San Angelo City Council Approves $160M Energy Storage Project, Tax Abatement

SAN ANGELO, TX – A $160 million battery storage facility will be built on the north side of East 28th Street, following the San Angelo City Council’s approval Tuesday of a three-year tax abatement for Zeppelin Energy Storage, LLC.

According to Investopedia, a tax abatement is defined as a temporary reduction or exemption from property taxes that local governments use to incentivize business investments and spur economic development.

The facility will store electricity in a 160-megawatt battery system that allows the company to buy power when prices are low and resell it to the grid at peak demand. The site, owned by Marty Frey Trucking, Inc., covers 12.9 acres within a 32-acre tract, located 0.7 miles east of Armstrong Street.

The agreement grants an 85% tax abatement for three years on improvements to the property. After that period, the company will pay full property taxes. City projections estimate a net tax revenue of $4.46 million over 10 years, assuming the full $160 million investment. If the project’s capital costs drop to $135 million, revenue is estimated at $3.62 million.

Interim Economic Development Director Michael Dane explained that a minimum investment threshold of $135 million was included to protect the city.

“What happens if they build less than $160 million, or the value is less than $160 million? That lowers the value of the abatement because it’s on a percentage basis,” Dane said. “If they don’t build that much, they don’t receive as much abatement. On the other hand, if the cost to build their facility is above $160 million, they receive a slightly greater abatement, because it is percentage-based.”

The council unanimously approved the agreement 7-0.

“We’ve been waiting for this and glad that we worked through all the paperwork that’s necessary to make it happen,” Gunter said.

The agreement allows the City Manager to negotiate and execute all related documents, finalizing the deal.