Senate Committees Hear Bill Requiring State Bonding For Solar, Wind Projects Duplicates Local Ordinances, Landowner Leases; Adds New Bureaucracy; And Has A Broader Scope Than Advertised
On May 12, the Senate Environmental Resources and Energy and Agriculture and Rural Affairs Committees heard from witnesses solar and wind energy projects already have bonding requirements for restoration and reclamation of sites as a standard part of landowner leases supplemented by county and local land use ordinances covering these facilities.
Senate Bill 284 (Yaw-R-Lycoming), the subject of the hearing, would establish a new state bureaucracy that imposes new state bonding requirements on solar electric generation, biomass, coal waste and other renewable energy projects of any type included in the state’s Alternative Energy Portfolio Standards, plus other products and services.
In addition to bonding requirements on solar electric generation, biomass, coal waste and other renewable energy projects of any type, the bill would also requires state bonds--
-- Alternative Fuels, Energy Efficiency, Energy Conservation Product Makers: “A facility that manufactures or produces products, including component parts, that provide alternative energy or alternative fuels, improve energy efficiency or conserve energy.”
-- Alternative Energy R&D Facilities: “A facility used for the research and development of technology to provide alternative energy sources or alternative fuels”
-- Transportation Systems For Alternative Fuels & High-Efficiency Locomotives: “A project for the development or enhancement of rail transportation systems that deliver alternative fuels or high-efficiency locomotives.”
While the bill’s sponsor said the intent of the legislation is simple and narrow-- state bonding solar and wind installations-- you need to read the black and white language of the bill to understand the true, far-reaching impact of this legislation.
Important Points Made
Here are some of the key points made during the hearing--
-- All witness pointed out bonding is included as a standard provision in landowner leases for solar and wind energy facilities;
-- Bonding requirements have been expanded upon by county and local land use ordinances covering solar and wind energy projects and a model ordinance for solar facilities is available;
-- The PA Farm Bureau and the solar energy industry supports legislation that would codify the existing industry practice of restoration and reclamation bonds for solar and wind facilities setting minimum requirements;
-- The new state bonding requirement and the new bureaucracy created by the bill would cover not only solar and wind facilities as stated by the prime sponsor, but 16 different renewable energy facilities, energy efficiency products including thermostats, lightbulbs, water heaters, high-efficiency HVAC systems, high-efficiency LED lighting, energy efficient windows and doors, and insulation.
It also imposes new state bonding requirements on facilities and projects that make and/or deliver alternative fuels across all sectors, including the rail sector and on facilities used for the research and development of alternative and renewable energy sources, which seems to include not just private, for-profit entities but also our public research universities.
Similar bonding requirements are not in place for natural gas, nuclear, coal, hydroelectric energy generation facilities.
The impact of this duplicate bonding requirement would increase the cost of these products and projects for limited benefits and limit economic investment and job creation in these manufacturing and other industries.
[Note: Interestingly, another bill by the same sponsor-- Senate Bill 275-- would preempt local governments from adopting ordinances and policies restricting energy providers-- including renewable energy facilities. Read more here.
[Ironically, this could include ordinances setting local bonding and other land use requirements for solar and wind facilities to make sure their sites are reclaimed.
[In fact, the PA State Association of Township Supervisors offered testimony on Senate Bill 275 expressing this specific concern saying, “Senate Bill 275 could be open to interpretation a nd limit the ability of municipalities to regulate in the siting of power generation facilities, including commercial solar facilities. Read more here.
[The common objective of both bills is to impose additional costs on renewable energy sources and impede their development in Pennsylvania.]
Summary of Testimony
Thomas B. Murphy, Director, Penn State Marcellus Center For Outreach & Research, said, “Pennsylvania is on the front edge of what appears to be a significant solar energy buildout due to early investment trends and applications to construct solar facilities.
“My colleagues have estimated there are now over 5,000 landowners in PA which have already signed solar option contracts and the underlying leases. They forecast there could be an additional 10,000 landowners involved with ongoing leasing in the near future.
“Solar leases typically are written for a 25 year timeframe with the option to renew them for an additional like term.
“In numerous ways, there are many similarities between the solar energy development taking place now, with the shale gas exploration process which preceded it.
“Similar forecasts indicate this investment in PA solar could reach $13 billion between now and 2030.”
“To reach the Commonwealth’s energy policy goal of 10 percent of electrical power being sourced from solar, that would entail upwards of 80,000 acres of land surface to be transitioned from its present use, to that of solar generation.
“These “surfaces” could take many forms from large warehouse rooves, to brownfield sites like old strip mine locations or landfills, to sides of buildings with some of the newest technology still emerging from the lab.
“Presently, most of the utility scale solar is being situated on agricultural land due to its availability, willing landowner partners involved in the leasing process, and proximity to presently built infrastructure, such as electrical substations and overhead high voltage transmission lines.”
Murphy said a frequent question they get from landowners is how can decommissioning be assured or guaranteed at the end of the lease term. He said this is normally handled with landowners in a decommissioning bond that guarantees the performance of the company installing the solar panels.
He also noted it is also ‘finding its way into more solar ordinances adopted by municipalities.”
With respect to recycling solar panels, Murphy said the “technologies to do that are still being perfected but are in place and operating.”
“At this time in the U.S. there is one company which is offering solar panel recycling services but that is expected to increase as additional European technologies find application in the U.S.”
David Althoff, Jr. Energy Programs Office, Department of Environmental Protection, first said Pennsylvania has approximately 100 megawatts installed capacity from seven operating utility-scale solar projects.
There are approximately 12,100 megawatts in development from roughly 370 projects seeking approval from PJM representing over $12 billion in investment potential and an estimated 40,000 jobs over 10 years.
Althoff said the language in the bill is broad and would include 16 different renewable energy facilities, energy efficiency products including thermostats, lightbulbs, water heaters, high-efficiency HVAC systems, high-efficiency LED lighting, energy efficient windows and doors, and insulation.
It also imposes bonding requirements on facilities or projects that make and/or deliver alternative fuels across all sectors, including the rail sector and on facilities used for the research and development of alternative and renewable energy sources, which seems to include not just private, for-profit entities but also our public research universities.
“Pennsylvania has long been a leader in the manufacturing sector and there are many facilities in the Commonwealth that produce components for alternative energy projects or that otherwise improve energy efficiency or conserve energy.
“For instance, there are at least 29 facilities in Pennsylvania that manufacture components that are used in wind turbines.”
“Recognizing and incentivizing proper reclamation and decommissioning of any project or site to restore it and recycle, reclaim, or refurbish the equipment and materials used is an effort we should apply across the board. In addition, we should be designing facilities with the environment in mind, using products that take less energy to make and are designed to be able to be reused or easily recycled.”
“In the case of solar, there are a number of mechanisms to achieve assurance that projects are decommissioned, the land is restored, and retired solar panels are handled properly. Bonding is already part of the current best practices for ensuring proper decommissioning and land restoration at the end of a solar project.
“Bonding and details regarding end-of-life restoration are considerations in the land lease between the property owner and developer such that the conditions, payments, and timeframes be suitable to both.
“This requirement can also be further strengthened at the local government level by including provisions in ordinances where oversight of a local project is customary. These bonding requirements bound by ordinance can and are included in the land lease before a construction permit is issued.
“For example, a model ordinance being used today by many local governments includes decommissioning and restoration provisions, and it even includes wording on bonding requirements to assure those plans are implemented at project closure or abandonment.
“Often due to the nature of the lease term, the number of term extensions and the potential over time for refurbishment of panels or costs for recycling or disposal, the bonding amount and agreements may have to be reviewed and updated.”
“With this in mind, SB 284 may create an additional, duplicative layer of state bureaucracy in that it would establish a new state-level bonding requirement and add new bonding requirements for items that were not normally part of the standard practice lease agreement bond.
“This would involve the Commonwealth becoming a party to the bonding process of hundreds of projects, all with differing timeframes and potential for periodic updates. This would very likely increase the cost of these projects being developed, making Pennsylvania less attractive for investment, with questionable benefit.”
“In closing, the alternative energy sector and associated support businesses, including manufacturers of products and component parts used in alternative energy facilities, is large and quickly growing.
“These bonding requirements are potentially duplicative and highly onerous and there are serious questions about what benefits they would provide over existing requirements. Renewable and alternative energy projects in development represent economic opportunities for the Commonwealth, and solar deployment in particular could result in over $12 billion of investment potential in Pennsylvania in the near future.
“Beyond the environmental benefits, these facilities will provide local economic opportunities and tax revenues as well as many jobs to build, maintain, and eventually decommission these projects.
“While we are encouraging this kind of smart, low-impact development, the effects of this bill could create a financial disincentive and lead to a substantial loss of investment potential in the alternative energy and manufacturing sectors.
“Again, in the case of solar, the best practice in play is to reduce, refurbish, and recycle. It is possible that SB 284 may unintentionally stifle research and development and be a deterrent to those manufacturers seeking to locate or expand in Pennsylvania.”
Doug Wolfgang, Director Of Farmland Preservation, and Cheryl Cook, Deputy Secretary Market Development, Department Of Agriculture, provided testimony to the Committees saying, “Renewable energy is one of those rare opportunities in agriculture that allows farmers to reduce their operating costs by supplying some of their own energy needs and offers a new source of revenue if they can produce more energy than is needed in their own operations.”
“The Department recommends that careful consideration take place when siting a utility scale solar installation on or near agricultural lands.
“Specifically, we recommend that prime farmland soil remains available for agricultural production and that placement of solar installations instead take place on rooftops, impervious surfaces or on less productive soils.
“That said, there are many examples of solar and agriculture taking place simultaneously. In the cases of pastured livestock, apiaries, some specialty crops, and floriculture; solar can provide a multitude of benefits for the farmer.
“Just as many Pennsylvania farms have diversified their agriculture production to become more resilient, properly cited solar installations can serve as a further economic support.
“The fact that solar can be removed enables a farm to return to full agricultural production, something that may not be possible under other land use types, such as residential development, warehousing, and or other energy development.
“Utility scale solar presents us with something new to consider in our conversations farmland protection. There are practical ways for utility scale solar to be responsibly deployed.
“Utility scale solar is not absent of risk, but provides an opportunity for farmers to diversify their portfolios while also ensuring more permanent forms of development do not compromise our agricultural land.
“In addition, the deployment of solar aids in the commonwealth’s mission to address climate change, which has serious implications for the agricultural community as our state becomes warmer and wetter.
“The Pennsylvania Department of Agriculture will continue to support the agricultural community and work closely with our legislature to ensure that farms are conserved and sustainable.”
Darrin Youker, State Government Affairs, PA Farm Bureau, said, “Broadly speaking, Pennsylvania Farm Bureau is supportive of solar energy. Our energy platform embraces an all-of-the-above approach that makes our country less dependent on foreign energy sources.
“It also acknowledges that landowners are in the best position to determine how to use their land for energy development, be it for natural gas leasing, wind energy, or solar.
“Solar is already used on farms, typically by farmers who want to use renewable energy to supplement energy usage on their farms.
“Unlike other development of farmland, these systems are not permanent. They are designed to be removable, so decades in the future a farmer could grow crops or graze animals on that land. To do so, that equipment needs to be removed. A bond, or other form of financial security, will make sure that happens.”
“There are more than 4,100 farms that use some form of renewable energy as part of their businesses, with solar leading the way. Nearly all of the solar installed on Pennsylvania farms is for on-farm energy generation.
“However, given the level of activity that we have seen in landowners being approached with leases, and the Governor’s recent proposal to power state buildings with renewable energy, we anticipate that a larger portion of farm ground will be converted to solar.”
“We believe that every commercial solar energy development should carry with it a requirement of financial security that protects a landowner from paying the cost of decommissioning.
“Solar energy companies, in meetings with our organization, have stressed that decommissioning is part of common industry practices. We view that as a positive step.
“However, we still see the need in legislation that will make posting financial security mandatory. Doing so can help weed out potential bad actors in the industry and protect landowners from companies that may lack the access to capital to complete a project.”
“Given that leases for solar energy development are for at least the next 30 years, it should be a given that bonding is a requirement with every agreement. It impossible for any business to be able to predict what their status will look like three decades from now.
“What we are seeking is to prevent landowners being left with inoperable systems that are no longer producing electricity, and no effective way to remove them.
“Pennsylvania Farm Bureau supports legislation that will require that renewable energy developers post bonds, or other forms of financial security, that pays the cost of decommissioning.
“We encourage the General Assembly to swiftly address the issue of bonding for solar, as called for in SB 284. Given the expected growth in commercial solar in Pennsylvania in the near future, we believe it is important to have bonding requirements in place before construction occurs.”
Scott Elias, Mid-Atlantic State Affairs, Solar Energy. Industries Association, said, “First, I would like to point out that today’s solar installations pose little to no risk to human or environmental health at any point in their lifecycle.
“Claims that PV modules release hazardous chemicals that contaminate our soil and waste stream have been largely disproven.
“PV modules are constructed to last 25 – 50 years, many have test results that characterize them as non-hazardous and contain only trace amounts of heavy metals enclosed in a solid matrix of polymeric and glass material, so the materials-of- concern are not bio-available for air or water exposure.”
“Second, SEIA’s National Recycling Program is preparing now for larger volumes of waste to come in future years, including those solar panels that reach actual end-of-life and others that require disposal for other reasons.
“Similarly, inverters can be recycled like e-Waste and steel from posts and trackers can also be recycled.
“SEIA’s PV Recycling Working Group has been actively seeking, developing and elevating the market visibility of solar recycling partners across the U.S since 2016.
“One of our partners has a drop-off location within the Commonwealth.”
“SEIA supports, promotes, and facilitates responsible decommissioning of solar projects; however, we believe that the approach proposed in Senate Bill 284, which charges the Environmental Quality Board with promulgating regulations which establish bonding requirements for project developers, will create unintended and severe market consequences; namely, increasing project development costs that will result in pushing energy investment and economic development to neighboring states instead of within communities across the Commonwealth.”
“SEIA and its members would encourage the state’s legislators to develop recommendations to form and support a stakeholder group to study, evaluate, and make future recommendations on PV Module End-of-Life policy that would benefit Pennsylvania, its growing solar market and its constituents, who like many across the U.S., value and believe in investing in solar.”
“The wind and solar industries have already invested $3 billion dollars in PA and these projects currently provide approximately $11.4 million in annual payments to farmers and other landowners in the Commonwealth.
“Local communities receive significant annual tax payments as well from these projects.
“The solar and wind energy industries support 6,600 well-paying jobs in Pennsylvania. We believe that these numbers are just the tip of the iceberg, assuming that there will be consistent, and sound public policy going forward for the industry to rely upon.
“Renewable energy job creation and investment are especially critical for Pennsylvania’s economic recovery from the pandemic.”
“RWE and the other MAREC developers are committed to responsible decommissioning of projects, and support reasonable requirements for decommissioning agreements, with financial assurance, that are in line with industry best practices.
“In Somerset County, for example, we are required by county ordinance to secure a third-party, independent engineer to estimate the cost of decommissioning, turbine removal, site restoration and, importantly, salvage value.
“The inclusion of salvage value is a very important provision, since wind and solar equipment is made primarily of steel, aluminum, and other valuable components. Since these materials can be sold on the market, an inherent incentive exists for developers and operators to never abandon equipment in the field.
“The engineer’s report is submitted to the county planning commission following the first year of operation and is updated every fifth year after that, and is also shared with each landowner.
“The current process ensures that the local government and landowners have the information they need to understand the costs we will incur when it comes time to decommission the site. When that time does come, there is a clear plan for reverting the land back to other beneficial uses.
“At Stony Creek Wind, we updated our decommissioning report in 2020 per the five- year update schedule.
“The engineer’s assessment was submitted, accompanied by a worksheet detailing total decommissioning costs for turbines and their major components, and a worksheet on salvage value based on scrap metal values and used parts value for the generator, gearbox and main shaft.
“Finally, the updated report provides current mobilization and demolition costs, which we noted have increased significantly since the project began commercial operations in 2009.
“To our knowledge, only one Pennsylvania renewable energy project—a wind farm not owned by RWE in Somerset County—has stopped producing electricity. It was successfully decommissioned in 2015 and neighbors were reportedly sad to see those turbines go.
“Specifically, Senate Bill 284 lacks flexibility in the acceptable forms of financial assurance for project decommissioning, and features no guardrails limiting financial assurance requirements to the total projected cost of decommissioning minus salvage value of materials.”
Sen. Elder Vogel (R-Beaver), Majority Chair of the Senate Agriculture Committee, said he plans to schedule two additional hearings on this same topic.
Click Here to watch a video of the hearing [when posted] and for written testimony.
Sen. Gene Yaw (R-Lycoming) serves as Majority Chair of the Senate Environmental Committee and can be contacted by calling 717-787-3280 or sending email to: firstname.lastname@example.org. Sen. Carolyn Comitta (D-Chester) serves as Minority Chair and can be contacted by calling 717-787-5709 or sending email to: email@example.com.
Sen. Elder Vogel (R-Beaver) serves as Majority Chair of the Senate Agriculture Committee, and can be contacted by calling 717-787-3076 or sending email to: firstname.lastname@example.org. Sen. Judy Schwank (D-Berks) serves as Minority Chair and can be contacted by calling 717-787-8925 or sending email to: SenatorSchwank@pasenate.com.
Part Of Larger Effort To Kill Renewable Energy
This legislation is part of a larger effort by conservative Senate and House Republicans to slow or kill renewable energy projects in Pennsylvania.
In addition to this legislation, Republicans have introduced or plan to introduce bills to--
-- Stop state support for solar energy projects with any foreign components, which every energy generation source has. Read more here.
-- Preempt local governments from requiring new buildings use climate-friendly energy sources. Read more here.
-- Threatened to hold up nominations to the Public Utility Commission-- which has nothing to do with the RGGI regulation-- unless the proposal is withdrawn. Read more here.
A minority of Senate Republicans have introduced legislation to support renewable energy--
-- Local Governments, Others Oppose Senate Bill That Limits Local Choice In Clean Energy Sources, Locks In Status Quo, Negates Local Democracy, With Overly Broad Language To Address A Problem That Doesn’t Exist In PA
Related Articles - Block Renewable Energy/Climate Initiatives:
-- Sen. Yaw Plans Bills To Stop State From Supporting Solar Energy Projects With Any Foreign Components; Adopt A Moratorium On Rulemaking During A Declared Emergency [Reported out of Committee April 27. Read more here.]
[Posted: May 12, 2021]
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