Farmers ‘Hosting’ Wind Turbines Face Massive Clean Up Bills & Other Legal Liability

wind turbine host

When the wind industry fiasco inevitable grinds to a halt sometime in the next decade, those that entertained it – be it dimwitted farmers who traded 30 pieces of silver to destroy their communities or the local governments that rubber stamped the DAs that permitted it – are going to be left with a monumental clean up bill.

Hence the move in Britain to force (deliberately worthless) wind power outfits to set aside hundreds of £millions to remove the rusting wreckage when the subsidies run out and/or these things collapse or fail:

Brits to Force £2 Wind Power Outfits to Hold £Millions in Reserve to Pay Damages to Victims & for Decommissioning

The Draft Bill (the subject of the post above) aimed at ensuring that wind farm victims can collect their damages claims; and that the whole pointless mess is cleaned up is available here: Public Nuisance from Wind Farms (Mandatory Liability Cover) Bill

The Bill had its first reading, through the 10 Minute Rule Motion procedure, back in July; and will get its Second Reading this month. It’s odds-on to pass – making it all the more difficult for an already beleaguered wind industry in Britain. Oh dear, how sad, never mind.

In Australia, the wind industry and its puppets planted in planning Departments continue to lie about who will really be responsible for removing thousands of rusting hulks, their toxic blades and 400-500m3 (1,000 tonne) reinforced concrete bases.

Here’s a dissection from Jupiter’s Michael Crawford on the legal calamity faced by the farmers foolish enough to have these things planted on their turf.

Recent advice from Department of Planning an Environment suggests wind farm hosts and their properties may have large decommissioning financial exposure
Michael Crawford
3 March 2016

Recent advice from the NSW Department of Planning & Environment indicates that wind farm hosts may have a large financial exposure related to the decommissioning of wind turbines on their property, which could significantly devalue those properties and affect their
salability.

The recent advice conflicts with statements in the NSW Draft Wind Farm Guidelines and seems to indicate that certain consent conditions in a number of previous wind farm approvals are void. The particular consent conditions provided some financial protection to hosts in relation to decommissioning costs.

Given this recent information, hosts might reasonably want to consult their legal advisors as to whether their hosting contracts now offer them adequate legal protection from the costs of decommissioning and, if not, whether they may have been misled by any party, including the Department.

The Apparent Position

The Department’s Draft Wind Farm Guidelines and the conditions of approval for a number of NSW wind farms over the last four years would give hosts and prospective hosts a reasonable belief that they could not be liable for decommissioning costs. However, the Department has recently admitted that:

  • hosts may be responsible for decommissioning costs if the operator is unable to pay for them (e.g. an insolvent company); and
  • the Department has no legal ability to require operators to make financial provision in advance for decommissioning costs.

It appears the Department’s draft guidelines and the rulings of the PAC have had the potential to mislead wind farm hosts about their actual exposure in relation to decommissioning. Prospective hosts may reasonably have relied on that position presented by the Department
and the PAC.

Background

The Draft NSW Wind Farm Guidelines, December 2011, say (p. 7):

The guidelines require that the proponent/wind farm owner rather than the “host” landowner must retain responsibility for decommissioning.

Additionally, the guidelines require applicants to include a Decommissioning and Rehabilitation Plan in their environmental assessment report. Where this is deemed to be inadequate, but the Development Application is granted consent, a condition of consent will be imposed requiring the proponent to pay a decommissioning bond (emphasis added).

The conditions of approval for the White Rock Wind Farm, issued by the Department 10 July 2012, include the following (p. 34):

G10. The Proponent shall prepare a Decommissioning and Rehabilitation Plan, which shall be submitted for the approval of the Director-General prior to the commencement of construction. The Plan shall be consistent with the requirements of the draft NSW Planning Guidelines – Wind Farms (December 2011), as updated. The plan shall be made publicly available. The Plan shall be updated every five years from the date of preparation, until decommissioning and rehabilitation is completed, and a copy of the updated versions provided to the Director-General and made publicly available. The plan shall include estimated costs of and funding arrangements for decommissioning, including provision for a decommissioning bond or other funding mechanisms (emphasis added), where the plan concludes that estimated costs and funding arrangements are inadequate.

Note that last sentence, where the conditions explicitly include:

provision for a decommissioning bond or other funding mechanisms, where the plan concludes that estimated costs and funding arrangements are inadequate

The consent conditions for the Collector Wind Farm, issued by the PAC on 2 December 2013, include the following condition in relation to a Decommissioning and Rehabilitation Plan (p. 35):

The updated Plan shall include estimated costs of and funding arrangements for decommissioning, including provision for a decommissioning bond or other funding mechanisms, where the Plan concludes that estimated costs and funding arrangements are inadequate.

Precisely the same words appear on page 34 of the PAC consent conditions for the Flyers Creek Wind Farm, issued on 14 March 2014.

And precisely the same words appear on page 29 of the recommended consent conditions provided by the Department to the PAC for Crookwell 3 Wind Farm in February 2015. [Note. That proposal has yet to be determined because the PAC referred the project back to the Department.]

Given the explicit statement in the draft guidelines, and the history of the Department and PAC imposing consent conditions that specifically require a

“decommissioning bond or other funding mechanisms, where the Plan concludes that estimated costs and funding arrangements are inadequate”

it would have been reasonable for a developer to say to any prospective host:

“You don’t need to worry about decommissioning costs because it is our responsibility and the Department will oblige us to make financial provision for it in advance if the Department judges it will not be met by scrap value.”

Likewise, if a prospective host consulted the draft guidelines and looked up a few recent wind farm approvals, they could reasonably have come to the same conclusion and thus that their exposure to decommissioning costs was nil and they did not need any particular protective provision in their contract with the developer.

However, recent advice from the Department contradicts that position.

What’s Changed?

The Department has recently provided recommendations to the PAC considering the proposed Crudine Ridge Wind Farm. Not only does the Department’s recommended consent conditions for Crudine Ridge, issued December 2015, fail to provide for any “Decommissioning and Rehabilitation Plan” but they do not include the statement:

provision for a decommissioning bond or other funding mechanisms, where the plan concludes that estimated costs and funding arrangements are inadequate or anything like it.

And in its Assessment Report to the PAC, the Department explained1:

The Department has obtained legal advice indicating that it is the proponent’s obligation to cover any financial costs associated with decommissioning and rehabilitation, and that the Department does not have the capacity to impose a condition of consent which requires a bond for security for decommissioning and rehabilitation, especially on private land.

Note the second part of that statement, which was tucked away in the fine print of its recommendations:

the Department does not have the capacity to impose a condition of consent which requires a bond for security for decommissioning and rehabilitation, especially on private land.

So, in relation to decommissioning conditions, the statement in the draft guidelines is legally wrong and the consent conditions imposed on White Rock, Collector and Flyers Creek Wind Farms, and recommended for Crookwell 3, are apparently not legal.

The problem for hosts does not end there. In response to a question to the Department from the Jupiter Community Consultative Committee, the Department advised2:

Under the current legal framework, in the event that the owners/operators of a wind farm are unable to fulfil the decommissioning and rehabilitation obligations under a planning approval, the obligation for these works could potentially reside with the owner of the land (as the development rights and obligations apply to the land which is the subject of the application).

In letters sent by the Department to some neighbours of the proposed Jupiter Wind Farm, the Department has elaborated a little more, saying:

However, where the company becomes insolvent, the owners of the land may be required to comply with the decommissioning and rehabilitation obligations under the consent. This is because in NSW the development rights and the associated conditions3 apply to the subject land (rather than to a particular person or corporate entity).

While the Department says the decommissioning obligation may apply to the landowner, that seems like a very definite “may”, since it is hard to see who else could be responsible if the operator is unable to pay. The Department is explicit that all “development rights and obligations apply to the land which is the subject of the application” and, if the operator is broke and there has been no enforceable provision to cause the operator to set aside the necessary funds, then the responsibility must fall on the landowner.

Conclusion

So the Department has now advised that:

  • it has no legal power to compel wind farm operators to set aside funds for decommissioning the wind farm (and it has ceased recommending consent conditions that would have that effect);
  • in the event the operator does not have funds at the end to cover decommissioning costs the responsibility to decommission the wind farm will likely fall on hosts because

“the development rights and obligations apply to the land which is the subject of the application”

The Department’s logic appears to be clear. If the “rights and obligations apply to the land”, the Department cannot require a third party to set aside funds to do something to that land. It would seem that only the host can do so through requiring those funds, or a bank guarantee, to be provided up front by the party wishing to erect structures on the host’s land. Clearly a contractual obligation to remove the turbines at end of life is meaningless if the operator can then be broke with no protected financial provision made.

This is new advice from the Department and contradicts past advice on a matter of great financial significance to hosts, affecting not just their financial position at the time of decommissioning but the value and salability of their properties now.

Epuron, an experienced wind farm developer, has estimated for its proposed Liverpool Range Wind Farm that the cost of decommissioning will be “approximately $380,000 per turbine” and that “This estimate is on par with other wind farm developments that have recently been approved in New South Wales.”4 An amount of $380,000 would vastly exceed the expected total revenue per turbine for many hosts, thus rendering hosting into a loss making proposition for them, and for anyone else who buys those properties.

It does raise questions about the obligation of hosts attempting to sell their properties, and real estate agents, to advise prospective buyers of the decommissioning exposure they may incur.

Given the role the Department may have played in giving false assurance to hosts about the financial consequences for their properties and themselves, the Department needs to take steps to rectify any consequent misunderstanding hosts and prospective hosts have of their legal situation.
Michael Crawford
PDF version


Footnotes
1State Significant Development Assessment Crudine Ridge Wind Farm (SSD-6697), Department of Planning & Environment, December 2015, p.60.
2Minutes of Jupiter Wind Farm Community Consultative Committee Fifth Meeting, 2/12/2015, p. 6-7.
3Note, this is a reference to all development conditions for the project, not just decommissioning, so may have implications for landowners in relation to other consent conditions, such as those relating to noise, turbine placement and environmental impact.
4Liverpool Range Wind Farm: Decommissioning & Rehabilitation Plan, Epuron Pty Ltd, February 2014, p. 7.

Hawaii rusting turbines

Plenty of rust visible, but no sign of the developers …

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Reblogged this on open822.

  2. Jackie Rovensky says:

    Any contract will be certain to ensure the company will not be left with the cost of decommissioning because they know these companies may and probably will not be around or financially viable when the time comes to make them disappear.
    Any estimate of the scrap value is just that an estimate, as it will depend on what is being paid for the scrap at the time. Currently there is no money in scrap metal due to an over-supply in Australia. The cost of hiring the huge cranes used to dismantle massive turbines is more than the value to the recoverable scrap, then there is the cost of disposal of that which cannot be recovered, and finding a site which will take the huge amounts from not only one but many turbines.
    Here in Australia it is common to have in the contract to erect for decommissioning to leave the concrete foundations in situ with a covering of soil/earth – that is leaving large areas and numbers of areas ‘hidden’ from future generations with large numbers of areas on their land where they cannot grow anything, or maybe even build due to contamination.
    If anyone thinks about signing to ‘host’ something which will never truly go away they need to consider these turbines are not visitors they are a permanent blight on the land/environment, they should consider these turbines and their infrastructure will become a ‘member of the family’ that never dies or goes to a retirement home.

  3. Uncle Fester says:

    I believe I read some fine print somewhere in which the secretary of the department could use his discretion to waive the entire decommissioning requirement. This would leave these things to deteriorate and fall down of their own accord, and would still be a ball and chain associated with any hosts properties, rendering them effectively unsaleable. What a legacy for a host to leave his children. A valueless block, an environmental nightmare and the requirement to traverse the community wearing a disguise lest you be identified by a local.

  4. “When the wind industry fiasco inevitably grinds to a halt sometime in the next decade…”
    I’m envisioning this happening within the next year!!!!!!!!!!!!

  5. Recent correspondence to the Maine Land Use Planning Commission, which has an upcoming 3-year review of a wind project’s decommissioning fund:

    Here in Maine we are closely scrutinizing the Blue Sky East decommissioning plan for its 19 turbine Bull Hill project.

    It is unclear what grade the copper is, but the steel in the tower is probably HMS#1 based on its thickness.

    Let’s estimate 3 tons of copper in each generator and 140 tons of steel in each tower.

    If copper salvage rate is $3000 per ton, one turbine will recover $9000.

    If steel salvage rate is $150 per ton, one turbine will recover $21,000.

    There is a firm claiming to be the only fiberglass recycler in the country, but their prices are not disclosed and it is unclear how strong the demand will be like for recycled fiberglass at a time when as many as half a million turbine blades will be decommissioned in the US alone. Based on their website http://americanfibergreenproducts.com/operations/wind-farm-blades-2/ it looks as though the process is labor intensive and costly, and their re-manufactured products do not seem to be in high demand.

    Crane roads must be restored.

    A crane must be deployed at a cost of approximately $10,000 per week. The Bull Hill project took several months to assemble.

    A crew must be on-site to disassemble the 19 turbines and handle the components.

    The site must be restored.

    Components that cannot be recycled must be disassembled, trucked away and disposed.

    A 260′ steel tower that has a base diameter of 15′ has to be disassembled, cut into about 1100 pieces no larger than 5′ x 2′, and transported to market.

    All to recover $30,000 per turbine at the scrap yard.

    Blue Sky East estimates they will be able to decommission the entire Bull Hill wind project at a cost of about $100,000 per turbine.

    The numbers in the BSE decommissioning plan appear to be sufficiently suspect to warrant a more robust decommissioning fund. This is to say nothing of BSE’s weak financial capacity under the corporate umbrella of SunEdison, a publicly traded company whose ongoing distress is public information.

    Friends of Maine’s Mountains has also raised these concerns with the siting authority, Maine’s Department of Environmental Protection. While FMM appreciates the DEP’s new requirement that licensees fully fund decommissioning early, we assert that the scrap value is always overestimated, and the disassembly/disposal costs are always underestimated. “Fully funded” is not truly full. Given the budget and the tenuous nature of the industry and its participants, FMM doubts that Maine wind projects will ever be decommissioned unless the public pays the cost.

    As you consider the amendment, and to the extent the Commission has discretion, we ask that it use the foregoing information to guide it toward a conservative decision.

    • These details are staggering!
      I’m envisioning, a half of a million fibreglass blades hauled to a pile somewhere in the U.S. and auctioned off to the highest bidder who will haul them to a factory somewhere and turn them into garbage cans.

  6. Here in Canada we have our own problems where the federal government is left holding the bag of provincial tyrants, like in Ontario where the current Premier Kathleen Wynne and her predecessor Dalton McGuinty have crippled Ontario’s economy, not to mention the victims of recklessly sited industrial wind energy projects.

    However, last I checked, Canada is still a sovereign nation, like Australia, and so can impose taxes, as can the province of Ontario, to fulfill some specific function. Furthermore, they can pass laws that are in the public interest and enjoy the consequences of doing just that. And so I am doubtful about statements like, “So the Department has now advised that: it has no legal power to compel wind farm operators to set aside funds for decommissioning the wind farm”, appearing in the article above.

    I am aware that contract holders cringe at the notion their contracts will be changed by the rulers of the land, but such is the nature of doing business and signing contracts with a party that writes the laws that govern society. And there is a court system that can be used to enforce justice where it’s thought lacking (and ratepayers know that wind energy profiteers can afford access to the courts!)

    The costs of NOT changing laws that are not in the public interest are tangible. It’s not only the Gen Y’s and Millenials who are “tuning out”, being disgusted by the festering corruption in these greatest nations on Earth; there is also an attitude that corruption is OK, and cheating is necessary in order to compete. Is this the future that’s being created for “our children and grandchildren”? What are the effects on the cost of capital of unchecked corruption?

    • Michael Crawford says:

      The Department’s comment is a statement about its powers under existing law, not about the power of the State Government to pass appropriate laws, which apparently to date they have failed to do.

  7. Reblogged this on citizenpoweralliance.

  8. analitik says:

    Nice touch, chanelling Windsor Davis

  9. Makes No Sense says:

    Oh, the Queensland Government is very generous. It has no requirement whatsoever for turbines to be decommissioned!

  10. Mike Lyons says:

    Used an abreviated form of this (due to space restrictions) to send to the Editor, Wellington Times, NSW

  11. Fantastic news!! It should stop the industry dead in its tracks!

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