The town of Vulcan in Alberta proudly features a giant replica of the original Starship Enterprise, a space-themed tourist information centre and a futuristic “solar tree” that generates enough electricity to power itself and supply the local electricity grid.

This forward-looking community seems an unlikely place for doubts concerning the renewable energy industry in Alberta. And yet, in a recent CBC article, Vulcan County Coun. Jason Schneider voiced concerns about solar companies going bankrupt and leaving the cleanup costs to local taxpayers.

Rural Municipalities of Alberta (RMA) president Paul McLauchlin noted that going bankrupt is the cheapest way to get out of paying for land reclamation, an all too common practice in the oil and gas industry. Is this really a case of once burnt, twice shy?

The RMA believes renewable projects should be subject to a bond that will cover the cost of cleanup. There are even calls to create a renewable energy equivalent of the Orphan Well Association (OWA).

The OWA was established in 2002 and claims to be industry-funded despite hundreds of millions in federal and provincial loans and $1 billion in federal funding announced as part of the COVID-19 Economic Response Plan. Despite the OWA’s mandate to address the accumulation of orphan wells, the inventory count has reached 2,888 sites for decommissioning, 2,876 pipelines for decommissioning and 7,305 orphan sites for reclamation as of April 1.

The orphan well numbers indicate that some bad actors in Alberta’s oilpatch have been systematically selling well assets to smaller companies, which later go bankrupt to avoid the reclamation liability.

Should we be afraid that the renewable energy industry has a similar problem? Not according to Canada’s monthly insolvency statistics dating back to 2013. Under the electric power generation and other electric power generation categories of the insolvency data sets by the North American Industry Classification System (NAICS), there have been no recorded bankruptcies in the available data set.

One has to consider the nature of the business model in question. The average lifespan of an oil or natural gas well is 20 to 30 years, according to the Canadian Association of Petroleum Producers. At this point, the reclamation liability must be addressed. When there is a significant liability and no further production revenues, unscrupulous companies will declare bankruptcy.

Solar panels have a similar lifespan of 25 to 30 years but can continue producing electricity for over 35 years. A solar energy company may decide to upgrade its panels to improve efficiency or remove underperforming units, but they can carry on profitably generating electricity as long as the sun still rises in the morning. The existing racking, cabling and transmission grid infrastructure is reusable, subject to its own life expectancy.

Alberta's renewable industry, which pays its taxes and appears to have a working relationship with its community partners, may be the target of a disinformation campaign led by Premier Danielle Smith, writes Rob Miller @winexus #EnergyTransition

Under what scenario would a solar company walk away from a revenue-generating asset with exceptionally low operating and maintenance costs? A study by Penn State University’s Department of Energy and Mineral Engineering estimates the operating costs for natural gas electricity generation to be four to 10 cents per kilowatt-hour and operating costs for solar to be less than one cent per kilowatt-hour. In the unlikely case of bankruptcy, surely an opportunistic investor would purchase the assets for pennies on the dollar and add it to their energy portfolio.

Evan Wilson of the Canadian Renewable Energy Association (CanREA) indicated that “as equipment reaches end of life, there is a great opportunity to repower the facility.”

This is true for both solar and wind energy facilities, where it is much easier to upgrade panels or turbines than perform a full-site installation with foundations and towers (wind energy) or racking and cabling (solar).

Furthermore, the site already has access to the transmission system, a completed Alberta Utilities Commission (AUC) approval, a property assessment for local taxes and an established relationship with the landowners that could potentially span 20 to 30 years.

Alberta’s conservation and reclamation directive for renewable energy operations requires that a reclamation and conservation plan be submitted to Alberta’s Ministry of Environment and Protected Areas (AEPA). Developers must do soil sampling and surveys as a baseline to determine the state the area must be returned to after reclamation. After receiving and responding to AEPA comments, the plan must be included as part of the AUC application.

There are also private agreements between the developer and the landowner. A CanREA survey of 17 members revealed that all had commitments to reclamation in their agreements with the landowners. Wilson indicated that the majority of these agreements provide some level of financial security for the landowners.

Unlike oil and gas projects, landowners actually have the right to veto any renewable energy projects on their land. It is in the developer’s best interest to negotiate long-term leases, address reclamation concerns and adequately compensate the landowners.

Compensation can come in the form of a lump sum payment, share of production, long-term lease or some combination of fixed and variable compensation. CanREA reports an average compensation of $500,000 in annual lease payments per 100 megawatts of generating capacity pooled across all landowners participating in the facility.

It seems very strange for Vulcan County officials and representatives of the RMA to be publicly airing concerns about a business partner that is contributing significantly to the tax base of the communities in which they operate.

CanREA estimates that roughly $1 million in property taxes are collected per 100 megawatts of generating capacity. Based on that estimate, the Travers Solar project alone may be contributing over $4 million a year to public coffers. According to Coun. Schneider, renewable energy projects make up 45 per cent of Vulcan County’s revenue, paying for libraries, roads and bridges.

Recently, the RMA has expressed its members’ concerns about $268 million in unpaid taxes owed by the oil and gas industry, an amount that has increased in a year when the industry is reaping record profits.

Between orphan wells and unpaid taxes, it’s understandable that trust has been damaged in this relationship. It is less understandable that this mistrust has been transferred to their cleaner energy partners, which have a long track record of paying their taxes.

One possible explanation is that rural municipalities are quite happy with their revenues from renewable energy projects and that the story is part of a campaign to create public concern about the renewable energy industry.

The fear of orphaned wind and solar projects gained prominence in January, with stories run by CBC, CTV, the Financial Post and the Globe and Mail. It resurfaced at an RMA convention in March, where Premier Danielle Smith and Red Deer County Mayor Jim Wood stoked the same fears of abandoned wind and solar farms.

Given that the Alberta government has a conservation and reclamation directive for renewable energy projects, there is no evidence of renewable energy companies going bankrupt or abandoning their profitable projects, the industry pays its taxes and appears to have a very good working relationship with its community partners, it’s possible the story is part of a wilful disinformation campaign.

Perhaps Alberta’s ruling politicians could be a little more welcoming to the booming renewable energy industry. This industry will provide diversification, jobs and tax revenues at a time when continued growth of the oil and gas industry is uncertain.

Some continue to disparage renewables while going “all in” on an aging industry that has a legacy of abandoned responsibilities, unpaid taxes and open resistance to responsibly addressing the climate crisis.

Rob Miller is a retired systems engineer, formerly with General Dynamics Canada, who now volunteers with the Calgary Climate Hub and writes on behalf of Eco-Elders for Climate Action.

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"The fear of orphaned wind and solar projects gained prominence in January, with stories run by CBC, CTV, the Financial Post and the Globe and Mail."
Huh, all around the same time. Based on zero actual examples. So, they all just happened to get concerned about this long term possibility at the same time.

How much do you suppose the fossil fuel industry paid for those stories? Oh, not directly I expect--more like, big ad buys just at the same time their PR firm submitted some copy with a bit of a nudge, nudge, wink, wink, say no more. Although we do know that some of those have formal arrangements with fossil fuel companies to publish their stuff with a little tiny disclaimer about who paid for it hidden in tiny print somewhere.

I hadn't previously heard of these concerns, but this article explains it well; it is puzzling that the concern exists amongst municipalities and towns.

One questison arises from the following sentence:

"This is true for both solar and wind energy facilities, where it is much easier to upgrade panels or turbines than perform a full-site installation with foundations and towers (wind energy) or racking and cabling (solar)."

I'm assuming that a substantially upgraded fan or generator pod on a wind turbine may require a new tower and/or foundation, or are the tower and foundation generally overbuilt to accommodate future upgrades?

I presume you can't put in a BIGGER fan, so it's not going to generate as much power as the new huge ones. But considering the relatively tiny capital cost, it's probably worth just putting in replacement blades at the existing size, with perhaps updated gearboxes and whatnot, rather than going to the major expense of ripping everything out and starting fresh.
The point is, with maintenance costs so low, keeping an existing wind/solar farm going after the capital costs are paid off is basically free money.

That said, I understand that in California and a couple of other places, there are actually some abandoned early solar arrays. But I think that's from the proof-of-concept days when the cost and output situation was very different, and probably setups were far less standardized and maintainable.

The nacelle on top of the tower can be replaced as a unit with a new one mounted to the same bearing plate using a very, very tall crane. More powerful generators and associated gear boxes, sensors and other more efficient, advanced technology is possible within the same nacelle housing. The latest generators can get more power out of slower, weaker winds.

Ditto replacing solar PV panels with new ones mounted to the same support structures. There are PV panels just leaving the labs that are super efficient, that use new materials that produce more power from sunlight, and that have better refraction using prism-like glass units that bend light in from all directions without moving the panels to track the sun.

Both wind and solar panels are perfectly recyclable.

All of the above is getting cheaper with every passing year. In fact, renewables are not just known today to outcompete gas and coal in power generation costs, but are now approaching a revolutionary disruption a lot quicker than one would have imagined just three years ago. Tony Seba called it years ago. The IEA is now recognizing this threat to carbon industry assets and financials merely by looking at the data, a complete flip from where they were just a few years ago (pro-oil).

It now appears there could be a similar earthquake in EVs knocking the gasoline car off its perch in the next three to five years, according to independent analysts who ignore car maker's hype and dig for data on their financial health, actual sales and unsubstantiated rosy predictions of a future with gasoline models still rolling off their assembly lines post-2030. Toyota is the biggest.

A recently emerging theme is that legacy car companies carrying hundreds of billions in debt today while promoting burners for the next few years will go bankrupt. The EV supply will rapidly grow and price parity with petro cars is no longer over the horizon. The demand for EVs is too high, the latest battery chemistry (LFP -- lithium iron phosphate) brings the price down with even better and cheaper chemistries on their way, extends the range per charge and don't catch fire. Moreover, China has stricter emissions standards kicking in on July 1st, but has a massive stock of all car models that aren't currently selling. Companies will be looking for a massive write down and possibly selling the stock sitting in Chinese parking lots at a great loss to international markets. Added to this is Joe Biden's IRA legislation and unheard of tax credits that has catalyzed the North American EV industry.

Long story short, there is a very distinct possibility that cheap renewables supplying clean power to cities (e.g. Adelaide, South Australia, recently achieved 80+% renewable power mainly with wind, solar and huge banks of LFP batteries) and new demand by waves of EVs, heat pumps and other power draws landing on the ground could put the fossil fuel industry into permanent decline. Will it go peacefully? Not if petro politicians have their say. But by then, who will even listen?

Interesting info.

Comment on the statement:

"Both wind and solar panels are perfectly recyclable."

I'm not sure what a "wind" or a "wind panel" is (likely just a grammar typo), but, after just looking this up for another conversation, wind installations and solar aren't "perfectly" recyclable.

Here's some info, copied from a post I left elsewhere:

Turbine blades are famously chopped up and landfilled, at present, though I recall ar least one manufacturer suggesting they ought to do something about that;

battery recycling and mineral upcycling is not yet the norm;

Solar panels appear not yet fully recyclable, particularly the elements/minerals used in small quantities.

The good people in Alberta need to wake up and recognize the true colours of the UCP and Daniella Smith. They have ZERO interest in the well-being of the people of Alberta, just there in the pocket oil & gas disinformation industry. Typical conservatives, still living in the dark ages. Just more proof that Daniella Smith is BAT SH*T CRAZY!

I think the renewable power sector should respond by actually agreeing to supply an auditable "cleanup" fund and post a large bond or letter of surety. Perhaps revenue from every 0.5 kWh of solar and wind power sold in Alberta could be devoted to building up such a fund.

In other words, do what the Alberta oil industry and its hype meisters have utterly failed to do.

It would be a huge win for Alberta for the old pre-Klein cleanup fund to be restored. The solar industry can be cheerfully cavalier about taking on the "risk", but the oil industry would be really bummed. What's not to like?