Wind Farm for Exxon Gets Texas Tax Incentives

The 300 megawatt Sage Draw Wind farm — which is selling electricity to Irving, Texas-based Exxon Mobil Corp. (NYSE: XOM) under a power purchase agreement with the farm’s owner, Denmark-based Ørsted — is set to draw $22.56 million in tax incentives over the course of 10 years.

The $206.5 million facility is covered by tax incentive agreements with government entities in the area of the farm, including a $14.76 million Chapter 313 agreement with Southland Independent School District near Lubbock, Texas, according to documents published by the Texas comptroller Nov. 9.

Chapter 313 of the Texas tax code allows school districts to negotiate with corporations building certain kinds of infrastructure to abate a portion of the investment’s value from property taxes. Because of the way Texas education funding works, the school districts themselves face little to no financial risk for agreeing to the deals.

In fact, supplemental payments by the corporation to the school district can sometimes result in more funding for the district than it would collect in taxes on the investment without an abatement, according to a comptroller spokesperson. That comes at the cost of $513.2 million and rising in abated school district property taxes each year, according to a 2017 comptroller report.

The Ørsted subsidiary building Sage Draw will return a total of $750,000 of its tax incentive — the maximum legal amount — to Southland ISD over the life of the agreement in supplemental payments, according to the comptroller documents. That number would increase if Texas law limiting supplemental payments changes or if the school district attendance more than triples, according to the comptroller documents.

Exxon Mobil has a power purchase agreement in place with Ørsted for 250 megawatts of capacity at Sage Draw, along with another 250 megawatt power purchase agreement supporting the 350 megawatt Permian Solar farm, also owned by Ørsted, according to an Ørsted presentation published on its website.

Sage Draw and Permian Solar are both still in development, with completions dates in 2020 and 2021, respectively, according to the presentation.

The Ørsted subsidiary, Lincoln Clean Energy LLC, also built and owns Amazon Wind Farm Texas, which supplies power under a power purchase agreement with Inc. (Nasdaq: AMZN) and is also covered by a Chapter 313 agreement.

Read more: Houston Business Journal