Conventional wisdom today holds that the world will quadruple the number of solar panels in the world over the next decade. “And that’s not even taking into consideration the further impact of possible new regulations and incentives launched by the green-friendly Biden administration,” Atasu, Wassenhove, and Duran write in HBR.
But the volume of solar panel waste will destroy the economics of solar even with the subsidies, they say. “By 2035,” write the three economists, “discarded panels would outweigh new units sold by 2.56 times. In turn, this would catapult the LCOE (levelized cost of energy, a measure of the overall cost of an energy-producing asset over its lifetime) to four times the current projection.”
The solar industry, and even supposedly neutral energy agencies, grossly underestimated how much waste solar panels would produce. The HBR authors, all of whom are business school professors, looked at the economics from the point of view of the customer, and past trends, and calculated that customers would replace panels far sooner than every 30 years, as the industry assumes.
“If early replacements occur as predicted by our statistical model,” they write, solar panels “can produce 50 times more waste in just four years than [International Renewable Energy Agency] IRENA anticipates.”
The HBR authors found that the price of panels, the amount solar panel owners are paid by the local electric company, and sunlight-to-electricity efficiency determined how quickly people replaced their panels.