In February of this year, the Queensland Government introduced changes to the Wind Farm Code. Among them is new ‘Performance Outcome 30’ that requires wind farm developers to provide financial security (in the form of a bond or bank guarantee) as security for the prompt decommissioning of wind farm projects at the end of their operational lives.
Developers, as part of their development applications, are required to provide plans outlining how decommissioning activities will be undertaken to reduce long-term impacts of the project for landowners and communities and evidencing the proposed financial security.
The costs of decommissioning a wind farm project are not insignificant with The Australian Energy Infrastructure Commission estimating between $400,000 to $600,000 per turbine.
Prior to the changes to the Wind Farm Code, security for decommissioning costs was left solely to negotiation between landowners and project developers.
The new government-mandated security arrangements require wind farm developers to detail the specifics of the financial security in its development application but do not prescribe what form the security is to take or who is to hold it.
While the changes to the Wind Farm Code highlight the importance of financial security and ensure it is something that must be addressed in project planning, there remains the potential for underestimation of decommissioning costs at the development stage. Estimates of decommissioning costs some 30-80 years in the future, before the project has even been constructed, will inevitably prove inaccurate over time and potentially insufficient to cover the actual costs of decommissioning at the end of a project’s life.
Landowners should continue to consider carefully the type and amount of the financial security they require during negotiations with project proponents and in particular, insist upon review mechanisms for the security amount.
This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.
About the Author
Bridie Shooter
Lawyer
Ph: +613231 8855
Email: bshooter@thymac.com.au