What is an Decommissioning/ Reinstatement Performance Bond?
A Decommissioning/ Reinstatement Performance Surety Bond can be requested by land owners, local councils, governing authorities such as the EPA and Governments when a developer of a wind or solar energy system is granted rights to operate on private or public land.
Solar and wind energy systems are common structures around the country. They create clean, alternative energy. However when the project is completed, or if the project is abandoned, it can cost millions of Euro to return the land back to its natural state.
There are many activities that may be necessary in decommissioning a site. These can include the removal of foundations, underground electrical wires, structures, access roads and hazardous materials from the site. Also returning the land to its original condition and restoring vegetation.
If the project was built on private property, the expense of decommissioning could fall on the landowner. However in the case of projects built on government land or public land, the cost burden of decommissioning could be placed on the taxpayers.
Decommissioning is usually at the local level. However some local authorities and Government departments also have the authority to enact decommissioning rules. In the case of some land owners, local authorities, governing authorities and Government, they may require a decommission surety bond, or performance and reclamation bond to be posted before a project begins.
To clarify, a surety bond is a financial guarantee that ensures proper removal of the equipment and restoration of the environment to its pre-existing state. And in the case of a Decommissioning/ Reinstatement Performance Bond, the burden is relieved from the land owners and taxpayers and the bond puts the responsibility of proper decommission on the project owner.
How much will a Decommissioning/ Reinstatement Performance Bond cost?
There are several factors that determine the amount required for a Decommissioning/ Reinstatement Performance Bond, these include environmental liabilities, decommissioning costs and reclamation costs.
A Reclamation Cost Estimate is an estimate of expenses required to return the land to its original state. As such this may include the likes of removing improvements made under the right-of-way, returning the land to its original contour and establishing sustainable vegetation. Limiting the amount of vegetation removal in the project planning phase can help reduce the bond amount. Once a project is completed and the restoration is satisfactory, the bond may be released.
The premium that you pay for a Decommission/ Reinstatement Performance Surety Bond will vary on the factors mentioned above, plus business and personal financial statements.
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