In the first article I’ve seen on the issue, North Dakota regulators are looking at the decommissioning plans for the aging slice-and-dicers in the state. They are considering a requirement to provide some sort of financial assurance that there will be money available to pay for disassembling the towers.
The estimated costs for decommissioning from three different operators for their specific slicers are $68,700, $82,567, and $75,720. The average of those three point estimates is $75,662. Let’s call that $75K each. That is the cost per turbine.
Check out When the turbines stop turning: ND regulators mull ‘financial assurance’ to cover costs of wind turbine decommissioning, from the Dickinson Press.
The financial assurance can take many forms. It could involve a performance or surety bond, irrevocable letter of credit, or guarantee from the corporate parent.
Removal of the towers is required when they haven’t produced electricity for 24 consecutive months.
Decommissioning includes:
…dismantling and removing the towers, turbine generators, transformers and overhead cables, removing the foundations to a depth of 3 feet, taking out access roads – unless the landowner asks in writing that they remain – and restoring and reseeding the topsoil.
Companies say assurance isn’t needed because, well, trust us
The response from companies is that no assurances are needed.
Several reasons are offered. First, the companies are making money. Second, the salvage value of the towers is greater than the cost of removal.
There are rather severe problems with those arguments. The whole issue is whether the operators will be solvent 10 or 20 years from now, not whether they have positive cash flow this quarter. They are mighty bold to assure us that they will survive 20 or more years. Further, most of the descriptions I’ve seen suggest each wind farm is in a separate corporation. That means if that specific, individual company isn’t generating cash flow (like, say, just as an illustration, that their turbines have mostly stopped working), or isn’t selling much because technology has passed them by, or has failed for any one of a variety of business reasons, the empty shell won’t be able to pay for dismantling the towers because there won’t be any money in the corporate shell.
Same points apply to the salvage value. If technology passes by, there won’t be any salvage value. That’s a mighty insightful forecaster who can predict technology 20 years out and determine the salvage value of each of those turbines along with the cost to decommission 20 years from now.