| Decommissioning Costs Pile Up For Energy Infrastructure | |
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Take solar rooftop installations for instance. Companies like Solar City install the installations on customers’ roofs at no upfront cost and they the consumer essentially pays for the installation over a period of two decades. Yet once that period is over, the rooftop installation will have very little value as the technology will likely be very obsolete and the system itself maybe so old that it requires constant maintenance. Yet homeowners are unlikely to pay to take the panels down and repair holes cut in the roof after the end of the system’s life. The solution to this type of poor long term planning is fairly straight-forward. New energy installation projects should require a long-term sinking fund that will eventually pay for the decommission of the infrastructure in question. Such a sinking fund would be funded over the course of a project’s life. Related: Geothermal Energy Could Grow Six Fold For instance, the cost of decommissioning a nuclear power plant is perhaps 10-15 percent of the plants upfront cost. Assuming a 7 percent return on assets, if the plant operator were required to contribute just 0.07 percent of the asset cost annually to a sinking fund for decommission (1 percent of revenues), assuming a 50 year plant life, and a 5 percent interest rate, the decommissioning would be fully paid for by the end of the nuclear plant’s life. The same plan could be applied to a variety of other infrastructure projects in the energy space. It may be difficult to foresee when new technologies will come along that will supplant existing technologies, but with proper financial planning in advance, decommissioning existing infrastructure when needs change does not have to be a major burden for a firm or taxpayers. By Michael McDonald of Oilprice.com
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National Grid Transco
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CODE : NG.L |
ISIN : US6362743006 |
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National Grid Trans est une société basée au Royaume-Uni. National Grid Trans est cotée au Royaume-Uni et aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 3 926,1 milliards GBX (4 575,7 milliards US$, 4 275,1 milliards €). La valeur de son action a atteint son plus bas niveau récent le 05 mai 2017 à 1 000,00 GBX, et son plus haut niveau récent le 25 avril 2024 à 1 047,00 GBX. National Grid Trans possède 3 749 860 096 actions en circulation. |