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Decommissioning: have the costs been accurately assessed?

Claire Acheson on the importance of preparing for the day the turbines stop turning.

While the turbine blades are spinning in the wind, and the rent and subsidy payments are rolling in, it’s easy for landlords and operators of wind farms to forget about what might happen at the end of the lease term. 

But many lease agreements in Scotland are midway through their term or beyond, so that time will come around sooner rather than later.  

Some sites will be suitable for a lease extension or refurbishment to continue operating, but it is inevitable that others may no longer be viable in the prevailing energy market and will be forced to decommission.  

This is when the provisions in the lease and the reinstatement bonds held will be vital to ensure that the operator has adequate funds to reinstate the land to the specifications set out in the planning consent, and that the landlord is not left with any unwanted infrastructure or future liabilities.

Reinstatement cost assessments and decommissioning reports

In many cases a reinstatement cost assessment or decommissioning report will have been provided by the operator at the start of the lease, and normally a bond would be put in place for the amount specified. 

However these reports often lack sufficient analysis of the cost. 

More importantly, the costs may not be reviewed during the lease to ensure that adequate sums are maintained, although many leases do provide for decommissioning costs to be reassessed periodically at the expense of the tenant. 

Key matters to be addressed in a decommissioning assessment report include: 

  • Site access and roads: has the full extent and area of the roads been accurately mapped, including all passing places, turning circles, cattle grids, drainage ditches, etc? Do the roads require to be fully reinstated under the terms of the planning consent or are there options for sections of roads to be retained or partially reinstated? 
  • Removal of wind turbines and concrete foundations: generally foundations need to be chopped back to a specified distance below ground level and the ground reinstated above. There can be scrap value in the turbines which may to some extent offset the cost of reinstatement. 
  • Site electrics and cabling: in some cases underground cables can remain in situ, but generally all substation switchgear and any overhead lines should be removed. 
  • Any other control or associated buildings may have to be removed. 
  • Are materials for ground reinstatement such as topsoil or peat available on site or will this require to be bought in? 
  • Are any additional landscaping works required, such as tree planting? 

Galbraith can act as an independent expert to provide decommissioning reports for clients. 

We can review lease terms, planning consents and section 75 agreements and combine our GIS expertise to accurately survey a site, alongside coordinating suitable technical consultants to provide a detailed cost assessment, which can be used to inform the position and negotiate updated bonds.