Decommissioning: The dark heart of renewable energy finance
Billions of dollars are pouring into the clean energy that is seen as crucial for the transition to net-zero emissions. But the financial sector is not taking sufficient account of what happens to such assets when they reach the end of their life. It may soon have to.
Capital Monitor
- Renewable energy investment is growing fast, but the similarly rapid build-up of non-recyclable waste is an environmentally and financially costly risk.
- Regulations will put more onus on banks and investors to take into account waste management and decommissioning in renewables financing plans.
- A small percentage of wind turbines, solar panels and batteries are now recycled but that figure is forecast to shoot up in the coming decades.
Eager to bolster their green credentials, banks and institutional investors are widely touting the growing capital they are pouring into renewable energy and decarbonisation projects. Some $750bn is forecast to go into the sector this year alone, according to the International Energy Agency.
But many in the financial sector are overlooking – or choosing to ignore – a key issue at the heart of this market: what happens to these assets at the end of their life.
Globally, 43 million tonnes of wind turbine blades and 60 to 78 million tonnes of photovoltaic solar panels must be decommissioned by 2050, according to respective studies by Cambridge University (see chart below) and the International Renewable Energy Agency. Meanwhile, the boom in electric vehicles is raising concerns about what will be done with the thousands of tonnes of spent batteries.
While 85% to 95% of wind turbines are recyclable – the structure is made largely of steel, copper and concrete – wind turbine blades are made from composite materials such as fibreglass, which have no established recycling route and are energy-intensive to make, according to a study by Cambridge University.
Almost all (90% to 100%) of wind turbine waste is still sent to landfill, according to Italian energy company Enel, or it is incinerated. Where solutions are being developed, they are not yet seen as mature enough, cost-competitive or widely available at industrial scale.
Source: University of Cambridge Institute for Manufacturing
Similarly, solar power production is essential for reducing emissions worldwide, but photovoltaic modules are expensive to recycle. In the US, only about 10% of panels are recycled, says a report by the Massachusetts Institute of Technology. And with up to 78 million tonnes of panels forecast to be decommissioned by 2050, more sustainable solutions than landfill need to be developed.
