Solar Decommissioning Plans Increasingly Required for PTO
The National Renewable Energy Laboratory's (NREL) PV in the Circular Economy (PViCE) tool predicts that at least 27 GW of all nonresidential (commercial and utility-scale) PV capacity installed as of 2020 will be decommissioned in the U.S. by 2030. Decommissioning a PV system typically includes removing the PV array and balance-of-system (BOS) equipment and restoring the land or infrastructure to its original condition or for a new use.
As of April 2021, the Bureau of Land Management (BLM) and 15 U.S. states have solar decommissioning policies in place. These policies typically apply to utility-scale projects and mandate compliance with regulatory requirements over the project's lifetime. Some jurisdictions require a decommissioning cost estimate and/or the submission of a decommissioning plan before project construction. Most decommissioning policies also require compliance with specific performance activities, including removal of all solar system equipment, site restoration, and reclamation. A project owner may also be subject to civil penalties for noncompliance under some U.S. state solar decommissioning policies. In addition to the BLM, below is a list of the states that currently have either a decommissioning plan requirement or an EOL financial assurance requirement.
Impacts of Solar Decommissioning Policies
Compliance with decommissioning policies can impact utility-scale solar project construction timelines, project economics, and overall project viability. Jurisdictions that require submission of decommissioning plans and/or financial assurance as a prerequisite or condition of approval before project construction or operation can impact construction timelines and capital costs associated with project development.
Financial assurance requirements can also affect project costs. Policies that mandate financial assurance amounts to include site restoration and reclamation costs may raise the cost of decommissioning, depending on the facility's size and the land's preconstruction uses. Some solar decommissioning policies allow facility owners to offset the costs of decommissioning with the estimated salvage value of the facility equipment, which may lower overall project costs.
Solar decommissioning policies can also influence project operations, solar equipment end-of-life (EOL) management decisions, and system repowering evaluations. Some state solar decommissioning policies mandate compliance with reporting and record-keeping requirements during project operation. Solar decommissioning policies may also impact equipment retirement and EOL decisions by requiring project owners to submit plans and detailed cost estimates accounting for transportation, salvage (e.g., reuse, recycling), and/or disposal of decommissioned system equipment.
Who will pay?
In the United States, there currently isn't a single entity responsible for the recycling of solar panels. Rather, the responsibility varies by state, depending on their respective policies in place. This is in contrast to the situation in the European Union, where the Waste Electrical and Electronic Equipment Directive (WEEE) mandates producer responsibility for recycling solar panels.
The WEEE Directive ensures that manufacturers are held accountable for the disposal of their products, thereby minimizing the environmental impact. The early adoption of such policies in the EU has been instrumental in driving down the cost of recycling solar panels. As such, while the United States is grappling with the patchwork of different state-level policies, the EU's unified approach has been more effective in managing the End-of-Life of solar panels, thereby setting a precedent for other regions to follow.
In the U.S., each state has varying financial assurance requirements. For example, in Louisiana, where financial assurance is required, The Louisiana Department of Natural Resources has determined that a bond is required for the EOL plan, no less than $500,000, which is the estimated cost of the decommissioning plus any past due rent and payments that are incurred by the owner including the obligation for insurance amount.
Producer Responsibility Approach
Producer responsibility is a comprehensive approach to managing the environmental impacts of products. It involves all parties in the product's life cycle - from design, manufacture, and use to end-of-life management - taking responsibility for the environmental impacts at each stage. This responsibility is not just moral or ethical but also financial and physical, particularly when it comes to the collection and recycling of products at the end of their useful lives.
Manufacturers, or their designated stewardship organizations, play a crucial role in operating end-of-life programs. These programs are typically established on a specific date and are funded through the sales of the products made after that date. They are responsible for the proper management, collection, and recycling of all products removed from service after the program's inception, regardless of the installation date, size of the installation, or category of the owner or permit holder.
The fees associated with these programs may be fully absorbed by the manufacturer or partially passed on to the purchaser. Importantly, these programs do not impose end-of-life fees, ensuring that the financial burden of product disposal does not deter consumers from participating in the recycling process.
One of the key benefits of a stewardship program is that it inherently provides manufacturers with incentives to enhance a product's environmental attributes and recyclability. However, the decision to make such improvements ultimately lies with the manufacturers themselves.
To recap, producer responsibility is a shared responsibility for the environmental impacts of a product throughout its life cycle. This approach necessitates manufacturers to participate in the financial and physical aspects of collecting and recycling products at the end of their useful lives. It also encourages the incorporation of recycled materials in new products and the design of products to be less toxic and easier to recycle.
Examples of producer responsibility can be seen in various industries, including electronic waste, paint, batteries, lighting, and mercury thermostats. These programs can be operated by individual companies or through a stewardship organization. For instance, PV Cycle, an EU system operating in each member country, provides a valuable model for effective producer responsibility.
Rate Payer Approach
The ratepayer approach is another viable strategy for managing the end-of-life of products, particularly in the context of solar energy. In this model, all ratepayers, or utility customers, contribute to an end-of-life management program for all products being removed from service in the state. This is based on the principle that all ratepayers benefit from the inclusion of solar energy in the state's energy generation mix.
Funding for this program is typically collected through a surcharge on the electric bill. To ensure fairness, this surcharge is likely based on consumption. Various options for calculating this surcharge could include a flat fee, a charge per unit of consumption, or a percentage of the total bill. Importantly, there are no end-of-life fees for the owner or permit holder of the product, removing potential financial barriers to participation in the program.
Utilities play a critical role in this approach, as they are responsible for collecting the surcharge from ratepayers and transmitting these funds to the entity operating the statewide collection and management program. This program oversees the collection, recycling, and proper disposal of all products being removed from service.
It's important to note that the fees associated with this program may change over time, depending on the needs of the program. This flexibility allows the program to adapt to changing circumstances, such as fluctuations in the volume of products being removed from service or changes in the costs associated with product disposal and recycling.
Renewable EOL Permittee Management Model
The model described here revolves around the concept of assigning the responsibility for end-of-life management of renewable energy production facilities, such as solar panels, to the owners or permittees of these facilities. The owners or permittees, being the ones who profit from the energy produced by these facilities, are proposed to fund a program for managing the products when they reach the end of their life cycle. This means when the products are no longer usable and need to be safely disposed of or recycled.
Under this model:
The permittees or owners would contribute to a fund designed for managing the end-of-life process for all products being retired from service within the state. The contribution would not be paid at the end of the life of the product, implying that the owners or permittees would regularly pay into the fund during the operational life of the product.
The fund would be used by an entity operating a statewide collection and management program for all products that are no longer in service. This entity would be responsible for safely disposing of or recycling these products.
The payment schedule into the fund could be tied to several factors, such as the annual energy generation of the facility, the number of panels installed, or the rated capacity of the installation. An option could be to reinstate a sales tax that also goes into this fund.
The fees paid into the fund may change over time, depending on the needs of the program. This could mean that if the costs of safely disposing or recycling the products increase, the fees may also increase to cover these costs.
The overall goal of this model is to ensure that there is a sustainable system in place for managing the end-of-life process for renewable energy products and that the financial burden of this process is carried by those who benefit from the operation of these facilities.
As solar power continues to grow in the United States, it is essential to consider the long-term implications and requirements of these installations. Solar decommissioning policies are becoming increasingly important in ensuring responsible management of these projects throughout their entire lifecycle. By understanding and addressing the potential impacts of these policies on construction timelines, project costs, and operations, the solar industry can continue to expand sustainably and responsibly.
Green Clean Solar is here to support the action of decommissioning a site by removing and recycling all equipment: solar panels, batteries, inverters, racking, and anything else particular to a solar job site. There are many reasons decommissioning projects are starting to take place, and we're the one-stop shop for getting a crew out and turning the site back to its original form.