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Is solar module recycling really as attractive as it looks?

Since the first batch of modern module manufacturers were put into production around 2002, China has ranked first in the world in terms of solar module output and solar installed capacity for many consecutive years.

Defective solar modules
Defective solar modules

Accompanied by this, the lifespan of previously installed solar modules continues to expire, and the fate of a large number of waste and retired solar modules has become a problem.

In early March of this year, China Photovoltaic Industry Association (CPIA) issued the “Notice on Preparing to Establish and Recruiting Members of the Solar Module Recycling Working Group of the CPIA“, making the issue of solar module recycling a focus of attention in the industry.

Among the most mainstream crystalline silicon solar modules in the market (accounting for 85% to 90% of the total installed capacity), glass accounts for about 70% of the total weight, 18% of aluminum frames, 4% of solar cells, and 1% of metals such as lead, silver, and gallium.

If these wastes are disposed like conventional solid wastes, they will not only occupy a large amount of land and cause environmental pollution, but waste in semiconductor silicon, precious metals, glass and other materials. On the contrary, if recycled, can produce considerable economic and ecological benefits.

Wu Cuigu, Deputy Secretary General of the Solar Recycling Center of the China Green Supply Chain Alliance, once proposed at an industry conference that by 2030, China’s solar module waste volume will reach around 18 GW, with a waste volume of about 1.4 million tons and an output value of about RMB 13 billion. By 2040, the cumulative waste of solar modules will reach 253 GW, about 20 million tons, and the output value will reach RMB 150 billion.

However, industry practitioners and track investors have expressed cautious optimism about this emerging market, which is just starting and has a market space of hundreds of billions.

In their view, domestic solar recycling faces problems such as a lack of access barriers and imperfect industry regulations, which may lead to a mixed bag of market participants, and even a situation of “bad currency driving out good currency”. At least so far, solar module recycling is “not a good business, nor can it be a big business”.

In 2011, China’s newly added solar installed capacity exceeded GW-level for the first time (up to 2.13 GW). Based on the 20-year service life of modules, China will only begin to have a large-scale module scrap volume by 2030. However, in fact, the scale of domestic solar module retirement is larger than expected and calculated, and the retirement time point is also earlier.

Part of this comes from early retirement of solar modules. Due to the immature technology and uneven output and quality of solar power stations constructed in China in the early stage, many solar modules have been eliminated in advance before reaching the retirement period. Some early subsidized power stations also replace efficient modules in advance due to their high profitability. The other part comes from scrap and defective products from solar module manufacturers.

Zhang Jie, founder of a solar module recycling enterprise in Qingdao, said that the majority of domestic solar recycling enterprises currently source goods from damaged products and waste materials from solar module manufacturers. Waste solar modules are not completely disassembled for disposal, and a small number of solar modules that can still work properly will be exported to other countries for cascade utilization. Therefore, the solar module recycling market has grown faster and earlier than expected, and a number of domestic “early birds” have already entered the market.

Currently, some preliminary industrial agglomeration has been formed in China around the recycling and utilization of retired and defective solar modules. “The packaging and domestic and international trade enterprises of solar modules are concentrated in Suzhou; the processing enterprises of solar backsheets and adhesive films are gathered in Yancheng and Suqian; processors of substandard wafers, degraded wafers, and cell scraps are concentrated in Zhejiang and Jiangxi,” Zhang Jie added.

Local governments have also taken action. In April 2022, Xiuzhou City, Zhejiang Province introduced the China Green Supply Chain Alliance Solar Recycling Industry Development Cooperation Center to the local area, and planned to introduce relevant solar recycling projects at home and abroad to build a solar recycling industry chain in the local area.

Driven by the demand for processing factory waste, domestic solar manufacturing enterprises have also been involved in the research and layout of solar module recycling earlier. For example, Jinko Solar has stated that since 2019, it has established and commissioned a recycling demonstration line, using chemical based module environmental protection treatment technology, and its silver, copper, and silicon recovery rates can reach over 95%.

Yingli Solar once stated in an interview that it has mastered the core technology of environmental protection and recycling of modules, and has established the first demonstration line for environmental protection and recycling of crystalline silicon modules based on physical methods in China. The lithium battery recycling company GEM is also paying attention to the recycling and utilization of solar modules, which has initiated relevant technical research and will build a recycling factory for recycling solar modules when appropriate and of economic value.

Currently, there are three mainstream formal methods for recycling and disposal of solar modules in the market, namely, thermal treatment, chemical solvent method, and physical mechanical method (referring to the process of recovering metal from modules through crushing, metal stripping, hydrometallurgical separation, and other steps).

However, regardless of which type, the profit from recycling solar modules is difficult to fully cover the costs related to transportation, disassembly and recycling, environmental protection, and so on. Especially when the scale of retired solar modules is limited, it is difficult for recovery and treatment plants to exert scale effects. The value of raw materials such as aluminum and silver that can be extracted from a retired solar module is RMB 56.53, but the recovery cost of each module is approximately RMB 75.

In the actual recycling and disposal process, Zhang Jie stated, “Some small workshops only remove the frames of solar modules and sell aluminum alloys, while the remaining parts are stacked, landfilled, or burned, hardly bearing environmental costs.” Therefore, small workshops are often able to provide higher recycling prices, creating a terrible competitive situation.

In addition to the low income and high cost caused by the current development stage, the business model of solar module recycling itself also has some chronic problems.

Due to transportation compliance and transportation cost factors, the layout of solar module recycling plants is regional and can only radiate waste modules within a certain area. To expand on a large scale, companies must constantly build new factories, and the profitability of each recycling factory will vary depending on the amount of radioactive supplies.

“This will limit the growth scale of enterprises to a certain extent, unlike the manufacturing process, which is still biased towards standardized products, and it is relatively easy to grow larger,” said Liu Yada, investment director of asset management investment services provider Zero2IPO.

Currently, the centralized solar power stations, which account for two-thirds of the total installed capacity in China, are mainly owned by dozens or hundreds of central state-owned enterprises and large private enterprise investors. It is not easy for third-party solar module recycling enterprises to establish cooperative relationships with these large enterprises. Liu Yada believes that relevant partners of large enterprises, such as module factories, power station operation and maintenance parties, or owners, who are directly responsible for recycling, will have more resource advantages.

Recycling distributed solar power stations, which account for about one-third of the current installed capacity, is even more difficult. These solar modules are distributed on the roofs of tens of millions of buildings in dozens of provinces and cities, and the economy of decentralized recycling and transportation is disappointing

In addition, fluctuations in the value of raw materials after recycling solar modules can also affect the yield. For example, the current domestic silicon material price has dropped by 30% from the peak of RMB 320,000 yuan/ton last year. In the field of HJT cells, researchers are now exploring to replace silver paste with electroplated copper, which may further reduce the value of future module recycling.

“Silicon is mainly a manufacturing attribute, while lithium has a resource attribute, which leads to different recycling businesses between the two.”. Liu Yada said. Referring to mature operating experience in foreign markets, it is difficult to rely solely on the value of recycling resources in solar modules, and module companies will also pay a certain amount of waste treatment fees to the recycling companies to ensure the balance of revenue and expenditure of the recycling companies.

From a long-term perspective, if domestic policy support and standard formulation for the recycling of waste solar modules can be improved, supplemented by industry regulation, the solar module recycling industry may explore a mature business model. But for now, the business of recycling solar modules is not attractive as it looks.

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