Industry pitches plan to ensure landowners are not hit with costs of dismantling wind and solar farms

The clean energy industry is putting forward a plan to use financial bonds to “ring-fence” finance for decommissioning end-of-life renewable energy projects, in a bid to offer landholders greater certainty when hosting solar and wind farms.

The proposal is being unveiled at the All Energy Australia conference on Wednesday by the new chief of the Clean Energy Council (CEC), former Queensland deputy premier Jackie Trad.

The model, developed by the CEC in partnership with the Queensland Renewable Energy Council (QREC) and in consultation with industry, proposes financial security to be held in approved instrument like a bank guarantee or surety bond.

The financial commitment would only be required once the asset is mature and the capital cost of the project has been paid off.

This would ensure that a renewable energy project’s obligations and liabilities are transferred with any change of ownership, maintaining continuity of responsibility throughout the life of the asset. “If a proponent defaults, the bond pays,” the proposal says.

“Communities have told us they want assurance that landholders won’t be left carrying the cost of removing wind and solar infrastructure at the end of a project’s life — and we’ve listened,” Trad said.

“This framework provides those protections while keeping projects viable and investment-friendly to keep powering homes, economies and jobs.”

The framework comes just days after Australian Energy Infrastructure Commissioner Tony Mahar called on governments to provide more clarity over who should bear the cost and the task of decommissioning wind and solar farms as they reach their end of life in coming decades.

As Renew Economy reports here, some wind farms in Australia are already approaching their use-by dates, and more wind and solar projects will reach the ends of their lives in the coming two decades, sparking concerns about who will pick up the tab of removing these assets if they are not “repowered” and have to be dismantled.

“For the most part the key concern here is how much and who pays,” Mahar said in a statement.

“The community needs more confidence that there will collaboration and rock-solid commitments that landholders won’t be left out of pocket if something goes wrong.”

Trad says that while the risk of project abandonment is “extremely low,” the proposed CER/QREC framework offers further assurance that landholders won’t be left carrying the cost of removing wind and solar infrastructure, while also keeping projects viable.

“Renewable energy projects have a strong track record of meeting their end-of-life obligations – in-fact, there’s never been an abandoned wind or solar farm in Australia,” Trad says.

“This proposal reinforces those obligations by requiring funds to be set aside at appropriate stages of a project’s life.

“The objective is to avoid tying up capital early, ensuring projects are still delivered to provide the electricity Australia needs, while giving landholders the financial assurances they require.”

Pacific Blue is the first on the east coast to endure the searing gaze of social expectations around decommissioning, as it removes the country’s first “commercial” scale wind project, the Codrington wind farm in Victoria (pictured above).

QREC CEO Katie-Anne Mulder says the new model provides a clear and consistent path forward for communities that have been seeking more certainty around end-of-life responsibilities.

“We’ve been working closely with industry over the past year to make sure expectations are practical, fair, and easy for landholders to understand,” Mulder says.

“With most projects still a decade or more from reaching the end of their operational life, we have time to get this right.

“By engaging early with communities and governments, we can ensure landowners never face unexpected costs, while supporting ongoing investment in renewable energy across Queensland.”

The industry groups say the two-stage proposal would first require project proponents to sign a Decommissioning Commitment Statement at the development approval stage, that outlines cost-estimates, a financial security mechanism, calculation method and custodian arrangements.

A second stage would involve phased financial contributions, using a mechanism that aligns with revenue generation and asset maturity.

An independent cost estimate made at the time of final investment decision (FID) would forms the basis for calculating these securities, with periodic reviews and indexation to reflect actual market and inflationary movements and ensure finance is adequate in the event of default.

“This is just the beginning of a broader national conversation,” Trad said on Wednesday.

“By proactively engaging with industry we hope to foster further collaboration, as we continue to consult and work with governments and communities, to further advance a leading practice standard for decommissioning Australia’s future energy assets.

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