What will it cost to decommission solar farms? Estimates suggest $15,000 per acre
Grace Stocks and Jeremy G. Weber
Solar farms lose productivity as they age and eventually must be decommissioned. Although decommissioning of large-scale farms has not yet occurred, estimates drawn from project filings and a representative facility suggest costs of about $15,000 per acre — far exceeding typical U.S. farm real estate values and highlighting the stakes of decommissioning policy.
Like oil and gas wells, coal mines, and wind turbines, solar farms produce less as they age and eventually require decommissioning. For solar farms, decommissioning involves dismantling and removing racks, panels, electrical components, as well as transporting the discarded material to recycling centers or landfills. How much would this cost solar companies or, if they go broke, landowners or taxpayers?
A quick internet search yields a range of decommissioning cost estimates from diverse sources and methods. We summarize estimates from 21 utility-scale solar farms with publicly available decommissioning plans. No estimates are based on actual cases of decommissioning because nearly all utility-scale solar farms in the U.S. have been built in the last 15 years. With an expected life of around 30 years, no farms have reached the decommissioning stage.
Fifteen estimates come from a report from the Maryland Department of Conservation and Natural Resources. Another five come from a report from the University of Michigan School for Environment and Sustainability. (To avoid double-counting, we include only projects from the Michigan report that are in the contiguous United States and from states not considered by the Maryland report). We also add the estimate from a publicly available decommissioning plan for a solar farm in New York not considered in the Maryland report. For all estimates we put costs in 2024 dollars, which is important given the post-pandemic rise in labor and material prices.
We further compare the estimates from specific projects with a model-based estimate. The Electric Power Research Institute, a non-profit energy research organization, commissioned a study to estimate the cost of decommissioning a ground-mounted solar photovoltaic farm at the end of its useful life.
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Decommissioning Cost Estimates
Source: Maryland DCNR; University of Michigan School for Environment and Sustainability, Electric Power Research Institute, calculations by authors.
Across the 21 projects, the average estimated decommissioning cost per megawatt is nearly $93,000, with half of projects having a cost between $54,000 and $136,000. These statistics from planned or constructed solar farms align with the EPRI estimate based on a representative farm, which estimated the cost at $104,000 per MW.
Some of the costs of decommissioning could be offset by the salvage values of recovered materials. The EPRI study estimated that scrap metal value could potentially offset a quarter of decommissioning costs. However, the values of scrap materials are highly volatile and difficult to predict year-to-year, let alone over decades. The price of copper, an important salvage material, fell by nearly 50 percent from 2011 to 2019 but then doubled over a few years. In contrast, labor costs, which account for an estimated 60 percent of decommissioning costs, rise steadily over time.
To put decommissioning costs in perspective, one megawatt of panels occupies around 6 acres. Using our average cost estimate, the cost per acre is roughly $15,000 (=$93,000/6). By comparison, the average farm real estate value in the United States is less than $5,000 per acre. Although values vary regionally, in no region do they exceed $9,000.
The high cost of decommissioning relative to land values indicates a lack of incentive to decommission apart from legal requirements. If a company abandoned a solar farm without decommissioning and was bankrupt, real estate investors could not buy the land cheap enough to profit from flipping it — buying the land, removing the panels, and returning it to market at a higher price.
To further put the costs in perspective, a landowner with 20 acres of abandoned solar panels would face a situation financially similar to having four abandoned conventional oil and gas wells on his land, with both costing around $300,000 for complete decommissioning (=20 acres x $15,000 for the panels and 4 x $75,000 for the wells).
A key difference is that a lack of policy has yielded millions of oil and gas wells already abandoned and with no responsible (and capable) party for decommissioning. The same has not yet happened for solar farms, but the high estimates for decommissioning make it likely apart from forward-looking policies to prevent it.
Grace Stocks is a Master of Public Administration student studying energy & environment at the University of Pittsburgh’s Graduate School of Public and International Affairs. She holds a bachelor’s degree in environmental economics and French from Virginia Tech, where she concentrated on agricultural economics and pollution.
Jeremy G. Weber is Professor at the University of Pittsburgh, Graduate School of Public and International Affairs and the Department of Economics. He is the author of Statistics for Public Policy: A Practical Guide to Being Mostly Right (or at Least Respectably Wrong).
