This is economic favouritism which exposes the law to serious risk. Courts could find it to be an illegal infringement of the Commerce Clause of the constitution of the United States.
Responding to several participants in the rulemaking process, but constrained by the law, the Texas Public Utilities Commission loosened the in-state location requirement. Projects are now allowed to be located across the state line as long as their production is transmitted into the state on a dedicated line and metered in Texas. Whether this will be sufficient to prevent a court challenge remains to be seen. An unfavourable ruling could disable the law unless the legislature chose to correct it.
All other states but Nevada avoid this problem by allowing renewables to be located anywhere within the regional electricity market.