How The Chapter 313 Tax Incentive Has Impacted Solar Energy Expansion and School Districts in Texas

Abstract

The development of solar energy in Texas began to increase rapidly in 2019, quickly catching up with California, the nationwide leader. This recent rapid increase is an ongoing trend that presents a unique opportunity to understand what is stimulating the expansion of solar energy in the state. Media reports suggest the role of Chapter 313 in the Texas Tax Code that the state implemented in the early 2000s to encourage businesses to develop new capital investments in school districts. Chapter 313 is a state tax incentive for companies to build large-scale projects on a school district's property in return for a limitation on the value of their taxable property for ten years. The program aims to direct investment in rural and property-poor districts which results in millions of dollars for these school districts. Large-scale manufacturing followed by wind energy farms were the majority of the first projects. However, solar energy projects have rapidly increased in recent years. Using the data from Chapter 313 agreements since 2003 and comparing the trends, our research focuses on how Chapter 313 projects have and will continue to substantially impact the expansion of utility-scale solar energy and developing school districts in Texas as we transition to cost-effective forms of carbon-free, sustainable energy.