Solar energy development is in its early phases in Pennsylvania. Many companies seeking to develop solar energy infrastructure and enter solar leases with landowners are new to the business and run the risk for a potential bankruptcy should circumstances change in the future. We have seen major gas companies go bankrupt in Pennsylvania and we must be aware of the potential for bankruptcy inherent to startup solar companies with little to no background of successful solar development.
Given the potential for future bankruptcies, landowners must negotiate for Decommissioning Bonds and reclamation requirements. Decommissioning involves the removal of solar power facilities and reclamation of their site at the end of the lease or of solar operations. As Pennsylvania is new to the solar industry, its laws have not caught up to addressing decommissioning and bonding to address cleanup upon the termination of the solar agreement or solar project. It is therefore imperative that the landowner negotiate to maximize surety in the form of a Decommissioning Bond or other appropriate device to address any potential future cleanup, restoration, or decommissioning issues.
Although it is anticipated that Pennsylvania will address decommissioning in the future, it remains necessary for the landowner to maximize their protections for the decommissioning process if Pennsylvania does not act or that Pennsylvania’s required decommissioning law is insufficient for the landowner’s property and project. One technique is to negotiate a Decommissioning Bond which will provide more than any future legislation addressing solar facility decommissioning. The landowner must negotiate to maximize their protection from potential future liability and decommissioning issues. Decommissioning Bonds and Sureties are a critical part of any lease agreement and must be negotiated to apply immediately and to remain effective throughout the solar lease and through its termination.