You keep hearing about new records for gigawatts of solar deployed each year. Then you wonder what happens after all the solar panels reach their end of life? There’s got to be a recycling business opportunity given the sheer numbers. Everyone is always skating to the puck, not to where it’s going. You think this is your chance to finally be one step ahead of everyone else.
Your intuition isn’t wrong. We are putting up insane quantities of panels. In 2020 19.2 gigawatts worth of solar was installed in the US. Double the number from just 5 years prior. Almost everyone is focused on deployment, not end of life. Now there are a few panel recycling businesses today but obviously this isn’t going to deter you. It’s not about being first, it’s just about being the best. And while that might generally be true, in this case even being the best might not be enough.
May the following insights be a guide to the gauntlet of obstacles you’ll need to overcome. It’s not impossible - it’s just not going to be easy.
Obstacle 1: Economies of scale are too far away
While each new year comes with a new solar deployment record, this has only been the case since the mid 2010s. The linked graph of solar power generated in the US from 2008 to 2018 makes clear the near step-change increase that took place between 2013 and 2015. Most solar panels today are less than 10 years old but have a useful life span of around 25 years. This means there won’t be significant volumes of panels reaching their end of life for at least another 15 years. One caveat is that functional end of life is not the same as financial end of life. The adoption of newer technologies like bi-facial panels may cause operators to replace perfectly good panels well within the next 15 years. Something to keep an eye on but not necessarily something to bank on.
The lack of volume is a problem because you need it to spread out your fixed costs. In 2016 there was less than half a million tons of panels to recycle globally. By 2030 that number is expected to go up to eight million. Economies of scale are especially relevant in panel recycling because the fixed cost of a facility is high - on the order of tens of millions of dollars. It’s hard to justify that kind of capital expenditure when significant volumes for recycling are more than a decade away. Because of this there are very few pure solar panel recycling operations today. Many outfits that do offer the service have a primary business in glass or general e-waste recycling since they can use some of the machinery from those processes for panels as well.
The intuition to skate where the puck is going is correct but in this case the puck simply won't get there for another 10+ years. New and existing businesses will have to survive that period before economies of scale become a real possibility.
Obstacle 2: The per unit economics are brutal
Waiting for volumes to pick up in another 10 years before starting your panel recycling business won’t solve your problems either. That’s because the variable costs of panel recycling are terrible. A standard panel is 65” x 39” and weighs 40 pounds. A bulky item on its own but much more so when you need to transport hundreds or thousands of them to a central facility. And on top of that, only around 4 of those 40 pounds have any significant resale value. Today the revenue per panel recycled is $3 while the cost is $25. Even if half of the $25 is the fractional portion assigned to processing equipment, that still leaves a 4x differential between revenue and the remaining operating costs. Drilling down into those operating costs, you'll see that they mostly consist of transport and labor. Both of which won't go away given the variance in where you pick up panels and their condition. At the end of the day you’re moving around a lot of mass to extract a small portion of useful material. A problem which has no easy fix.
If that wasn’t bad enough, the value-to-weight ratio of an end of life panel is going to get worse as time goes on. The amount of precious metals in panels is decreasing as manufacturers look to reduce their own costs. Meaning the same effort to transport and recycle a panel will result in less revenue, further throwing the economic equation out of balance. For society it’s a positive to use less precious metals in panels. For a recycling business its just another obstacle. Price spikes from shortages in these materials could theoretically counterbalance lower quantities extracted per panel. But it's too soon to make any definitive statements on where that will net out.
All of this is disheartening but it’s only true within our current system of economic incentives. While the physics of moving around bulky panels can’t change too drastically, the way in which we organize incentives is entirely up to us. For now there's no clear line of sight to financially sustainable panel recycling in the US given the economics described.
Obstacle 3: The whole economy itself
The solar industry is incentivized to manufacture and deploy. The rules of the game say nothing about recycling. There’s almost zero regulation in the US on end of life protocols for solar panels. Rules and incentives determine what happens in a given market. Without tax credits and government loans the solar industry itself would not be what it is today. The entire modern economy is built around a linear system of production, use, and disposal. Landfilling a solar panel costs less than $3. In a system where that’s true there’s no way recycling at a cost of $25 will ever be viable. And that cost is so high because of this linear incentive system. Solar panels are made with polymers (glue) that bind a glass sheet to the modules that produce electricity. While this helps the panel withstand inclement weather, breaking down these polymers to separate each individual material is what makes recycling operations so expensive. A different incentive structure that prioritized recycling would ultimately lead to different design decisions. Only by bending the incentive system to be more circular can panel recycling become a real possibility.
Going one level deeper, economic incentives and regulations are ultimately based on our values. Do we care about never-ending resource extraction or not? Do we find it offensive to dump ever-increasing quantities of “waste” into landfills or not? So while overcoming this obstacle in the short term means lobbying for regulations that incentivize panel recycling, in the long-term the solution is reshaping our values around consumption and disposal. We’ve finally got to a point where people see electricity from renewable sources as meaningfully different than electricity from fossil sources. What if we could go one step further by making a distinction between electricity generated from recycled solar panels and electricity generated from newly manufactured panels. Or what if silver extracted from old panels was deemed more valuable than freshly mined silver? This is something we have total control over. A commodity is a commodity only if we collectively believe it. Incentives are only a reflection of what we value. As what we value changes so will the behaviors that we encourage and discourage.
A path forwards
What’s hopefully clear is that while solar panel recycling itself has some tough obstacles, the real problem is much more foundational. It’s not just that economies of scale are more than a decade away or that per unit economics still look terrible at scale, it’s that the incentive structures are working against you at every turn. That leaves you the aspiring solar panel recycling entrepreneur in a tough spot. Established panel recycling businesses deserve huge credit for finding ways to carve out an existence in this space.
The place where opportunity could exist without a change in the prevailing incentive system however is re-using old solar panels. As previously mentioned, many panels may reach their financial end of life before they physically stop working. Starting there may provide enough runway until more systemic changes come about. With that in mind here are two ideas to inspire you to keep going where others have decided to move on.
- Develop a better resale market for old panels. Existing sites are quite barebones and have little data on panel degradation. Creating a framework for quality and amassing an accompanying dataset could prove to be valuable differentiators as the volume of panels available to re-use increases.
- Build a solar farm with only re-used panels in the desert. First collect all the panels that would be landfilled but are still in working condition. Then build the necessary tools to seamlessly integrate every given make or model of panel together. Finally sell this aggregate power at a premium to consumers who want to buy power from re-used panels.