The Clean Energy Council (CEC) and Queensland Renewable Energy Council (QREC) have jointly released a Decommissioning Security Framework (Framework), the first nationally coordinated model for managing financial assurance of decommissioning obligations.[1]
The Framework creates strategic opportunities and risk allocation challenges. The development of the Framework responds to a growing regulatory and commercial gap in how end-of-life project liabilities are managed across Australia. In the absence of a consistent approach, project proponents have faced varying state-based requirements, landholders have been left uncertain about the extent of their rights once projects cease operation and financiers and contractors are unclear on long-term risk exposure.
Purpose of the Framework
The Framework is a proactive measure to provide stakeholders with assurance that, in the unlikely event that a renewable energy project is unable to meet its end-of-life decommissioning obligations, protection is provided against stranded liabilities.[2]
There has never been an abandoned wind or solar farm in Australia[3] and according to the CEC the risk of project abandonment is low.[4] However, communities have expressed concerns about landholders being left carrying the cost of removing wind and solar infrastructure at the end of a project’s life.[5] In an attempt to address such concerns and strengthen community trust[6], the CEC and QREC have[7] developed the Framework using a two-stage approach model:[8]
- Pre-approval commitment: developers can lodge a signed ‘Decommissioning Commitment Statement’ (a report required to be submitted to the relevant authority approving construction) affirming responsibility for decommissioning, and an indicative financial security plan clearly outlining cost-estimates, a financial security mechanism, calculation method and custodian arrangements.[9]
- Phased financial contributions: rather than locking up capital upfront, security is built up progressively throughout the project life cycle, using approved financial instruments such as bank guarantees. It is proposed that security amounts should be recalculated at least every five years based on net decommissioning costs (i.e. after deducting the salvage and resale value of components such as turbines, batteries, steel, and cabling).[10]
The Framework is currently available to government bodies and the community for consultation. It is expected the CEC and QREC will advocate for the Framework’s adoption as a best practice national model.[11]
Strategic implications and risk allocation of the Framework
There are several obligations, risks and in some cases opportunities, that various stakeholders in a renewable energy project will need to be mindful of under the new Framework.
1. Integrated planning and disclosure[12]
Decommissioning will be a continuous obligation rather than a late-stage task. The Framework proposes that developers should include decommissioning strategies in planning approvals, landholder agreements and finance documents, supported by regular ‘Decommissioning Security Reports’. These reports are required before construction, after completion, at mid-life and every five years thereafter. They ensure transparency over decades of operation, with non-compliance potentially triggering breaches of approval conditions. Independent verification of cost estimates introduces an extra layer of scrutiny, testing assumptions around inflation, salvage value and recycling potential.
2. Financial structuring and timing of contributions[13]
Security contributions will be phased over the life of the project, linked to key milestones such as construction, commissioning and late-life operation meaning large upfront capital lock-up is avoided. As decommissioning obligations transfer with ownership, robust documentation and established securities will also be essential for transaction readiness and due diligence during asset sales.
3. Contractual and technical alignment
The Framework will influence EPC and O&M contracting practices. Construction quality, component design and recyclability could now have direct financial implications, with periodic recalculations potentially exposing future decommissioning liabilities.[14] Developers may require extended warranties, recyclability data or end-of-life certifications. Contractors can also coordinate performance bonds and retention amounts to avoid overlapping with project-level securities.[15]
4. Custodianship, enforcement and step-in risk
The Framework proposes that security instruments should be held by independent custodians, ensuring neutrality but limiting landholders’ direct control. Financiers with step-in rights assume decommissioning obligations, adding complexity to workouts and restructuring.[16] Although the Framework contemplates dispute-resolution processes between developers, regulators and landholders, procedural details such as timeframes and evidentiary standards remain uncertain.[17]
5. Opportunities and strategic positioning
The Framework presents the following opportunities for participants:
- Developers who demonstrate transparent, well-structured compliance can strengthen investor confidence, improve ESG performance and reduce the cost of capital.
- Contractors who adopt decommissioning-friendly designs, such as modular structures, recyclable components and accessible foundations, can help lower overall decommissioning costs and stand out in tenders.
- Financiers can innovate by offering tailored security instruments such as insurance-backed bonds, portfolio-level facilities and surety bonds, leveraging predictable PPA revenues to balance protection and returns.[18]
- Landowners benefit from increased certainty that renewable energy assets will be responsibly removed and sites rehabilitated at the end of a project’s life, reducing long-term environmental and financial risks and ensuring farmland is protected for future use.[19]
For projects already advanced in development, existing security arrangements may be recognised if verified and aligned with the Framework’s principles.[20]
Potential issues and industry priorities
There is currently no clear regulatory mechanism to enforce compliance. The Framework is industry-led and relies on voluntary adoption and acceptance by State approval bodies.[21] Without integration into planning or environmental approval regimes, the Framework’s commitments, such as phased financial contributions and five-yearly recalculations, risk being viewed as best practice rather than binding obligations.
In the absence of a formal regulatory mandate, the Framework’s effectiveness will depend heavily on how its principles are incorporated into project documentation. Decommissioning security obligations, cost calculations, and custodianship arrangements will need to be expressly defined within key contractual instruments, most notably project agreements, land and lease agreements and financing documents. Contractual negotiations will therefore play a critical role in determining how the recommended practices under the Framework are implemented in practice, and whether the resulting obligations are enforceable between parties.
To operationalise the Framework effectively, the renewable energy industry must prioritise regulatory integration, standardisation, and transparency. There is a clear need for State and Federal governments to formally adopt or reference the Framework within approval conditions and model planning instruments, thereby providing the necessary legal scaffolding to ensure that security commitments are enforceable. Industry bodies and financiers should collaborate to develop standardised valuation methodologies for calculating decommissioning costs, residual values and security escalation schedules, therefore reducing subjectivity, improving comparability between projects, and strengthening investor confidence.[22] The Framework proposes that developers should embed decommissioning obligations within key project documents to ensure clear allocation of financial and operational responsibilities.[23]
Finally, the industry must focus on building a credible circular economy framework to support the assumptions underlying net-cost calculations.[24] This includes establishing certified recycling facilities for panels, blades and batteries, and transparent reporting on material recovery rates. The long-term success of the Framework will depend not only on financial assurance mechanisms but on the sector’s ability to demonstrate genuine end-of-life stewardship.[25]
Conclusion
The Framework marks an important step toward establishing clearer, more consistent expectations for end-of-life management across Australia’s renewable energy projects, balancing community protection with investment viability through a nationally consistent, risk-aligned approach. However, its success will hinge on how effectively it is translated from a voluntary industry guideline into enforceable obligations through regulations and contracts. Until such time, decommissioning risk allocation will continue to be shaped primarily through commercial negotiation, with varying outcomes for stakeholders.
To ensure the Framework delivers on its intent, industry participants, regulators and governments must work collaboratively to embed its principles into approval regimes and standard contractual practice.
Developers, contractors, landholders and financiers who engage proactively with these requirements may, over time, secure competitive advantage, strengthen social licence and position themselves as leaders in the energy transition.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
[1] Clean Energy Council, ‘Clean Energy Industry Proposes New National Decommissioning Approach to Protect Farmers’ (Media Release, 29 October 2025) <https://cleanenergycouncil.org.au/news-resources/clean-energy-industry-proposes-new-national-decommissioning-approach-to-protect-farmers> (‘New National Decommissioning Approach to Protect Farmers’).
[2] ‘Decommissioning Security Framework for Renewable Energy Projects’, Clean Energy Council (Framework Proposal, October 2025) 4 <https://cleanenergycouncil.org.au/getmedia/a5093f1e-4cb8-44d8-b15a-cf1339135833/Decommissioning-security-framework-for-renewable-energy-projects.pdf> (‘Decommissioning Security Framework’).
[3] New National Decommissioning Approach to Protect Farmers (n 1).
[4] Decommissioning Security Framework (n 5) 6. An ‘abandoned’ renewable project is one that has permanently ceased operation without repowering or decommissioning, leaving no responsible party to remove infrastructure or rehabilitate the site.
[5] Ibid.
[6] Lavinia Hulley, ‘CEC Announces Reforms and Decommissioning Framework’, Ecogeneration (Online Article, 31 October 2025) <https://www.ecogeneration.com.au/cec-announces-reforms-and-decommissioning-framework/>.
[7] New National Decommissioning Approach to Protect Farmers (n 1).
[8] Decommissioning Security Framework (n 5) 6.
[9] Ibid.
[10] Ibid.
[11] Hulley (n 10).
[12] Decommissioning Security Framework (n 5) 5.
[13] Ibid 6.
[14] New National Decommissioning Approach to Protect Farmers (n 1).
[15] Decommissioning Security Framework (n 5) 6.
[16] Ibid 4.
[17] Ibid 6.
[18] Ibid 5.
[19] New National Decommissioning Approach to Protect Farmers (n 1).
[20] Decommissioning Security Framework (n 5) 7.
[21] New National Decommissioning Approach to Protect Farmers (n 1).
[22] Australian Energy Infrastructure Commissioner, ‘Decommissioning and Protection for Landholders – Media Release’ (Media Release, 27 October 2025) <https://www.aeic.gov.au/decommissioning-and-protection-landholders-media-release>.
[23] Ibid.
[24] Ibid.
[25] Marion Rae, ‘Preparing for Retirement-age Renewables’, The Energy (online, 29 October 2025) <https://theenergy.co/article/preparing-for-retirement-age-renewables>.
