Midwestern communities have experienced a dramatic increase in the buildout of solar and wind systems in the last decade, continuing an upward trend in renewable energy projects that began in the early- and mid-2000s. As many of these initial projects reach the end of their lifespan, communities will see the local impacts of repowering and decommissioning—the decisions made at the end of a project’s life. Learning about the full lifespan of projects can help communities planning new projects attain the long-term benefits of renewable energy while reducing potential conflicts.
This post lays the foundation for learning about repowering and decommissioning and how each can affect the community where a renewable energy project is located.
Here are three key takeaways:
- Few large-scale solar and wind projects have reached the end of their lifespan in the Midwest; in the coming years, a large volume of projects will reach the decision to repower or decommission at the same time.
- Local communities should learn about end-of-life decisions for renewable projects, their impacts, and incorporate this stage into their planning processes.
- While the project siting process varies by location, the decision to repower or decommission will affect all projects and should be discussed when communities (and states) think about renewable energy development and siting considerations.
We will follow up on this post by expanding it to a series that explores what repowering and decommissioning means for carbon-free electricity in the Midwest along with the impact of repowering on state energy and climate goals.
Read our recently published series on siting large-scale solar and wind projects here. Additional information is being developed on discrete siting or ordinance topics that are evolving as the renewable energy industry grows, such as integration of battery storage in large-scale projects and hybrid project development.
Large number of Midwestern projects will reach the end of their lifespan at the same time
The major increase in solar and wind projects in Midwestern communities was due to several factors, including rapidly declining costs of solar and wind systems, increasing demand for clean energy technologies, passing supportive public policy, investing in transmission infrastructure (to the tune of $6 billion in 2011 alone), and increasing social acceptance. Improvements in technology also played an important role, as solar panels and wind turbines became more reliable and efficient, contributing to those declining costs.
As we look forward, however, these systems—like other energy facilities—are impermanent. The lifespan of solar and wind systems is typically 20-30 years for projects developed in the early 2000s but can be as long as 35 years for more recent projects. The end of life will also typically correspond to the duration of the land lease and power purchase agreement for that project.
What happens to these systems when they reach their endpoint? And, more importantly, what does this mean for communities, states, and the nation as we consider an increasingly renewable energy future?
Note: In this post, a solar or wind project’s “end of life” is defined as the point at which the physical components of the renewable energy system have reached the end of their useful life and need to be replaced, and the point at which the project owner must decide whether to repower or decommission.
How do these projects work from a land-use perspective?
To develop and operate a large renewable energy system requires land (which must be developed in accordance with land use requirements and standards), an interconnection agreement with the regional transmission system operator to inject into the electric grid, and a power purchase agreement.
Land for large solar and wind projects is typically leased and can provide an important source of rent income to landowners. In addition to obtaining and following a land use agreement, the renewable energy system owner must follow land use requirements and standards for development which are set at the federal, state, and local level (though some states pre-empt local authority on land use and environmental review for larger projects). While landowners may develop and operate a wind or solar project as part of their property rights, most local and state governments with large-scale energy project siting authority require that a project file a plan to decommission (also typically backed by some financial surety) when they apply for a development permit.
The length of time that renewable energy projects use a site is variable. Most systems constructed before 2016 have an engineering life in the 20-year range, while newer systems (2016 and later) are closer to 30. Model type, manufacturer, and a handful of other considerations might lengthen the lifespan by a few years, but two to three decades is the general timescale.
To sell energy on the wholesale market, the generation system will also need a power purchase agreement (PPA) and a generator interconnection agreement (GIA):
- A power purchase agreement is a contract that designates that the system will sell a set amount of power output at a price to a power purchaser (typically a utility).
- An interconnection agreement (the legal contract that allows the plant to inject electricity into the region’s electric grid) is tied to the location at which the generator is injecting energy (also known as the point of interconnection).
A project developer may choose to lease or buy land close to a certain point of interconnection. When a project is retired, there is no obligation to continue to use the interconnection and produce energy (although there are rules to allow the replacement of a generator, if the developer wants to pursue it).
What can happen at the end of a renewable energy project’s life?
There are two main options for a large renewable energy system when it reaches end of life: repowering or decommissioning. The decision is typically made by the project owner, but a vast array of factors can influence the decision, including project profitability, any re-negotiation of the land lease, whether the land use permit expires with the end of life (and the developer acquires a new permit), and the condition of the system.
Repowering means that the wind or solar energy system, or a version of it, will be refurbished or replaced and the project will continue to operate at the same location for another lease cycle. Repowering may require new siting permits that will vary by location and may even require applications to the public utility commission if power output after repowering exceeds a specific threshold (which varies by state). This means that there are degrees of repowering, depending on the type of energy system. A project can undergo a full repower (at various PPA output levels), partial repower, or retrofit package/software upgrade.
Decommissioning means that the system is deconstructed, removed, and the land is made ready for redevelopment or return to original use (as is typically required in a decommissioning plan, or as a stipulation of the lease, but will vary from project to project). In most places, the estimated costs and a plan for decommissioning are included as part of the initial project application. This protects the landowner and the surrounding community from both the uncertainty associated with lease transfers and the risk of bankruptcy or abandonment by the developer. Additionally, many local governments stipulate that if a project is not in operation for a certain number of years (typically between one and five), then the project must decommission.
Once a project meets decommissioning requirements, the land is ready for redevelopment or can be returned to its former land use (likely agricultural).
Figure 1 is an interactive flow diagram that illustrates the main options and decisions for a renewable energy system when it has reached end of life.
Figure 1. Interactive flow diagram for renewable energy system at end of life (i.e., 20 – 35 years depending on initial construction
Source: Jessi Wyatt and Dane McFarlane, Great Plains Institute, April 2020.
Impacts to consider in community planning efforts for large-scale solar and wind projects
The decision to repower or decommission wind projects has subsequent impacts for local communities to consider:
- Tax revenue: In addition to sales tax revenue and property tax revenue, local siting jurisdictions in some states (e.g., Minnesota) receive revenue from turbines through a state production tax based on electricity generation and system size. Newer, taller turbines are projected to generate more power, and fewer turbines may be needed to generate the same amount of power for a given project, leading to less tax revenue. Fewer, more powerful turbines may also mean that the community receives a different amount of property taxes (highly dependent on the state and specific community).
- Land leases: Projected improvements in turbines mean more efficiency at greater heights. For landowners, fewer turbines may mean fewer landowners have an opportunity to receive rent. Developers are generally under no obligation to pay adjacent neighbors or negotiate if the landowner no longer hosts a turbine after a repower. Based on experience with the few turbines that have reached the repower/decommission phase and the recent experience in California where a large number of turbines reached repowering at the same time, developers have noted that any changes in height or rotor diameter could trigger setback requirements; while this could change or delay project progress, the increase in output often offsets any additional permitting costs.
- Jobs: Renewable energy projects provide jobs, including construction, deconstruction, and maintenance of energy systems. In 2018, there were about 36,000 jobs in wind (and 39,000 jobs in solar) across the Midwest, as reported by Clean Jobs Midwest.
- Roads: Construction or moving equipment can lead to increased wear and tear on roads.
- Waste and recycling: The potential for waste generation can increase at the end of a project’s life. In a repowered project, it depends on the extent and whether components are replaced or upgraded. While most of the steel towers and other turbine components can be recycled, turbine blades can pose recycling problems. In some places, blades can be recycled, and there are ways to reuse the components of the turbine (e.g., towers and electrical cables). Metal components like steel and copper can also be recycled. If not recycled, turbine blades are often landfilled, which can strain local landfills that may not have space to accommodate such big equipment in large numbers.
The decision to repower or decommission solar projects has impacts for local communities to consider in addition to those mentioned for wind:
- Land use: If repowering, the project footprint of a solar development will likely stay constant, as it can be difficult for a development to acquire more land for the site to accommodate more panels. However, in some cases (and as possible by the specific site) developers may decide to replace panels or the array configuration to improve the project economics; with more efficient panels, or use of a tracking system, the project is able to offer more power for sale more reliably and more often.
- Waste and recycling: As solar deployment increases, the number of panels in waste stream also increases. For panels, there are both reuse and recycling options. When a solar panel is removed or replaced in a large system, panels with remaining life can be repurposed for less critical operations in the secondary market. The other option is to break down the panel and reuse its components, though some challenges remain for recycling panels. For example, approximately 5 percent of panels in the market are made from cadmium (as opposed to silicone), which is a toxic heavy metal and makes both disposal and recycling more difficult. There are recycling opportunities for the remaining 95 percent of panels, though they may be inconvenient or more costly than landfilling (depending on the location).
What has been done to date for renewable energy projects that reach end of life?
Most of the US has yet to see mass repowering or decommissioning. States like California that have seen slightly more end-of-life projects have primarily seen projects decide to repower rather than decommission. The US Department of Energy 2018 “Wind Technologies Market Report” corroborates this trend with wind, while solar projects are slightly more variable.
In the Midwest, communities have seen more repowering than decommissioning in the handful of projects that have reached end of life, as repowering is often found to be quicker (and likely less expensive) than developing a new project. Furthermore, repowering can retain the value of the interconnection agreement, which can be seen as greater than the value of converting the land to other use(s).
The role of long-term planning in achieving renewable energy benefits
As communities continue to see projects develop and experience increased market pressures to develop, there could be changes to the way that projects are granted land leases or land use permits (i.e., a conditional use permit versus an interim use permit). These changes could have long-term implications, including for renewable energy generation at the regional or state level, which could impact progress toward carbon reduction goals.
Given the implications for communities, long-term land use planning efforts need to consider what actions developers and landowners will take as many projects in the Midwest approach their end of life. Careful planning and early education on the impacts of various end-of-life options can maximize the many economic and environmental benefits that solar and wind projects provide and mitigate any potential risks or conflicts.
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Utility-Scale Siting Guides for Local Governments by State
- Siting Utility-Scale Solar and Wind in Minnesota: A Guide for Local Governments
- Additional Minnesota-specific guidance for wind projects from the Minnesota Department of Commerce: https://mn.gov/eera/web/doc/13655/
- Siting Utility-Scale Solar and Wind in Wisconsin: A Guide for Local Governments
- Siting Utility-Scale Solar and Wind in Iowa: A Guide for Local Governments
- Siting Utility-Scale Solar and Wind in Michigan: A Guide for Local Governments (forthcoming)
- Siting Utility-Scale Solar and Wind in Indiana: A Guide for Local Governments (forthcoming)