Decommissioning Bonds: What are they? Who do they protect?
Often required by a landowner, municipality, state, or federal government decommissioning bonds guarantee the removal of equipment such as solar panels and wind turbines as well as the restoration of land to its pre-existing state. The penal sum or bond amount of decommissioning bonds is based on the decommissioning and restoration costs of a particular site and must be in place for the duration of the useful life of operation. It is important to note that this amount is based on what it would cost a to hire a third party to complete the decommissioning. Due to the long-term nature of these obligations, sureties prefer these bonds are written on an annually renewable or cancellable bond form; however, release of the sureties' obligation most often requires replacement with another surety bond or alternative form of financial security.
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