Since the early 2000’s the installation of wind turbines has steadily increased. Before turbines are installed at a wind farm a power purchase agreement is worked out between the seller of the energy (usually the turbine manufacturer) and the buyer of the energy (a utility). These power purchase agreements generally last for 20 years. Once these 20 years are up a new power purchase agreement must be formed or more commonly the old turbines need to be decommissioned. Unfortunately, decommissioning policy varies largely from state to state causing roadblocks in the decommissioning process. This allows some wind turbines to rot in place for years before being removed. A second issue arises after the turbines are finally taken down. Until now these wind turbines have been thrown in landfills which fill up rapidly due to the size of these turbines. With thousands of turbines nearing the end of their life in the next few years, they will be in need of decommissioning and recycling. This literature review will dive into the current decommissioning policy and its shortfalls. In addition, it will investigate various methods of recycling wind turbines.
he rise of wind energy can be attributed to multiple factors including but not limited to: climate change, advances in technology and the push for energy independence. The 1970’s mark the turning point for wind energy development. At this time the world was experiencing an oil shortage which drove oil prices through the roof. Countries such as Denmark which heavily relied on foreign oil to produce electricity knew they had to change how they approached energy production. With government support they began researching and installing wind turbines. Governments in various countries throughout the world continued to provide subsidies for wind and other renewable energies which lead to the first wind boom in the 1980’s. As oil prices declined renewable subsidies where phased out and renewable energy was put on the back burner until the 2000’s. This marked the beginning of the present-day wind boom which was caused by large advances in technology in conjunction with the renewal of government subsidies. These factors lead to a large reduction in cost to the point of being competitive with coal as of 2018. This is one reason wind energy has become more and more appealing to investors.
Additionally, wind energy doesn’t require any fuel (coal, oil, gas) to produce electricity therefore both the wind farm owner and the utility can lock in electricity rates for the life time of the turbine which is usually 20 years. This agreement is known as a power purchase agreement (PPA). After the 20-year contract there are many different things that can happen to a wind farm. Many wind farms are built on land leased to turbine owners by land owners. If the turbines are in good shape the land owner, utility and wind farm owner can try to renegotiate a deal. This would extend the lease with the land owner and extend the PPA with the utility.
However, the most common route according to Nicholas Killen of Vestas Blades Brighton is for turbine owners to stop maintaining the turbines close to the 20-year mark. At this point they will try to negotiate another long-term lease with land owners and replace old turbines with state of the art turbines. One reason this is done is because it will cost more to maintain 20-year-old turbines due to a high chance of parts failing. Secondly, most turbines built 20 years ago have a capacity of 600 to 1000 kilo watts, whereas the most common turbine being produced today is 2.5 to 3 megawatts. This means each new turbine has the potential to produce 3 times the amount of electricity as would a turbine from 20 years ago. Another aspect playing into the decommissioning of old turbines in the U.S. is the expiration of the Production Tax Credit (PTC). With the PTC being phased out in 2019 wind farm owners will be even more inclined to decommission old turbines as they will become even less economical to operate. With this said it is a good time to look at what decommissioning a wind farm means and who is responsible for it.
The aftermath of the first wind boom can still been seen throughout the United States today. California was the for runner in wind turbine installation back in the 1980s, installing 11,820 turbines at three major wind farms across the state. The lifetime of these turbines varied but overall the bulk of them lasted 25 years. Some are even considered operational to this day however they are not being used because they are too expensive to operate. For these reasons hundreds of turbines rotted in place for years with no sign of being repowered (replaced with a newer turbine) or decommissioned. Similarly, 37 turbines located on the Kamaoa wind farm in Hawaii rotted for 6 years before they were taken down and sold for scrap. The reason these wind turbines are not being taken down in a timely fashion is that 25-30 years ago when these projects where planned the wind farm owners where required to submit a decommissioning plan, but they did not need to show any financial security for this decommissioning. A lot of issues from change in tax policy to frequent mechanical failures came up and wind farm developers simply abandoned the site. Since it is primarily state or government land the decommissioning ends up falling on the shoulders of the state and eventually the taxpayer. Both California and Hawaii put off decommissioning their turbines as long as they could until the public got involved. They were tired of hundreds of broken turbines littering the landscape and pressured the state into removing these turbines. Ironically the taxpayer of these states ended up paying for this decommissioning which they are fighting for. These are some lingering effects left over from the lack of proper contracts being written up during the first wind boom. Currently wind energy looks a lot different than 30 years ago, however decommissioning plans have remained nearly the same and this is a problem.
As of 2018 there are three different decommissioning options based on the state where the wind farm is built. These can be categorized as follows:
• States that require no decommissioning
• States that require operators to decommission the wind farm but do not have to have a bond for decommissioning
• States that require both a decommissioning plan and a bond to cover the decommissioning costs.
California and Hawaii are examples of a states which require a plan for decommissioning but does not require any financial security for this decommissioning. One example of where this ends up being a problem is when a wind farm operator goes bankrupt, the company is dissolved or abandons the farm. The burden of decommissioning then falls onto the state and ultimately taxpayer. The result of state cleanup efforts can vary based on the financial situation and resources available to the state. In some cases, this cleanup is not as thorough as it should be.
Oklahoma, Oregon, Montana, and Indiana are the only four states that require operators to provide both a decommissioning plan and a bond or fund. Oklahoma is the most notable state out of the three because of its favorable location in America’s wind belt.
The last category that requires no decommissioning is unfortunately the approach taken by most states including Texas who has the largest capacity of wind energy in the United States. This becomes a problem especially when wind farms are built on land leased by a land owner which is becoming more and more common. The land owner and developer sit down and decide on the terms of the contract. Generally, a lease lasts from 25-50 years and as of 2017 land owners get around $4,000-$6,000 per MW capacity installed. However, the terms that are usually talked about lightly are those involving decommissioning. This can be caused by several things. Either the land owners feel pressured into closing the deal due to their own financial troubles or the land owners think they won’t be around in 50 years, so it won’t be their problem.
Even if neither of these are the case planning 50 years into the future is very difficult and hard to envision. For this reason, the decommissioning plans the wind developer proposes is often what is decided upon and the land owner must trust that it comes through in 50 years. This once again ends up being a problem if the wind developer goes out of business or the company is dissolved. Then the land owner is left with multiple inoperable pieces of equipment that they have no way of taking down. If they had to pay for this, it could end up costing the land owner hundreds of thousands of dollars. Although the cost for uninstalling a turbine varies greatly based on size, location, salvage value etc…Most wind farm developers estimate it will cost them between 15,000-25,000 USD to decommission per turbine. Salvage value is already included in the estimate above. However, independent studies done have estimated this cost to be much higher ranging from 150,000-200,000 USD per turbine. Stating current calculations done by wind farm developers lowball the cost of renting cranes, moving soil and the labor hours required. They also are very generous in what salvage value they estimate to get back and often use scrap metal prices from 20 years ago rather than projected scrap metal prices 20 years from now.
Additionally, wind farm developers are not considering the transport costs to get scrap from a standing turbine in the Midwest of the United States to the highest paying scrapyard which is usually in China. These independent reports have led land owners to think twice about whether they want to lease their precious land to turbine developers. This is very unfortunate because the wind developers need land owners more than ever to continue pushing towards a more sustainable future. So, what can be done to protect landowners and taxpayers while still supporting a clean energy future?
The first step is for states, especially those located in the wind belt, to pass a law requiring a decommissioning plan and a bond to cover the decommissioning cost of the wind farm. This protects the state, taxpayer, and private land owners from future economic and environmental burdens. This law should be implemented at the state level because federal law has power over only federal land or federally funded projects. Wind farms are more frequently being built on privately leased lands and are rarely federally funded, therefore a federal law wouldn’t do much good. State law also has an upper hand in comparison to county law because it would provide a homogenous law for the entire state. This provides clarity to wind farm developers as they wouldn’t have to worry about varying regulations throughout the state. This is particularly useful when developers build a wind farm that spans across a county line. This would work best if all states would agree to implement a law like this to deter wind developers from building in states with no decommissioning laws.
This law may seem unfair to wind farm developers as they are already paying extremely high capital costs for land, turbines, labor etc… The state should take this into account when formulating this law and craft it in a way that would require the wind farm developer to pay very little into the bond the first few years of operation. This way the developer can recuperate some of these costs. The payments into the decommissioning bond would then steadily increase further into the lifecycle of the wind farm.
Lastly, and perhaps most importantly both the state and turbine developer need to perform an in-depth analysis on the cost to decommission a turbine at the end of its lifetime. As was seen earlier wind farm developers estimate the cost to decommission one turbine to range between $15,000-$25,000 USD. Independent studies estimated this number to be closer to $150,000-$200,000 USD per turbine. A whole factor of magnitude difference. It is vital a cost per turbine number is agreed upon. Without this there is no way of telling how much a turbine developer needs to pay into the bond.
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