It’s a logical and attractive idea: circular solar panels. But unfortunately, the hard truth is that they don’t exist yet. That’s why we started Gener8 three years ago: our initiative to develop circular solar panels. In our previous blog, we summarized our “journey”. In this blog, we will take you from our first assumptions to the technical development and an elaboration of the business case. Read on to find out why we think it’s possible, and – perhaps more importantly – why we think it’s possible now.
Blog #2 – Why we believe in the possibilities of circular solar panels
Unfortunately, a blog post is too short to present evidence that’s thorough and 100% complete. It is a subject that can take several years of academic research. We’ll try to provide enough background in this post to make subsequent ones more understandable. So we’re going to look at this from a future perspective: the possibilities that are unlocked by circular solar panels.
Can it technically be done already?
The short answer is a resounding yes. The balanced answer, however, requires a definition of what we consider circular. To make a panel fully circular, 1) parts must be reused, 2) material must be reused to make new panels or 3) material must be reused at least equally in other applications.
Using this definition, panels are still far from circular. In other markets, there are already examples of components of a PV module that are almost entirely recyclable. Consider, for example, a frame, cables and an inverter. But the real challenge lies with the panel itself. Currently, only the iron elements are reused; the rest is burned or reused at lower value – for example, the glass is used as a packaging material.The below figure shows the circular possibilities of the main components of a PV module. A large proportion of the arrows are linked to the red box: ‘not circular’. It may therefore seem like we have a long way to go. In practice, however, there are big leaps we can make.Research we conducted shows that five steps are already feasible, and that they have a significant impact on the degree of circularity of a PV panel. It was striking for us that by far not all solutions have to be found in adjustments of the materials used; the design and organization of the supply chain can contribute directly.
Where is the value?
It’s more than just money: it’s about energy, conservation of raw materials and, as a result, high financial returns in the long term. The major challenge in quantifying these benefits is that there are no circular panels yet. It is therefore impossible to determine in practical terms how big or small these benefits are.
That’s why we’ve turned the question around: how much room is there in the system? Do panels generate enough energy to cover their own recycling costs in addition to production costs? Are there enough factors that make it attractive to recycle the materials? Are these factors so decisive that it is no longer attractive to use new raw materials? And finally, does it provide enough economic benefit to all parties? Below are the three value factors.
A PV panel is already a very energy efficient way of generating energy. In frequently cited research from 2013, it was already suggested that the energy payback period was less than four years, and it was expected that in the short term, it could fall to two years. Let’s assume four years, and a conservative lifespan of 20 years: this means that 80% of the energy generated can be used for other purposes, including recycling. So even if recycling would cost as much energy as production (which is unlikely, because of the use of new raw materials) there would still be 60% of the energy available for other applications.
The demand for raw materials is increasing significantly – particularly in Asia, where there has been a sharp rise in demand. All this material cannot be taken out of the ground in the long run, and urban mining will become increasingly dominant. Simultaneously, PV panels have been growing exponentially for years, and it is expected that this will continue. In a few years, therefore, the residual current from PV panels will grow exponentially, and therefore become an important source of materials. Although adjustments will still be needed to recover the materials, it is very clear that the increasing demand for raw materials stimulates the need for developing these adjustments.
We believe in a system that benefits all the stakeholders in the supply chain: the manufacturer, the recycler and especially the customer. In order to do that, a redistribution methodology is needed. Over the past two years, we have developed such a methodology. In order to explain the financial benefits, we must also explain this model. Fortunately, we already warned you that this would be a long blog post…
Our model: what does it actually deliver?
We believe in a system where the energy price paid by a consumer is not dependent on the efficiency of their own panels but of all installed panels. Customers do not buy or lease panels but take a share of the solar park. The more people participate with newer, more efficient panels, the more favorable it is for everyone. At the end of their economic life, panels go to a so-called ‘buffer’ – this is an organization or customer who has a lot of space at their disposal and a high demand for energy. The solar panels remain here for the rest of their lifespan, until it is economically attractive to recycle them. With an approach like this, you create a lot of flexibility and with it the opportunity to offer PV panels to tenants, a group that currently has limited access to PV panels. The risk is that tenants move and cannot take the panels with them, and the new tenants do not want to take over their share. This, together with the use of the buffer, results in an increase in installation costs, which can be covered by recovering residual flows.Because such a model contains uncertainties, we have done a scenario analysis. The average result of this analysis is summarized in the chart below.So there seems to be some financial space in the system. To see how robust or vulnerable this is, we have looked at several scenarios. This reveals that three elements have the most influence on the success or failure of the model:
- Cost of the panels: The faster the price per watt peak goes down, the more attractive the whole model becomes. If this happens much slower than expected, it has the reverse effect. For all values that are associated with the cost of panels and their development, we have assumed conservative values in the calculations – we believe we are therefore on the ‘safe side’.
- The takeover profile: If our model works as well as we hope, this can greatly increase the return. Virtually all panels are taken over by new customers and installation costs go down. This does not affect the break-even point. The negative impact on the negative scenario is smaller than the positive impact on the positive scenario.
- Energy prices: If they go down, as they did in 2016, and we continue to calculate at 90% of this price, margins will decrease sharply. Conversely, an increase in energy prices means returns increase and the payback period decreases.3 scenarios, positive and negative, with the break-even point and the return per year.
The most important consideration is the potential for recycling. In our calculations, we have looked purely at the residual value of the materials, minus the cost of recovery. However, if it is possible to recover components (for example, modules or wafers), the efficiency of recycling and recovered residual value will be drastically increased. In theory, this could be done with existing panels; this makes our model even more interesting.
So it is possible. Why is it not happening yet?
Circular solar panels therefore seem not only possible but also attractive. Our models show that the technology is possible and that there is ‘value in the system’. In other words, there is potential to earn. Still, circular panels do not yet exist. Perhaps that’s because, as we have found, while there are no truly insurmountable obstacles, it’s obvious that no straightforward solution comes to the fore.
We mentioned the main obstacle in our first blog: it may be in the long-term interest of the entire chain, but it is not in the interests of individual parties in the short term. We are currently in the process of getting funding to develop a technical prototype. We want to use our well-grounded concept to demonstrate that this development is relevant, and we want to use the prototype to show that it is also technically possible. Our model cannot be created without the product, and our product will never be developed without the feeling that our model is relevant. We are working hard to break this circle.
Do you want to help? We would love to hear from you! Are you interested in reading more on the future perspective of this system? Keep an eye on this blog!