Battery storage projects can provide Texas landowners with a steady source of lease income. However, these projects also bring risks. If a developer goes bankrupt, landowners may lose rental income and face the cost of removing abandoned equipment.
Texas law offers some protection against these problems. Still, landowners should understand what happens when a developer can no longer meet its duties.
Who removes abandoned battery equipment?
Bankruptcy does not always mean a battery storage project will close. Another company may buy the facility and continue running it. However, if no buyer takes over, the equipment may remain on the property.
This creates a problem for landowners because removing battery storage equipment can be expensive. Workers must safely disconnect electrical systems, remove batteries and clear foundations. They may also need to repair damage to the land.
To address these concerns, Texas sets cleanup rules for certain battery storage agreements. The law requires developers to take responsibility for removing equipment and restoring the property.
However, bankruptcy can make it harder to enforce these duties. Landowners may need to resolve ownership and removal issues through the bankruptcy court.
How can landowners avoid cleanup costs?
Because removing equipment can cost thousands of dollars or more, landowners need financial protection if a developer cannot pay.
Under Chapter 303, covered agreements must include financial security for cleanup costs. Developers may provide this protection through bonds or letters of credit. The law also requires cost estimates and regular updates. These rules generally apply to agreements signed on or after September 1, 2025.
However, landowners should check whether the financial security will cover all cleanup costs. This includes battery disposal, equipment removal and land repairs. They should also understand how to access the money if the developer fails to meet its duties.
How can landowners prepare for financial problems?
Landowners can lower their risks by reviewing lease terms before signing. The agreement should explain who pays for cleanup, when equipment must be removed and what happens if the developer goes bankrupt.
If bankruptcy occurs, landowners should avoid removing equipment or ending the lease without first checking their legal rights.
Speaking with a Texas attorney who understands energy leases and bankruptcy law may be a good idea. An attorney can help landowners review these issues. This guidance can also help them protect their property and avoid unexpected costs.