A Recent Delay in Pre-construction Decommissioning Bond Raises Concerns
By David T. Stevenson
Center for Energy & Environmental Policy
August 13, 2024
US Wind will likely petition the federal Bureau of Ocean Energy Management (BOEM) to delay buying a pre-construction decommissioning bond, which will likely be approved. These bonds ensure that expensive decommissioning costs are covered if a developer goes bankrupt. Developers often create separate Limited Liability Companies to protect parent companies in case of bankruptcy. The Italian company Renexia established US Wind as such a company.
BOEM granted a petition from the developer of the first large offshore wind project, Vineyard Wind off Nantucket, MA, to delay the purchase of a decommissioning bond until 15 years after construction started and has extended that deferral to several other projects upon final BOEM project approval.
Given this precedent, the Caesar Rodney Institute became concerned that since BOEM approved a delay request, US Wind would want one as well. US Wind admits it has never built an offshore wind project before, and the massive turbines it plans to use have never been built in the ocean anywhere in the world.
Adding to the concern, the recent failure of a brand-new turbine blade at the Vineyard Wind project in Nantucket, MA, provides extra reason for concern about turbine durability. US Wind has claimed in public meetings it would purchase a pre-construction decommissioning bond. Therefore, it is reasonable to assume it will request a delay and be granted.
Furthermore, US Wind is asking for state permits to bring power ashore at Delaware's state park beach and to allow cables to be buried under the Delaware Inland Bays next to the coal-fired utility that connects to the PJM Grid. Sussex County, Delaware, has been asked to approve a "conditional use" to build an electric substation in Millsboro. No local permits should be granted without a requirement for a pre-construction decommissioning bond. Sussex County has approved over forty utility-scale solar projects and has required such bonds for every project as they are a standard for all electric power plants.
On July 30th, Sussex County Council heard numerous well-informed public comments regarding why the requested electric substation "conditional use" permit should be denied. The Council members deferred a decision until they could review all the new information. We look forward to the County Council's denial of the "conditional use" permit.
In recent related developments, BOEM has just issued the Final Environmental Impact Statement on the US Wind project. We will prepare public comments and encourage others to do the same.
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