Netherlands can play leading role in wind turbine decommissioning

The costs of fully decommissioning offshore wind farms appear to be higher than the bank guarantee amounts previously set by the government in earlier offshore site decisions. Wind farm developers bear the costs of removing the wind farm, but the bank guarantee provides the government with security in case the developer fails to meet this obligation, for example, in the event of bankruptcy. New simulation studies by TNO show that the current bank guarantee (dating from 2016) is too low. This insight could be important for updating the financial frameworks for future wind farms. The report also offers guidance for innovation in decommissioning operations.

When constructing new wind farms within the Dutch Exclusive Economic Zone, the government requires project developers to provide a bank guarantee as security for the later decommissioning of the wind farm. This guarantee is intended to prevent society from bearing the costs if, for instance, the permit holder goes bankrupt. The developer remains responsible for the full cost of removing the wind farm.

Under current site decisions, a bank guarantee of €120,000 per megawatt (MW) is assumed. This guarantee is indexed annually by 2 percent at the expense of the permit holder from the moment the wind farm starts supplying electricity. TNO has produced a new calculation. “Our calculations show that fully decommissioning a modern wind farm costs about €172,500 per MW,” says Harald van der Mijle Meijer, wind energy researcher at TNO. “If only part of the installation is removed — for example, if the monopiles are cut six meters below the seabed — the cost is about €110,600 per MW. This new estimate can help policymakers evaluate existing policy.”

Seabed erosion protection is the biggest cost item

One conclusion of the study is that removing so-called scour protection (seabed erosion protection) accounts for nearly 40 percent of total decommissioning costs. Harald van der Mijle Meijer: “Removing the erosion protection is logistically very complex, time-consuming, highly dependent on weather conditions, and requires specialized equipment.” The study also shows that scale matters: larger turbines reduce costs per MW. Distance to port is another key factor; doubling the distance from 105 to 210 kilometers increases costs by more than 12 percent.

Simulation study with 480 variants

TNO conducted the study on behalf of the Ministry of Climate and Green Growth, using the simulation model UWiSE – TNO UWiSE. For each scenario, 480 variants were calculated based on 40 historical weather years and 12 possible start months. Assumptions were also validated in a workshop with sector representatives — including developers, contractors, suppliers, the Netherlands Enterprise Agency (RVO), and Rijkswaterstaat.

Recommendations: flexibility and customization needed

TNO advises allowing developers, during the lifetime of a project, to demonstrate when lower bank guarantees may be appropriate. The report also highlights the desirability of tailored solutions for locations with specific characteristics, such as seabed or weather conditions. Decommissioning techniques that work well in sandy soils may be less effective in areas with thick clay layers.

Innovation opportunities for the Netherlands

“The most costly decommissioning activities offer the greatest opportunities for innovation,” says Van der Mijle Meijer. “Think of more efficient methods for removing scour protection, faster techniques for extracting or cutting monopiles from the seabed, optimized offshore logistics, and better integration of decommissioning with recycling.”

From 2040 onward, a vast global market for decommissioning will emerge. By investing in these technological and organizational innovations in time, the Netherlands can, according to TNO, take on an international leading role in sustainable decommissioning.