Presentation to Lee County Zoning Board of Appeals On Behalf of - - PowerPoint PPT Presentation

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Presentation to Lee County Zoning Board of Appeals On Behalf of Local Landowners and Hamilton Township Tom Hewson John Stamberg P.E. Principal Energy Ventures Analysis Inc Arlington Virginia 703-276-8900 November 27, 2011

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Decommissioning Costs and Risks

 Why should Lee County care?



Paul Gipe estimated that there over 14,000 wind turbines in California alone that were abandoned by 1997. Abandoned wind turbines have/will continue to adversely affect local property values and character.



Caithness Windfarm Information Forum (www.caithnesswindfarms.co.uk) tracks wind turbine accident data that can be confirmed through press reports or official releases. They have documented (through 9/2012) 249 turbine blade failure incidents, 195 turbine fires and 130 structural failures– that can lead to premature unit decommissioning.



Wind facilities are often developed as limited liability corporations. At the end of the project life, the LLC may have no equity remaining to fund decommissioning cost.



Pre-funding future decommissioning costs has become a common requirement for wind project permitting.



Intent to have cost paid by wind developer who financially benefits from wind project operation



Different approaches available to assign decommissioning cost and risk between wind project

• perators and local community

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Decommissioning Risk

Abandoned Wind Turbines at Kamora Wind Farm (HI)

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Decommissioning Risk

130 documented cases of structural failure such this January 2008 accident in Cumbria UK

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Decommissioning Risk

Wind turbine foundation failure

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Decommissioning Risk

195 Documented Wind turbine fires such as this turbine in

• Germany. Can be caused by equipment failure or lightning.

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Decommission Planning

Decommissioning Plan Components

 Defining Scope of Work:



Dismantling wind turbines and met towers



Removing turbine foundations (to what depth?) and land reclamation



Removing crane pads



Substation removal (transformers, equipment, foundations, etc..)



O&M building removal



Access Roads- Retain or remove?



Collection system electrical system- Abandon underground lines or remove?



Trigger decommissioning as individual turbines cease operation or wait until entire project is shutdown

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Decommission Financing

 Financing cost approaches

 Project performance bond for a defined scope of work with an approved

highly rated bonding company--- Assigns 100% of project risk to project bonding agency

 Financial bond at a preset amount to be sufficient to cover anticipated

decommissioning costs– Leaves future cost escalation and scrap value risks to local community and property owners

 Other financial assurance – Assigns full financial risks to local community

and property owners if financial assurance entity fails

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Decommissioning Costs

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Decommissioning Costs

Table 1. Decommissioning Cost Known To Wind Turbine Contractors and Items with Insufficient Details to Make Independent Demolition Estimates

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Decommissioning Costs

Scrap Amounts Dixon Iron and Metal 7/20/12 Verbal Quote

(4)

Per Turbine Received Scrap Value Truck Delivery Cost

(5)

Cost to Disassemble

• r Torch

(6)

Cost to Load at Wind Farm Crew B-12N

(7)

Net Scrap Value

• I. Turbine Metal
• A. Rotor 60 Tons

(1),(3)

• 1. Hub Iron/Steel

40 tons $165/ton $6,600 $400 (2 trips) $1,000 $2,305 $2,895

• 2. Blades

20 tons

• B. Nacelle 82 Tons

(1),(2)

• 1. Gear Box, Transmission,

Brakes 35 tons $165/ton $5,775 $400 (2 trips) Nil $2,305 $3,070

• 2. Generator

35 tons $7,500/each $7,500 $200 (1 trip) Nil $1,153 $6,147

• 3. Non-Metal

12 tons

• C. Tower/Bolts

(2)

• 1. Tower

205 tons $165/ton $33,825 $4,000 (10 trips) $5,000 $11,525 $13,300

• D. Subtotal per Turbine

280 tons $53,700 ($5,000) ($6,000) ($17,288) $25,412

• E. Subtotal per 87 Turbines

24,360 tons $4,671,900 ($435,000) ($522,000) ($1,504,056) $2,210,844

• II. Transformers/Miscellaneous
• A. Turbine Transformer

7.48 tons

• 1. Sheet Steel

3.1 tons

• 2. Core Steel

1.6 tons 6.3 tons $3,276 at $66 Nil $768 $2,442

• 3. Core Copper

1.6 tons $0.26/#

(9)

(3 trips)

• 4. Oil

1.15 tons

• B. Subtotal per 87 Turbines

$285,012 ($5,742) Nil ($66,816) $212,454

• C. Master Primary Transformer

(MPT) 120 tons $62,400

(10)

$0.26/# $800 (4 trips) Nil ($2,305) $59,294

• D. Miscellaneous (in above

Section I)

• E. Subtotal per 87 Turbines

$347,412 ($6,542) Nil ($69,121) $271,748

• III. Total Salvage Value

$5,019,312 ($441,542) ($522,000) ($1,573,177) $2,482,592

Table 2 Net Scrap Salvage Value

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Decommissioning Costs

Table 3 Non-Metal Disposal Costs

Item Amount Site Process Cost Trucking Cost To Load Landfill Dumping Cost Total Cost

• 1. Blades

20 tons $4,371.50/3 blades $200 (1 trip) $51.00 3/day $900

(

$5,542.50 (Crew B-7) (Crew B-10-U)

• 2. Nacelle Non-Metal

12 tons $1,452.60 $200 (1 trip) $51.00 3/day $450 $2,153.60 (Crew Q-20) (Crew B-10-U)

• 3. Transformer and Transmission

500 gal $1,200 = 12 barrels $50.00 Nil $450 $1,700.00 Oils @ $100/barrel

• 4. Cost per Turbine

$7,024.10 $450 $102 $1,800 $9,376.10

• 5. Cost for 87 Turbines

$611,097 $39,150 $8,874 $156,600 $815,721

Lee County landfill charge at $900 per 20 ton load

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Decommissioning Costs

Table 4- Foundation Removal and Land Reclamation

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Decommissioning Costs

Table 5 --Road Removal Costs

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Decommissioning Risk

Future Labor Cost Escalation Scrap Market Value Changes Landfill Disposal Costs Land Acquisition Costs Landfill Regulation Changes Heavy Equipment Rental Costs Fuel Costs

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Presentation to Lee County Zoning Board of Appeals On Behalf of Local Landowners and Hamilton Township Tom Hewson John Stamberg P.E. Principal Energy Ventures Analysis Inc Arlington Virginia 703-276-8900 November 27, 2011