Dan Farrell, director of project development for Origis Energy, Miami, Florida, spoke with members of the Knox County Area Plan Commission on Tuesday night regarding his concerns about a new solar ordinance being considered. Staff photo by Jenny McNeese
How much is an abandoned solar farm worth?
Such was a question that garnered much attention and discussion during a meeting of the Area Plan Commission Tuesday night.
Members of the APC met again to continue hashing out the details of a solar ordinance, one that would regulate the development of solar energy systems in Knox County.
At least two solar companies are pursuing the lease of ground here, so county officials weeks ago, in the midst of the COVID-19 pandemic, embarked on a plan to make sure the county’s interests are protected along the way.
Solar companies, too, prefer a stand alone solar ordinance so that the perimeters of local development are clearly set.
Dan Farrell, director of project development at Miami-based Origis Energy, went before APC members, who met at City Hall, 201 Vigo St., with concerns about the way the proposed county ordinance addresses a solar company’s decommissioning bond, or the money it must put up to ensure a solar farm is properly disposed of should it be taken off the grid.
Language in the county’s ordinance has that bond required up front.
Farrell said many other county ordinances — ones in Indiana and elsewhere — have that decommissioning security bond required of solar companies years down the road; he recommended 20 years out.
The sooner a county requires that bond, the more expensive the project becomes on the front end. And that, he said, makes a solar company less competitive in the overall market.
And that, he pointed out, could cost the county money, too.
“We’re in this together,” Farrell told the APC. “Your tax dollars will not come if we can’t be competitive.”
The idea behind a decommissioning bond is that, should a solar company abandon a farm and leave it for the county or property owner to clean up, the bond could be cashed in, providing money to pay for the cleanup effort.
And while solar companies often have no problem providing the decommissioning bonds, Farrell argued that the value of the land — especially with all of the solar equipment left behind — is of far greater value.
If the solar panels are taken apart and scrapped, the value would be “more than sufficient” to cover cleanup costs, Farrell contended.
APC members could be seen plainly considering his argument, but member John Jones wondered if it wasn’t too good to be true.
Metal salvage prices, he said, aren’t what they once were, and he wondered if the value of the solar equipment lessens over time.
“I’m concerned with how high a priority you put on that,” Jones told Farrell. “I’m worried that, ten years down the road, solar technology will have changed so much (the panels will be rendered worthless).”
“I’m afraid you’re putting it up here when it might need to be down here,” he said moving his hand from his head down to his chest.
And while Farrell called it a “valid point,” he said solar technology hasn’t changed a lot over time. The same technology that once powered Texas Instruments calculators is the same energy that now powers homes across the country now.
Old solar panels might not be as efficient, but it’s the same technology, he said.
And the level of technology doesn’t affect the price of scrap metal anyway, he added.
APC member Rod Mullins, also a Bicknell city councilman, said he didn’t see what all the fuss was about.
Why, he asked, would the county be worried in the first place?
Should a solar company or a land owner abandon a solar farm, he’d be the first in line to buy it.
“I don’t know what the county is worried about,” he said. “If a land owner walks away, there would be a bidding war.
“I would gladly take it on,” he said. “And so would anybody else.”
Farrell emphatically nodded in agreement.
“The value of what is on the ground is significantly higher than what it would cost to decommission,” he told the APC.
Farrell also argued that pushing out the required security bond simply makes more sense.
It’s 20 years later — most land leases are for 35 years — that a project becomes more “risky,” he said.
No solar company is going to walk away from a major capital investment early on; one such solar company, Nebraska-based Tenaska, is looking to invest $110 million in a farm in southern Knox County.
And even if a solar company goes bankrupt, investors would hold the asset until another solar provider steps up to take it over.
“There is minimal risk (of abandonment) in the beginning of a project,” Farrell said.
“Again, I’m not suggesting you don’t have a decommissioning bond,” he said. “I’m just asking that you push it out.”
Farrell said another issue is that oftentimes a land owner requires a decommissioning bond in a lease as well.
“So we ask that consideration is given to that, too, so that we’re not paying for both,” Farrell asked of the APC.
But he also commended the APC for taking on the development of a solar ordinance. They’re a “great thing,” he said, in that they provide “transparency.”
“Having a document like this provides the rules of engagement to get a project permitted and moving forward,” he said.
But just how quickly?
Kent Utt, former CEO of the Knox County Development Corp., is now working as a consultant for Tenaska and has been representing the solar company’s interests as the document is drafted.
One such issue Tenaska is struggling with, Utt explained, is that a detailed design plan is required in order to secure a permit.
Tenaska is concerned, Utt said, that they would spend hundreds of thousands of dollars on engineering costs only to be denied a permit later, so he is asking for a kind of staggered approach, one wherein a preliminary plan could be approved first.
But APC chairman Dick Vermillion wasn’t so sure.
He called it a kind of “chicken or the egg” scenario.
Tenaska is concerned about spending money for nothing, while he is concerned about giving approval to a plan that doesn’t meet the ordinance requirements — regardless of what those end up being.
“I understand why a company wouldn’t want to pursue engineering without a permit,” Vermillion told Utt. “But how can the county approve a permit without a design?”
Vermillion, too, argued that allowing for a preliminary permit would require a second draft of the ordinance, which would take months.
The APC will vote to either give the ordinance a favorable or unfavorable recommendation, but it will be up to the Knox County Commissioners to approve the legislation.
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