OCI Energy Breaks Ground on 480 MWh Texas BESS, Claiming Up to 40% Federal Tax Credits

OCI Energy, the San Antonio-based subsidiary of South Korean conglomerate OCI Holdings, broke ground May 19 on the Alamo City Battery Energy Storage System (BESS) in southeastern Bexar County, Texas — one of the largest standalone battery storage facilities under construction in the region and among the first major projects to begin building under the federal tax credit structure established by the One Big Beautiful Bill Act. The 120-megawatt, 480-megawatt-hour facility will hold enough stored electricity to power roughly 30,000 homes for four hours during peak demand, with commercial operations targeted for 2027 under a 20-year capacity agreement with CPS Energy.

The project's timing is deliberate. The One Big Beautiful Bill, signed July 4, 2025, accelerated the phase-out of federal investment tax credits for new wind and solar projects while preserving full credits for battery storage through 2033. OCI Energy began construction before the January 1, 2026 safe harbor deadline that shields storage projects from new foreign-entity sourcing restrictions, making Alamo City eligible for a 30% base Investment Tax Credit plus a 10% energy community bonus — a combined recovery of up to 40% of capital costs.

Alamo City BESS: What It Does and How

The facility stores electricity generated during periods of low demand and dispatches it during the peak hours when the Texas grid is most stressed — typically summer afternoons and the first hours of a winter morning when solar output is absent. The four-hour discharge duration is significant: most operational battery storage on the Electric Reliability Council of Texas (ERCOT) grid is built for one- to two-hour discharge, and only about 3% of ERCOT's installed storage fleet can sustain output for three to five hours. At four hours, Alamo City sits in that underrepresented long-duration tier, which ERCOT has identified as critical for meeting demand through evening hours as solar generation drops off.

LG Energy Solution Vertech — the U.S. energy storage subsidiary of South Korea's LG Energy Solution — will supply the battery systems, following a memorandum of understanding signed with OCI Energy and CPS Energy in May 2025. Elgin Power Solutions will serve as the engineering, procurement, and construction contractor, and ING Capital is providing a construction-to-term loan package, including a tax equity bridge loan and letters of credit. Black & Veatch acted as technical advisor through the development phase.

ERCOT's Demand Gap Gives Storage Unusual Urgency

Texas's grid operator projects peak demand to rise from 87 gigawatts in 2025 toward 138 gigawatts by 2030 — a near-60% increase driven by data center expansion, vehicle electrification, and industrial growth. The state's battery storage capacity nearly doubled in 2025, reaching roughly 13.9 gigawatts of commercially operational grid-scale storage by early 2026, yet interconnection queues are lengthening and forward power prices remain low enough to complicate new project economics. Projects like Alamo City, which carry long-term offtake agreements directly with a municipal utility rather than depending on volatile spot market revenues, represent the model energy analysts say is needed to attract capital for continued storage buildout.

CPS Energy, the nation's largest municipally owned electric and natural gas utility serving approximately 1.36 million customers across San Antonio and portions of seven surrounding counties, will hold operational control of the facility once it is online. "Energy storage is a critical component of how we prepare for the future," said Rudy D. Garza, president and CEO of CPS Energy. "Projects like Alamo City BESS give us the flexibility to meet growing demand, integrate more diverse energy resources, and ensure our community has reliable power when it matters most."

OCI Shifts Away From Project Flip Model Toward Long-Term Ownership

The Alamo City project marks a deliberate strategic turn for OCI Energy. The company spent years operating primarily as a develop-and-flip business — advancing projects to a point near completion and then selling them to other operators. Alamo City, by contrast, has OCI Energy retaining full ownership under the 20-year capacity agreement, with CPS Energy paying for stored capacity rather than acquiring the asset outright.

"We plan to move away from our previous model of selling projects just before completion, and instead expand the share of joint ventures and directly operated assets," an OCI Holdings spokesperson said. "We'll strategically grow our ESS business, which can offset the intermittency of solar power, to generate long-term electricity sales revenue."

OCI Energy's North American development pipeline now spans 31 projects totaling 7 gigawatts, concentrated in Texas, including 3.9 GW of solar and 3.1 GW of battery storage. The groundbreaking follows a separate transaction announced May 14, in which OCI Energy sold a 50% stake in its 500-megawatt La Salle solar project to Arava Power, an Israeli energy developer, with construction on that site targeted for later this year.

Charles Kim, president and CEO of OCI Enterprises — OCI Holdings' U.S. solar holding company — and Sabah Bayatli, president of OCI Energy, attended the May 19 groundbreaking ceremony alongside Garza and Jaehong Park, president of LG Energy Solution Vertech.