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Asset value recovery: enabling utilities to transition from a linear to a closed loop circular economy

Bragadesh Damodaran
12 Sep 2022

There is immense value in aging energy and utilities infrastructure for the firms that manage it intelligently. The key lies in circular principles.

Circular economy is a concept of using assets and resources responsibly, aiming to minimize the use and wastage of resources during production, and applying the principles of reuse, refurbish, repair and recycle to extend the life of assets. Circular economy is pivotal to achieving a more sustainable, net-zero carbon future. A report from the Capgemini Research Institute (CRI), Circular Economy for a Sustainable Future, states that close to half (49%) of consumers across sectors believe that organizations are not doing enough to reduce, reuse, and recycle waste. The report recommends that organizations embrace circular design principles by focusing on waste-reduction opportunities to eliminate waste by design.

The renewable energy sector highlights the relevance of circular economy. Renewables will remain the fastest-growing energy segment due to technology-enabled cost reductions and climate policies. According to IEA, Solar PV is on course to account for 60% of global renewable power growth in 2022, followed by wind and hydropower. The global additions of solar PV capacity are on course to break new records in both 2022 and 2023, with the annual market reaching 200GW in 2023. However, these trends in the renewable sector can only be sustainable if circular principles are adopted to manage the end-to-end asset lifecycle.

Solar panels have a lifespan of 20-25 years, and the problem of disposal is not a short-term concern; however, in a decade, solar waste comprising discarded PV panels and batteries will become a common form of landfill waste.  According to an EPRI report, the wind industry could send approximately 4 million tons of wind turbine blades to U.S. landfills. According to IEA, the amount of spent EV batteries reaching the end of their first life is expected to surge after 2030, at a time when demand for minerals is set to grow rapidly.

A circular approach addresses these challenges

An IRENA report highlights that recycling or repurposing solar PV panels can unlock an estimated stock of 78 million tons of raw materials and other valuable components globally by 2050. Transformation from a ‘take-use-waste’ linear economy to a ‘recover-reuse-recycle’ circular economy where waste is reduced, and assets and materials are reused, recycled, and refurbished, is the most promising strategy to increase asset life expectancy.

Industries have been increasing efforts to achieve sustainability and meet net-zero goals by focusing on a shift from a linear to a circular economy across the value chain. This shift entails new strategies and new technologies.  For many energy transition metals, such as lithium and rare earth elements, recycling practices are not well established. Emerging waste streams from clean energy sources (e.g., storage, PV systems and wind turbines) can change this picture. Circular economy objectives include, minimizing the use of resources, closing resource loops, and improving durability and lifetimes of assets.

Manage the data, manage the asset

One of the main challenges in implementing a process to reassess retired or due-to-be-retired assets for maximum value recovery is the lack of a proper information flow. Suitable information and dedicated technology support are fundamental resources for sustainable organizations, providing support to asset operators in decision-making processes. Digital transformation and data technologies are considered key enablers of the circular economy and should be leveraged to address the challenges that industries face in adopting circularity in managing asset lifecycle from cradle to grave.

A circular economy approach maximizes end-of-life value

A six-step process can be adopted to address the challenges faced by utilities in assessing assets that have been decommissioned and evaluating the potential for value recovery.

The asset value recovery process aims to fill in the information gap that utilities face with evaluating assets that have been decommissioned or retired. Utilities gain a complete view of the asset history by looking up asset details from the existing asset management systems using asset attributes like company number, asset type and equipment details. Some utilities add radio frequency identification (RFID) tags to the equipment before retiring them and this information can be integrated to existing enterprise asset management (EAM) systems.  Computer vision can be used to automate the assessment of the asset’s physical condition. The value and resource recovery methodologies – whether to repair, refurbish or reuse for parts – are considered and evaluated keeping in mind environmental, technical, business, and regulatory impact. This enables utilities to do a cost-benefit analysis and take data-driven decisions to recover maximum value from assets. The process creates a foundation to re-examine the end-of-life asset evaluation process, develop solutions to automate the potential value assessment and strategize asset value recovery.

Asset value recovery aids utilities in recovering potential value from retired assets

The accelerating growth of the renewable industry brings with it an opportunity to place circular approaches and methodologies at the center of this transition to address the asset end-of-life challenges. Circularity benefits utilities in capital recovery by extending the life of assets through potential reuse or repurposing of the asset or its components. This approach is also beneficial to the environment, as other uses of retired assets can be explored, thus preventing the assets ending up in the scrap yard or land fill before extracting their maximum possible value.

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