There is no question that the renewable energy industries — wind and solar — are on the fast track. The Biden administration spent considerable effort providing subsidies and approving leases for these industries. These efforts have now moved into coastal waters.
A recent Council to Modernize Governance report detailed how renewable energy has complications and drawbacks, just as any other energy industry segment. Even while operating, wind and solar plants have environmental concerns. Wind turbines and solar panels take up large swaths of land, rendering it unusable or semi-unusable. Both threaten wildlife and ecosystems.
The more significant problems come after these projects stop operating. Like oil wells, renewable energy producers must decommission — that is, to take down the facility and restore the site. This involves deconstructing the wind turbines and solar panels. Currently, there is no financially viable recycling system for these materials. This means the only solution for most decommissioned renewable energy equipment is to put it in landfills.
There is an unbelievable quantity of material that landfills must take on. For example, wind turbines will produce 3,000 football fields worth of waste by 2030. It is estimated that 1 million tons of solar panel material containing lead and cadmium will have to go into landfills. These numbers will continue to grow.
The time to develop a plan for all of this material is looming much sooner than initially expected. When wind plants were erected on land, the projections were that they would last 30 years. However, findings now estimate the typical lifespan is 20 years due to conditions such as their design, weather and collisions with birds at high speeds. Now that they are being built in the ocean, they may deteriorate even faster.
Similarly, solar plants do not last as long as projected due to the quality of the panels, bad installation, bad maintenance or weather. Even if the panels last, the inverters that covert the energy into electricity fail 10-15 years earlier than projected.
Meanwhile, government decommissioning regulations appear woefully inadequate. Estimates suggest that a turbine would cost $532,000 and solar plants would cost $278,000 per acre to decommission. Yet, federal laws require companies to set aside only $10,000 to pay for it. For Vineyard Wind, the nation’s first offshore wind plant, the government waived its decommissioning requirement altogether.
By not requiring renewable energy companies to set aside sufficient cash, or even any cash, to decommission its energy plants, is the government creating a risk for the taxpayers to shoulder that burden if the company should fold?
This favorable treatment is surprising, given the financial questions already surrounding the industry. Thus far, the Production Tax Credit and Investment Tax Credits have funded the renewable energy industry. These credits were recently renewed by the Inflation Reduction Act, giving renewable energy companies even more tax incentives.
These credits give the companies money for all energy produced, regardless of whether it is needed. As a result, renewable energy companies are incentivized to pay the energy grid to take their energy. For example, the federal government will pay $26 per megawatt-hour produced. So, the company could pay the energy grid as much as $25 per MWh to take the energy and still make a profit.
In regular business conditions, it is hardly a good business model to pay the customer to take your product. This is part of how renewable energy companies remain in business. The favorable treatment creates a competitive advantage over other, more proven forms of energy.
It creates a potential house of cards. If renewable energy becomes the primary energy source, could taxpayers be at risk of having to pay for subsidies permanently? Or, if the subsidies go away and renewable energy businesses fold, would taxpayers risk having to foot the decommissioning bill entirely? The government should establish regulations to ensure that Americans have a reliable source of energy that is self-sustaining.
The Department of Interior must address decommissioning, including disposal plans, and ensure that the companies provide sufficient financial assurances. Congress and the federal government should evaluate its uneconomical tax credits. If renewable energy is our future, it must exist in environmentally and financially sound terms.
