BILL ANALYSIS

Senate Research Center	H.B. 3778
89R24081 CS-D	By: Louderback et al. (Kolkhorst)
	Business & Commerce
	5/22/2025
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Recently, Texas has invested tremendous effort to ensuring the expansion of dispatchable energy. S.B. 2627 (88th Legislature, Regular Session) established the Texas Energy Fund (TEF) in order to target money for dispatchable electric generation facilities in the form of low-interest loans and completion bonuses. One sustainable new source of dispatchable electric generation comes from geothermal energy, which uses the Earth's internal heat to produce energy. However, even though geothermal energy is dispatchable by its nature, geothermal companies are ineligible for Texas Energy Fund grants because it is not clearly defined in statute.

H.B. 3778 codifies that a geothermal electric generating facility is considered to be dispatchable. The bill defines that a geothermal facility is eligible for the TEF as a dispatchable resource.

H.B. 3778 also addresses concerns brought by the Geothermal Energy Alliance and the Public Utilitiy Commission of Texas (PUC) by clarifying that a geothermal energy conservation well is not considered to be a battery storage facility. Additionally, H.B. 3778 addresses industry concerns by allowing the PUC to consider geothermal energy generation facilities or conservation wells for TEF funding if the project can produce at least 10 megawatts of generation.

H.B. 3778 amends current law relating to the use of geothermal energy as a dispatchable generation resource.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subchapter A, Chapter 34, Utilities Code, by adding Section 34.01015, as follows:

Sec. 34.01015. APPLICABILITY. Provides that, for the purposes of Chapter 34 (Facility Funding), a generating facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control and a geothermal energy generation facility is considered to be dispatchable.

SECTION 2. Amends Section 34.0104, Utilities Code, by amending Subsection (a) and adding Subsection (a-1), as follows:

(a) Provides that an electric energy storage facility, other than a geothermal energy conservation well, is not eligible for a loan under Section 34.0104 (Loans for ERCOT Power Region). Deletes existing text providing that, for the purposes of this section, a generating facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control.

(a-1) Authorizes the Public Utilitiy Commission of Texas (PUC), notwithstanding certain provisions, to use money in the Texas energy fund, without further appropriation, to provide loans to finance the construction of geothermal energy generation facilities and geothermal energy conservation wells in the Electric Reliability Council of Texas power region that have a generation capacity of at least 10 megawatts.

SECTION 3. Amends Sections 34.0105(a) and (c), Utilities Code, as follows:

(a) Makes conforming changes to this subsection.

(c) Provides that the PUC is authorized to provide a grant under this section only for construction of a facility that meets certain criteria, including a facility that will have a generation capacity of at least 100 megawatts or at least 10 megawatts for a geothermal energy generation facility or geothermal energy conservation well.

SECTION 4. Amends Section 39.159(a), Utilities Code, as follows:

(a) Provides that, for the purposes of Section 39.159 (Power Region Reliability and Dispatchable Generation) generation facility is considered to be dispatchable if the facility's output can be controlled primarily by forces under human control and a geothermal energy generation facility and a geothermal energy conservation well are considered to be dispatchable

Deletes existing text providing that a generation facility is considered to be non-dispatchable if the facility's output is controlled primarily by forces outside of human control. Makes nonsubstantive changes.

SECTION 5. Effective date: September 1, 2025.