Renewable Energy Buildout Benefits Rural Communities

Renewable energy sources such as wind and solar have offered low-cost, clean energy to rural communities across the country. Renewable generation has helped increase energy security and reliability by expanding the diversity of fuel sources and, depending on project location, aid in reducing the impacts that extreme weather events have on providing electric service. Wind and solar projects are often located in rural areas and can provide numerous benefits to nearby communities, including lease payments to landowners, tax revenue to fund infrastructure and services, and the creation of both permanent and temporary jobs.

To take advantage of the potential benefits of wind and solar energy, county officials are responsible for enacting siting or zoning standards that help capture the benefits of new development while ensuring projects are built in a way that works best for local communities. One way this can be done is through planning for decommissioning. A well-balanced ordinance will provide clear expectations and guidance for when and how decommissioning projects will take place.

The development of renewable energy projects has provided benefits to communities. As projects age, however, there are concerns about what happens at the end of a project’s life, which is between 25 and 40 years for wind energy and 25 to 35 years for solar energy. Because many officials have little experience with the development of wind and solar projects, they are often unsure of how to handle decommissioning standards and do not know how to address what should happen to a project once it reaches the end of its operational life. Understanding the available options and alternatives to decommissioning can help officials craft siting and zoning regulations that will best serve their communities.

End of operational life concerns 

Once a facility has reached the end of its lifespan, owners must evaluate next steps. One option is extending the performance period. If viable, continuing operation past the original planned performance period can result in cost savings and revenue opportunities and offer the benefits of leveraging existing land use, infrastructure, and interconnections at the generation site. However, older systems will often need to be repowered to continue to function, a process that involves updating or replacing equipment. Repowering can create challenges due to the special expertise needed for working with older equipment, and the difficulty of finding parts to repower the system.

If it is not feasible to extend the performance period, projects need to be fully decommissioned. This process includes the complete removal of an energy project at the end of its operational lifespan, and the restoration of the generation site to its original condition. Decommissioning can involve recycling, disposal, or repurposing of project infrastructure. Repurposing and recycling offer financial and environmental benefits, but when these options are not available components are sometimes disposed of in landfills, which has environmental drawbacks and creates logistical issues for local landfills.

Best practices for decommissioning based on review of four Midwest states

Local decision makers must ensure the community and landowners are not responsible for decommissioning tasks by spelling out the obligations and responsibilities for a project's end of operation, including the financial commitments to complete said tasks.

A review of all wind and solar county siting and zoning ordinances across Iowa, Nebraska, South Dakota, and Minnesota, has identified the following best practices for decommissioning:

• Include a requirement for decommissioning plans in ordinances, outlining obligations and methods developers will use to decommission projects, remove materials, and restore sites.
• Ensure that decommissioning plans include expected timelines for completion of tasks.
• Require the project developer to notify the county of its intent to cease operations at the facility once it has been determined the system will be fully retired.
• Work with a knowledgeable independent party, such as third-party engineers, to determine the real projected cost of decommissioning for a project; use that to set amounts for financial assurances.
• Include a provision that the project owner is responsible for the costs of decommissioning, ensuring that county and landowners do not bear these costs.
• Determine if standards exist for decommissioning at the state level prior to county officials drafting any requirements, and address any additional decommissioning related issues through an ordinance.
• Consider how a county wants to regulate disposal into landfills; encourage recycling or repurposing of wind and solar components.

A growing industry provides economic opportunities 

According to the U.S. Energy Information Administration, wind and solar power generation in the U.S. increased significantly in 2023, with a combined growth of around 16 percent, which represents a substantial portion of new electricity generation compared to previous years; solar specifically saw a particularly large jump in capacity, growing more than 23 percent compared with 2022. The rising demand for sustainable energy generation combined with decreasing equipment costs has created more opportunities for the development of wind and solar energy projects.

Land for large wind and solar projects is typically leased, which can provide an important source of rental income to landowners. According to the American Clean Power Association, in 2021, wind projects delivered $2 billion and solar projects contributed $739 million in state and local tax payments and land lease payments. Land lease payments can provide a stable income stream for farm and ranch families.

Wind and solar energy also deliver production tax payments to counties. Each year, the Minnesota Department of Revenue releases a report detailing production taxes paid by wind and solar projects to the counties that host them. In 2022, the report showed that 28 counties received more than $16.8 million in wind production tax revenue. Lincoln County, Minnesota, was the leader, receiving $3.8 million from 640 towers in the county.

With the benefits that wind and solar energy can provide to rural communities, local officials need to address concerns around decommissioning, ensuring that obligations are clear to relieve local decision makers of worrying about dealing with abandoned projects.

Cora Hoffer is Senior Policy Associate at the Center for Rural Affairs, a nonprofit, mission-driven lender focusing on underserved communities, primarily to rural, Latino, Native, and other communities that mainstream finance doesn’t traditionally reach.

Center for Rural Affairs | www.cfra.org

To learn more about decommissioning, the Center for Rural Affairs has created a short, digestible, and easy-to-use resource that combines research and recommendations from reports on wind and solar energy guidance previously published by the Center. To read and download a copy of the Center’s “Decommissioning Wind and Solar Energy Systems Fact Sheet,” visit cfra.org/publications.