Why a circular economy is so important to a sustainable electric power industry
Since the Industrial Revolution, economic activity around the globe has operated basically this way: Natural resources are extracted from the earth and then processed into goods that people purchase, use, and eventually throw away. It’s a model that has vastly improved the living conditions of billions of people across generations.
As the name implies, circular economies represent a paradigm shift from the make-take-dispose model that has predominated since the 18th century.
Instead of disposing of products in a landfill, circular economies embrace a full life-cycle approach that starts with how products are designed and the resources used to make them. This approach can include extracting usable materials from existing products or materials that would otherwise be wasted and feeding them back into manufacturing processes that ultimately result in entirely new products. Circular economies also generate significant economic opportunities and have the potential to promote environmental justice, social justice, and economic mobility, especially in communities that have suffered most from the linear model of economic activity.
Defining Circularity in the Electric Power Industry
Circular economy concepts are highly relevant to the electric power industry and often are related to existing sustainability goals and priorities. For example, reductions in greenhouse gas emissions and the transition to decarbonized electricity depend on a shift to greater use of renewables, energy storage, and other low-carbon technologies. The industry also procures and uses huge volumes of materials and equipment and manages what happens to them at the end of their useful life.
In 2021, EPRI formed the Circular Economies for Energy Technologies Interest Group to bring together utilities and other stakeholders to share information and experiences and identify new research initiatives to help companies incorporate circularity across their entire organization.
“We started with a definition of circularity which goes beyond recycling and reuse to thinking about a larger range of aspects through the whole life cycle, such as designing-for-circularity and life extension,” said Stephanie Shaw, an EPRI technical executive who leads the interest group. “We began with a focus on solar, wind, and battery technologies, but we also received many inquiries around equipment like transformers as well as coal combustion products, for which the industry is already participating in circularity activities.”
In the past, the European Union, the Organisation for Economic Cooperation and Development, and the Ellen MacArthur Foundation have all developed circular economy policy frameworks. EPRI reviewed these and other frameworks and interviewed a wide range of subject matter experts to produce the report A Framework for the Application of Global Circular Economy Principles for the Electric Power Industry.
Although there is plenty of overlap with other frameworks, EPRI researchers determined that a circular economy in the electric power industry has three fundamental components:
- Lowering the use of natural resources: This includes transitioning from extracting and burning coal and other fossil fuels to produce electricity and relying more on renewable generation sources like solar and wind. Bolstering energy efficiency and expanding end-use electrification (particularly when renewables provide electricity) also help to reduce the consumption of natural resources to supply society with the electricity it needs.
- Extending equipment life: Purchasing and installing new equipment is necessary less frequently when existing equipment operates reliably and effectively. The lifetime of all equipment used to produce and distribute electricity can be extended by manufacturing more durable products designed to be easily upgraded or repaired. Repair or refurbishment can sometimes add years to project lifetimes, delaying the need for end-of-life management.
- Eliminating resource loss: Even the most durable equipment eventually ends its useful life. A circular economy approach anticipates that end of life and establishes systems and processes to reuse, repurpose, and recycle as many materials, components, and byproducts as possible. For example, solar modules and wind turbines typically operate for 20 to 30 years. Lithium-ion battery modules are expected to last 10-20 years, depending on their application. At the end of their life, supply chains must be in place to collect and extract materials from what will be a large volume of equipment to manufacture new turbines and modules. NREL estimates the total value of recyclable materials in end-of-life solar modules will be $15 billion by 2050. These materials would be enough to manufacture about 2 billion new modules (approximately 630 GW capacity).
Research to Improve Circular Economy Efforts
In 2022, EPRI’s interest group hosted a series of webinars and conducted several technical assessments related to circular economy concepts in the electric power industry. “Last year was about gathering examples of how companies are implementing circular economy practices in their business processes, as well as clarifying definitions and metrics, so we have a better sense of what this means for the industry,” Shaw said. “That meant addressing topics like design-for-circularity, life extension, procurement choices, and decommissioning to make recycling and reusing equipment and materials practical. We’re raising awareness about a variety of concepts.”
One webinar topic was current options for recycling wind turbines; today’s primary option is reusing blade materials as input and fuel for producing Portland cement. Another webinar examined circularity potential in a broader range of energy technologies, including transmission and distribution equipment and nuclear generation equipment and materials.
The circularity potential of fuels was also considered. For example, coal combustion products have long been used to produce new products like wallboard and to replace Portland cement in concrete production. Emitted methane could be recovered for upgrade and use as renewable natural gas.
A webinar also examined the potential to refurbish and extend the life of transformers. Beyond any sustainability benefits, extending the life of transformers is currently a priority for many utilities because supply chain delays have led to multi-year waits to receive new equipment.
The EPRI report Novel Battery Module Designs to Enhance Sustainability delved into how design can help incentivize recycling and repurposing. For example, the global demand for EV batteries is expected to reach 1400 GWh annually by 2030. Lithium-ion batteries currently dominate the EV battery market. They are made with critical materials like cobalt, nickel, copper, graphite, and lithium, none of which is sourced in large quantities in the United States or Europe. Though the Inflation Reduction Act, passed in 2022, seeks to create domestic supply chains for lithium-ion batteries, more financially advantageous and efficient recycling and repurposing of used batteries could meet some of the demand for critical materials.
Currently, a lack of recycling facilities and the relatively small volume of EV batteries that have reached the end of their useful life limit the reuse of used batteries in similar applications (such as another vehicle) or repurposing them for use in other applications (such as stationary storage). But so too does battery module design, which today results in the need for a multi-step, labor-intensive process of disassembly and sorting before recycling. Recycling and repurposing are also hindered by the lack of standardization among EV and stationary battery packs and modules. Another impediment is the lack of performance and safety standards specifically associated with reused or repurposed batteries. Design that makes it faster and easier to sort and disassemble packs and modules could incentivize more circularity. One example is more comprehensive labeling of materials in a battery using color coding, bar codes, and radio frequency ID tags (RFIDs). Clear labeling allows for rapid identification of hazardous materials and more efficient collection and sorting of materials for recycling and repurposing.
A Circular Economy Pioneer
A significant benefit of joining EPRI’s Circular Economies for Clean Energy Technologies Interest Group is the opportunity to learn from other companies, including those that have been engaged in this area for a long time. For example, Enel Group placed circular economy practices at the heart of its strategy in 2015 and directly connected circularity and achieving decarbonization and economic objectives.
“We decided to make a strategic shift and look at it as an accelerator of our business,” said Peter Perrault, the director and head of circular economy at Enel North America. “Circular economy is critical for net zero; it’s where the rubber meets the road. If you have scope 3 emissions reduction goals, you have to think about circular economy.”
Over the past eight years, Enel has injected circular economy practices into all stages of its value chain, from design and engineering to procurement, construction, and O&M. Circularity is also a driver of the pace of and processes for decommissioning existing thermal power plants, which it owns or operates in various global regions, although not in North America. Circular practices also guide site selection and community engagement around new projects.
At this year’s World Economic Forum in Switzerland, Enel launched a circularity index for economic performance, which evaluates the raw materials and fuels needed to achieve a company’s revenue goals. At the same event, Enel announced a goal of reducing by half the resources used to achieve its revenue goals, with a target of 92 percent circularity by 2030.
Even though Enel has been pursuing circularity for nearly a decade, Perrault spends much of his time educating colleagues about what circular practices are and how they can be applied to their work inside Enel North America. “If you are a construction team going to the procurement group and someone talks about embodied carbon, they won’t know how that relates to their role because their job is to build a power plant,” Perrault said. “So that is the very first thing: education.”
But Perrault’s role also involves working with procurement to establish criteria for awarding contracts to ensure they align with the company’s circular economy goals. He collaborates with the legal, finance, and marketing departments as well. “We work to understand contractually what we are responsible for versus what equipment and services providers are responsible for because they are purchasing materials,” Perrault said. “And in marketing, we need to educate our customers about what we are doing and why. On any given day, I can work across many business lines and functional areas of the company.”
Participation in the EPRI interest group gives Enel a forum to share what it has learned about implementing circular economy practices in the utility industry. But it’s also beneficial in shaping Enel’s future direction. “Working with EPRI is helpful and beneficial because we are able to share some of our ideas and vision and position,” Perrault said. “But the research EPRI is doing also helps inform our future vision and supports the type of collaborative environment needed to create change.”
EPRI Technical Experts:
Cara Libby, Fiona Baker, Ben Gallagher, Mitch Rencheck, Stephanie Shaw, Gabriella Siegfriend