind, and natural gas power plants.

If you operate or are planning a BESS facility in Texas, now is the time to review your lease agreements and compliance strategy.