Texas Data Center Projects: SB 6 Power Commitments, Sales Tax Recapture and 2026 Permit Directives

Subsection (f) sets "a flat study fee of at least $100,000" for the initial transmission screening study, and any unused amount is credited toward the customer's obligations at the same site. That fee is an early, sunk cost of site selection, and it sits with the owner or developer rather than in the construction budget.

SB 6 also reaches the generator yard. Large loads must disclose "information about the customer's on-site backup generating facilities," and the utility may require the customer to "either deploy the customer's on-site backup generating facilities or curtail load" during an emergency. Backup covered by that provision must be able to serve "at least 50 percent of on-site demand," and the bill says this does not override emissions limits. New Section 39.170(a) adds that large loads connected after December 31, 2025, can be curtailed during firm load shed, and Section 35.004(c-1) requires large loads to contribute to recovering the utility's interconnection costs under agreements made on or after the effective date.

For builders, a backup plant sized for half or more of site demand typically means more generators, larger fuel storage and longer commissioning, which feeds the testing and pollution questions underwriters ask.

Because SB 6 delegates the amounts and forms to rules, the operating details sit with the PUCT and ERCOT. ERCOT's issue page for NPRR1325, "Batch Zero Process for Large Load Interconnections," shows it approved by the PUCT on June 18, 2026, and effective July 11, 2026, for all but four listed sections. That page describes the study process rather than security terms.

Rule numbers, security amounts and batch timing can change, so the developer's interconnection counsel and the transmission service provider are the parties to confirm current terms. A broker can help price what a delay in the interconnection date does to the builders risk term and soft costs, but cannot set the security amount or obtain the interconnection.

Texas Tax Code Section 151.359 provides a sales and use tax exemption for qualifying data centers, and the Comptroller's pages describe two tracks. The standard track (Form AP-233) needs "at least 100,000 square feet of space in a single building or portion of a single building," at least 20 qualifying jobs in the county and "a capital investment of at least $200 million" over five years, and the exemption "lasts for 10 or 15 years beginning on the date the Comptroller's office certifies the data center." The large project track (Form AP-236) needs "a project of at least 250,000 square feet," 40 qualifying jobs and "a capital investment of at least $500 million," and that exemption "lasts for 20 years." A qualifying job must pay "at least 120 percent of the county average weekly wage."

For the general contractor, the key line is what the exemption leaves out. The Comptroller says property incorporated into real estate or into an improvement of real estate is excluded, so building materials stay taxable, while electrical systems, cooling systems, emergency generators and hardware can qualify. Labor used to build or refurbish property used in the data center counts toward capital investment. Data centers with Chapter 313 value limitation agreements are excluded.

If the requirements are not met, the Comptroller will "terminate the certification and revoke the data center's sales tax exemption," and each person whose registration number is revoked is liable for the tax "including penalty and interest from the date of purchase." That recapture is a tax and contract obligation. Insurance does not cover a missed incentive threshold or tax recapture, so allocate it in the owner, tenant and construction contracts.

Three 2026 letters from the Governor affect data center schedules. They are executive directives, not statutes or adopted rules; their duration and effect may change, and the current status should be confirmed with the PUCT, ERCOT, the TWDB and the TCEQ.

On August 3, 2026, the Governor directed a PUCT and ERCOT audit, stating the audit must be completed "before any data center project moves forward" and that non-compliant projects "will be denied connection to the Texas grid." On September 14, 2026, he directed the Texas Water Development Board to act on data centers that fail to return its water survey, saying a late filer is ineligible for TCEQ permits, amendments or renewals under Chapter 11 of the Water Code. On September 21, 2026, a letter said, "I am directing the Texas Commission on Environmental Quality (TCEQ) to halt all permits sought by data centers," until ERCOT completes its review, with a compliance update requested by October 19, 2026. That letter also described setback and incentive changes the Governor will seek, which are legislative goals, not enacted law.

A pause on air permits for generators or on water permits can push back mobilization or energization. That is a schedule risk to price into contract dates, bond terms and the builders risk policy period.

None of these state sources sets an insurance limit for the construction program. What they change is timing, scope and who carries financial obligations. An interconnection date that moves with a study batch, an audit or a permit pause typically means a builders risk policy period that may need an extension and delay in startup and soft cost limits sized to the real energization date. Performance and payment bond terms can also run longer than planned.

Larger backup generation adds fuel storage, load bank testing and commissioning exposure, which underwriters often price through testing and pollution terms. Utility security, study fees and tax recapture are financial obligations of the owner or developer rather than insurance, and SB 6 does not name a surety bond as a security form. Indemnity and liquidated damages clauses should say who bears an energization delay the contractor did not cause. Terms can vary by carrier guidelines and programs, subject to underwriting and the terms of the bonds and policies issued.