Circular economy perspectives in solar value chains: Circular business models for photovoltaic and solar water heating systems
This report examines transition strategies for solar value chains, focusing on circular business models for photovoltaic and solar water heating systems. It explores lifecycle management, modular design, and policy frameworks needed to manage projected cumulative solar waste of 60–78 million tonnes by 2050 while recovering critical materials.
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OVERVIEW
Solar deployment at unprecedented scale
The rapid expansion of solar photovoltaic (PV) and solar water heating (SWH) technologies has become a central pillar of global decarbonisation strategies. Over the past decade, solar power has experienced one of the fastest technology expansions in history. Global installed PV capacity surpassed 1 terawatt in 2022, representing a more than tenfold increase since 2012. According to the International Renewable Energy Agency (IRENA), solar PV accounted for nearly two-thirds of all newly installed renewable power capacity worldwide in 2023, making it the dominant technology in the global renewable energy expansion.
Solar systems across their lifecycle
As solar technologies scale, their contribution increasingly depends on efficient operation over their full lifecycle. PV modules are designed for lifetimes of 25–30 years, though key components such as inverters and control systems require earlier replacement. System efficiency is shaped by design, installation quality, operating conditions, and maintenance. Preventive maintenance and timely component replacement can sustain energy output and avoid premature performance losses, while design choices like modularity determine if systems can be repaired, upgraded, or adapted without full replacement.
Growing material flows of solar equipment
As the global installed base grows, increasing volumes of equipment will reach the end of their first operational life. Projections estimate that cumulative solar PV waste could reach 60–78 million tonnes globally by 2050. These flows represent a significant reservoir of functional components and valuable materials. However, current systems for managing end-of-life equipment remain underdeveloped in many regions. Progress in lifecycle management systems has not yet matched the rapid growth in solar deployment, creating a widening gap between incoming waste volumes and the capacity to manage them effectively.
From linear to value-retaining solar systems
Solar value chains have largely evolved along linear models, where decommissioned equipment is frequently stored, downcycled, or discarded without recognising its remaining functional or material value. Solar technologies contain valuable materials that can support more resilient value chains if recovered. For a typical crystalline silicon PV module, material composition by weight includes glass (~65–75%), aluminium (~10–18%), polymers (~10%), silicon (~3–5%), copper (~1%), and silver (~0.05–0.1%). Circular economy approaches link three dimensions: maintaining system performance during use, enabling longer use through repair and reuse, and recovering materials at high value at the end of life.
Introducing circular business models in the solar value chain
UNIDO identifies several strategic intervention areas to embed circular economy principles across the solar lifecycle. These include design for circularity, high-performance energy systems (solar-as-a-service), enabling second life for components, strategic circular infrastructure, and the development of policies and standards. Transitioning to these models offers opportunities for countries to develop local industries linked to maintenance, refurbishment, and material recovery.
Design for circularity: engineering solar technologies for multiple lifecycles
Circular value chains begin at the design stage. Modular system architecture allows individual components to be replaced without dismantling entire installations. For PV systems, this includes designing mounting structures and junction boxes so modules can be serviced independently. In SWH systems, modularity allows pumps and heat exchangers to be replaced without dismantling collectors. Design-for-disassembly approaches prioritise reversible connections and mechanical fasteners instead of permanent adhesives, facilitating the recovery of high-purity silicon and silver.
High-performance energy systems: solar as a service
Circular business models increasingly emphasise long-term service delivery over upfront investment. Under solar-as-a-service models, providers retain responsibility for system operation and performance over extended contract periods, and users pay for delivered energy services. This shifts the commercial focus toward asset longevity and creates incentives to maximise reliability. Preventive maintenance, such as monitoring heat transfer fluids in SWH systems, can significantly extend lifetimes and delay the generation of waste streams.
Enabling second life: repurposing and requalification
Before entering recycling streams, circular strategies prioritise extending the useful life of components. Many modules retain significant functional capacity after removal and can be redeployed if performance is verified. Standardised requalification and testing protocols, such as electroluminescence imaging, are essential for enabling second-life markets. Traceability systems and digital product passports can store information on manufacturing dates and technical specifications to reduce uncertainty for buyers.
Strategic investment in regional circular infrastructure
Organised systems for collection, testing, and material recovery are required to prevent valuable components from being lost to informal handling. Regional collection and triage hubs can determine whether modules are suitable for continued use or should enter recycling. For equipment at the end of its functional life, specialised facilities are needed to recover critical materials like silver and high-purity silicon wafers. In SWH systems, infrastructure is required for the controlled dismantling of steel tanks and the safe collection of glycol-based heat transfer fluids.
Policy, standards and traceability: enabling circular solar markets
Circular solar value chains require supportive policy frameworks. Extended producer responsibility (EPR) frameworks assign manufacturers responsibility for managing equipment at the end of its life, creating incentives for circular design. The European Union’s WEEE Directive already includes PV modules, requiring that at least 85% of modules be collected and 80% of their mass prepared for reuse or recycling. Digital tracking systems and quality standards for refurbished components are also necessary to build confidence in secondary markets.
Enabling the transition to circular solar value chains
As deployment accelerates, the focus must shift toward creating the enabling conditions for circular practices to operate at scale. This requires international cooperation, shared technical standards, and investment to bridge gaps in infrastructure. For emerging economies, this transition creates opportunities to move beyond technology deployment toward broader participation in solar value chains, supporting diversified industrial activity and skilled employment.