Land & Renewables Connection
Addressing Solar Farm Decommissioning When Leasing Land for a Solar Energy Facility
Prepare for the End at the Beginning
Property owners who are considering leasing their land for solar energy facilities should make sure that the lease contract adequately addresses decommissioning the solar farm and any other infrastructure placed on the property. Decommissioning involves closing the facility, removing the equipment, and restoring the land. If everything goes right, that happens at the end of the solar energy development lease. It seems counterintuitive to think about what happens at the end of the lease during the initial negotiations.
Decommissioning and reclamation of solar energy facilities are critical issues that could permanently impact the land and its value, and potentially cost property owners money. Just because solar energy facilities are forms of clean, renewable energy does not mean that solar panels vanish into the air at the end of their service lives. Landowners should protect themselves in their lease contracts, and not rely on governmental involvement, to ensure that the land is properly reclaimed when the solar energy development lease expires.
Pennsylvania has hundreds of thousands of neglected oil and gas wells that are orphaned or abandoned. Pennsylvania has countless miles of streams impacted by acid mine drainage from coal mining and subsidence is a substantial issue in Western Pennsylvania. A coal mine has been burning for decades beneath Centralia, Pennsylvania, causing the town to be virtually abandoned. Needless to say, Pennsylvania’s landscape is littered with the remnants of past energy developments that have never been adequately cleaned-up. Those facilities negatively impact property values and degrade the Commonwealth’s environment.
Solar power is identified as clean energy. But being the site of clean energy generation, or renewable energy generation, does not mean that properties hosting solar farms will escape the legacy issues that have impacted properties with coal, oil, and gas developments. Regardless of the industry, companies can go out of business. Regardless of the industry, companies may have little incentive to invest money cleaning up land that is no longer generating revenue for them. Regardless of the industry using a property, the owner must make sure that the land maintains its value. That holds true for developments involving clean energy or renewable energy.
A solar energy facility can involve a number of features that disturb the ground. Those obviously include the photovoltaic arrays (the solar panels), along with power lines, communications facilities, inverters, transformers, access roads and, potentially, batteries. These facilities will all be permanently secured to the ground. There is considerable above ground infrastructure associated with solar energy development. At the end of the solar energy development lease, there may be considerable surface (and subsurface) infrastructure that needs to be removed and properly disposed-of, along with reclamation of the surface contours. Some of that infrastructure may require specialized disposal. That can all be very expensive. A publication from the New York State Energy Research and Development Authority identified that decommissioning of a ground mounted 2 MW solar facility could be approximately $100,000 when adjusted for 20 years of inflation.
Although solar farm decommissioning and reclaiming the land may not naturally be at the front of mind when considering whether to lease property for solar energy development, it should be. Solar energy development leases are long-term contracts. There may not be an opportunity in the future to renegotiate the lease to include stronger requirements for restoring the land when the contract is over. And, landowners should not rely on the government to impose reclamation obligations on solar developers.
Surety bonds can be a source of protection to ensure that reclamation takes place. Surety bonds can provide a source of money to fulfill a contractual obligation if the party charged with that responsibility fails to satisfy its duty. Many property owners may be familiar with Pennsylvania Department of Environmental Protection reclamation bonding requirements for mines and for oil and gas wells. At this time, there are no similar state-level bonding requirements for solar farm decommissioning. While it is important to include detailed reclamation plans and requirements in a lease of property for solar energy facilities, property owners may give serious consideration to requiring the counterparty to post a surety bond in an amount suitable to cover the costs of site reclamation and for it to identify the property owners as the obligee. Property owners may consider working with an engineer and contractor to gain an accurate estimate of potential costs.
Decommissioning and reclamation are some of the many complex issues in a lease for solar energy facilities. The attorneys in Houston Harbaugh’s Renewable Energy, Zoning and Land Use practice assist clients across Pennsylvania who are considering leases of their property for solar energy facilities. If you have questions about a proposed solar energy development lease, or an agreement that is already in place, contact Brendan A. O’Donnell at (412) 288-2226 or odonnellba@hh-law.com.
About Us
These are cutting edge legal issues. The law of the future. Renewable energy, zoning and land use issues will shape the future of growth in the region. Houston Harbaugh’s Renewable Energy, Zoning and Land Use practice focuses on assisting clients maximize and protect the value of their properties, whether related to renewable energy, commercial or residential development opportunities.
As renewable energy becomes more reliable, efficient, inexpensive and technologies associated with carbon capture and storage advance, Pennsylvania, West Virginia and Ohio are in position to benefit from these two parallel energy development opportunities. The region’s geographic location and existing infrastructure presents unique opportunities for property owners to participate in solar, wind, geothermal, other renewable energy developments, as well as for carbon capture, carbon sequestration and carbon storage projects. Additionally, legacy oil, gas and coal infrastructure may be repurposed and reused in connection with new energy developments.
With any development, whether renewable energy, commercial or residential, there are a host of zoning and land use issues that directly impact the most basic parts of daily life of both individuals and communities. Determining where and how land can be developed impacts property ownership, property value, quality of life and the economic development and wellbeing of communities. Zoning and land use issues are, on one hand, matters of local concern but, on the other hand, potentially subject to county or state regulations.
The Renewable Energy, Zoning and Land Use practice draws on Houston Harbaugh attorneys’ experience in energy, oil and gas and real property matters to advance clients’ interests in both transactional and litigation matters. Houston Harbaugh’s Renewable Energy, Zoning and Land Use attorneys assist clients with matters including:
- Solar energy leases;
- Wind energy leases;
- Pore space ownership for carbon capture / carbon sequestration / carbon storage, geothermal and waste disposal;
- Ownership of legacy oil, gas and coal infrastructure for repurposing/renewable energy usage;
- Compliance with existing solar, wind and renewable energy leases;
- Surface and subsurface accommodation between competing land uses;
- Variance, Special Exception and Conditional Uses applications/hearings;
- Land use appeals;
- Eminent domain
Brendan A. O'Donnell
An attorney in Houston Harbaugh’s Oil and Gas Practice, Brendan O’Donnell has represented oil and gas owners across Pennsylvania in a wide array of oil and gas matters for over a decade. This experience has involved not only the Marcellus shale and the Utica shale, but more traditional oil and gas development as well.
Brendan maintains a diverse practice, representing clients in all matters involving oil and gas spanning the transactional and litigation realms. On the transactional front, Brendan routinely assists landowners with negotiating oil and gas leases, pipeline rights of way and surface use agreements and subsurface easements related to horizontal drilling as part of Marcellus and Utica shale development. Brendan also frequently reviews royalty statements and oil and gas ownership issues as well as preparing deeds and title curative documents. Brendan also maintains an active litigation practice, representing clients in state and federal courts, as well as private arbitration matters. This litigation often involves title disputes, pooling and unitization challenges, lease termination questions and royalty/ post-production cost claims.
Assisting clients across the spectrum from contract negotiations through litigation and appeals gives Brendan valuable first-hand knowledge about how oil and gas agreements are prepared, how disputes arise and how courts resolve these issues. Brendan stays up-to-date on developments in oil and gas law and writes frequently on the these topics. Additionally, as alternative energy generation like wind and solar are increasingly being developed in oil and gas producing regions, Brendan assists clients with navigating the interplay between these complex energy developments and evaluating solar agreements.
Brendan complements his oil and gas practice by representing property owners, including oil and gas owners, in zoning and land use matters. Brendan has represented clients before municipal bodies and in appeals to court. Brendan is also active in the firm’s Energy and Environmental Law Practice.
Regardless of the type of representation, Brendan prides himself in providing clients with realistic, pragmatic advice. Hiring an attorney is an investment and Brendan focuses on how he can provide value to clients.
Outside of the office, Brendan serves on the Town of McCandless Planning Commission and lives with his family in McCandless. Brendan has visited every one of Allegheny County’s 130 municipalities.