Blog By: Julia Giordano
In recent years, Kentucky has attempted to transition away from fossil fuel plants and look to more renewable resources to meet the increasing energy demand.[i] Solar and wind energy have become viable options for many states looking to transition their energy sources. [ii] Solar, in particular, has taken a foothold in Kentucky, with some areas opting to retire their fossil fuel plants and replace them with solar and battery energy storage.[iii] Energy developers have sought to establish large-scale solar projects on private farmland.[iv]
How the transition occurs has become a contentious topic in communities and among legislatures.[v] Questions about protecting landowners’ rights have arisen due to attempts to develop private land.[vi] Many are worried that developers who want to build solar panels on their property will take advantage of landowners.[vii] A specific issue that has concerned lawmakers is what will happen to the panels and the land once the panels have served their use.[viii] On average, panels can last between 20 and 30 years, depending on their quality and upkeep.[ix] While some developers include decommissioning plans in their agreements, others might not include the necessary protections to return the land to its prior state.[x]
As a result, the Kentucky legislature has attempted to step in to regulate the decommissioning of panels and the length of construction certificates.[xi] Kentucky legislators mostly recently passed House Bill 4 (HB4), overriding Governor Beshear’s veto.[xii] HB4 provides several new provisions for regulating solar facilities and developers.[xiii] First, it amends KRS 278.704 to lengthen the period that a construction certificate lasts from 2 to 3 years.[xiv] Second, it amends KRS 278.706 to require that a decommissioning plan be included in the application for construction of the facility and establishes minimum requirements for the decommissioning plan.[xv] This includes, among other things, removing all above-ground facilities, underground components, and foundations and returning the land to the state prior to construction.[xvi] Additionally, a bond or similar security must be secured as part of the decommissioning plan to ensure that the plan is actually accomplished.[xvii] This is because sometimes a company will build the facility then sell it to another provider who could disregard the plan.
Some lawmakers have opposed HB4, and Governor Beshear recently vetoed it.[xviii] The main reason being that it removes local input on enforcement of construction certificates.[xix] In his veto, he stated:
House Bill 4 removes the Kentucky State Electric Generation and Transmission Siting Board’s authority to enforce any conditions of the construction certificates it approves. Because the Board’s membership comprises members from the counties where a facility will be located, House Bill 4 removes local input on enforcement of the construction certificate, including the bonding and decommissioning requirements.[xx]
Given that the bill also amends KRS 278.718 to provide that an ordinance, permit, or license issued by a local government has priority over the requirements of certain portions of the bill, it remains unclear how relevant this concern is.[xxi] Even if a local government has no regulations, having some state regulation is better than nothing to protect landowners.
While this is a legitimate concern, another question to consider is how much these regulations may infringe on the ability of private individuals to contract and lease their land as they see fit. Typically, an individual is free to enter into contracts of their choosing, whether to their advantage or not. Therefore, why should private landowners require government input when contracting with developers? If the energy regulation primarily benefits the landowner, then that argument would be justified. However, when solar panels contribute to supplying energy to the general public, government regulation becomes essential. Especially given that part of the reason there has been a shift toward solar energy is because it is environmentally friendly and more reliable than other sources. Without proper regulations, developers could use the land and leave it ravaged by deteriorating solar panels without repercussions. Problems like these might cause landowners to resist permitting solar to operate on their land and potentially cause reliability issues in the future.[xxii]
However, it appears the legislature is attempting to retain some power in the hands of landowners.[xxiii] Currently under consideration in the legislature are new administrative regulations regarding the requirements of decommissioning plans, among others.[xxiv] Part of the legislation provides that unless otherwise stated in an accommodation contained within a lease agreement with the affected landowner, the decommissioning plan shall be designed to return the land to a substantially similar state as it was before the commencement of construction.[xxv] This allows a landowner to request different decommissioning provisions in the lease compared to those outlined in the statute should they choose to do so.[xxvi] As with HB4, local ordinances have priority over the statute.[xxvii] These regulations represent the legislature’s newest efforts to address the specifics of decommissioning while implementing and addressing some of the concerns from HB4.
Many people consider the new solar energy regulations beneficial, but as with any new industry, there will be a learning curve. This is especially true in the solar industry, where the results of the regulations may not be felt for 20 to 30 years.
[i] Alison F. Davis, Ph.D., Considerations for Future Utility Scale Solar Farm Developments, Dep't of Agric. Econ. Univ. of Kentucky (Sept. 2020), https://agecon.ca.uky.edu/files/considerations_for_future_utility_scale_solar_farm_developments_aec_staff_paper_498_davis_sept2020.pdf [https://perma.cc/X2L5-7386].
[ii] Id.
[iii] Ryan Kennedy, Kentucky regulators approve plan for 900% increase in renewable energy, pv mag. (Nov. 10, 2023), https://pv-magazine-usa.com/2023/11/10/kentucky-regulators-approve-plan-for-900-increase-in-renewable-energy/ [https://perma.cc/CY9B-U4D4].
[iv] Liam Niemeyer, Kentucky counties, cities increasingly adopting ordinances to regulate solar energy projects, Kentucky Lantern (Feb. 7, 2023), https://kentuckylantern.com/2023/02/07/kentucky-counties-cities-increasingly-adopting-ordinances-to-regulate-solar-energy-projects/ [https://perma.cc/KHC4-63ET].
[v] Melina Walling, The promise of solar farm income and why it’s not winning everyone’s hear, USA TODAY (updated Sep. 17, 2021), https://www.cincinnati.com/in-depth/news/2021/09/16/invitation-solar-farm-not-sitting-well-rural-neighbors-kentucky/5649016001/ [https://perma.cc/2WUQ-FPTJ]; Liam Niemeyer, Beshear vetoes solar decommissioning bill, saying it weakens local control, Kentucky Lantern (Mar. 24, 2023, 04:28 PM), https://kentuckylantern.com/2023/03/24/beshear-vetoes-solar-decommissioning-bill-saying-it-weakens-local-control/ [https://perma.cc/6W4D-TT3V].
[vi] Id.
[vii] Id.
[viii] Id.
[ix] Emily Glover & Corinne Tynan, How Long Do Solar Panels Last?, Forbes (updated Sept. 11, 2023, 10:56 AM), https://www.forbes.com/home-improvement/solar/how-long-do-solar-panels-last/ [https://perma.cc/JDD4-S9K9].
[x] Davis, supra note 1.
[xi] H.B. 4, Gen. Assemb., Reg. Sess. (Ky. 2023).
[xii] Id.
[xiii] Id.
[xiv] Id.
[xv] Id.
[xvi] Id.
[xvii] Id.
[xviii] Niemeyer, supra note 5.; Veto of Ky. HB 4 (2023) (message from Gov. Andy Beshear regarding House Bill 4 of the 2023 Regular Session, Mar. 24, 2023), https://apps.legislature.ky.gov/record/23rs/hb4/veto.pdf [https://perma.cc/W57H-33GY].
[xix] Id.
[xx] Id.
[xxi] H.B. 4, supra, note 11.
[xxii] Walling, supra note 5.
[xxiii] 401 Ky. Admin. Regs. 103:020 (2023) [https://perma.cc/EA43-25U2].
[xxiv] Id.
[xxv] Id.
[xxvi] Id.
[xxvii] Id.