Think before trashing: The second-hand solar market is booming!
Below is an article From EnergyBin, we thought this had a very interesting take on some of the up-cycling opportunities for solar installers and wanted to share.
By Melissa Ann Schmidt- EnergyBin
Over the next five years, a growing number of U.S. solar owners and operators will choose to repower their systems. Total supply of decommissioned material will increase, but not all equipment is bound for recycling. Brokers engaged in the trade of used goods, particularly second-hand modules, are seeing more quality equipment uninstalled years prior to their end-of-life.
One online exchange has seen second-hand modules for resale as young as two years old. Demand for such material is booming, as resellers broker deals in the megawatt levels. Installers can also play a role in the circular economy by redirecting energy-producing decommissioned modules to the secondary market.
Repowering and decommissions increase second-hand supply The repowering trend is expected to spike this decade in the United States. The primary reason for repowering has to do with aging components. Wood Mackenzie expects 800 GWDC will be repowered between 2021 and 2025 due to inverters reaching the end of their 10-year lifespan. Credit: Duke Energy
Other reasons include upgrading technology and solar policy. Falling prices for bifacial and high-efficiency modules along with next generation microinverters and batteries are accelerating repowering. Additionally, renewable portfolio standard (RPS) mandates may lead to repowering sooner than anticipated. The National Conference of State Legislatures reports that roughly half of the country’s growth in renewable energy generation since the early 2000s is related to RPS requirements.
Beyond repowering, the industry is seeing a number of uninstalls taking place prior to system end-of-life. Sometimes a property with a rooftop or ground-mount is sold, and the new owner dismantles the array. Or, a building with an existing array is demolished. Other times, an array is partially destroyed by a natural disaster, but instead of replacing just the damaged components, the insurance company decides to replace all components.
“We’ve also heard from field operators about cases where panels are installed but never connected because deals fell through for some reason,” stated Renee Kuehl, sales and marketing director at EnergyBin, an online B2B exchange where PV professionals trade new and used wholesale solar equipment.
On EnergyBin’s trading platform, a growing percentage of second-hand modules are appearing for resale, some barely two years old. Kuehl noted it’s difficult to put a number on the total supply, but traded quantities tend to be in the megawatt range. She attributes the supply to non-residential and utility-scale repowering and decommissioning. “Within days after second-hand modules for sale are listed on our exchange, they tend to be purchased, which gives insight into the high demand for quality used modules,” she said. “If there wasn’t a strong demand, we wouldn’t see this material moving.”
What’s driving demand for second-hand modules? In the solar industry, resale of used panels is just beginning to take off. Some solar equipment brokers have realized the economic opportunity of remarketing decommissioned solar panels. Credit: PetersenDean
“Non-shattered panels always have someone who’s willing to buy them and put them back into use somewhere in the world,” explained Jay Granat, owner of Jay’s Energy Equipment, a wholesale solar brokerage firm. “If it’s a working solar panel, there’s always a buyer.” In his 10 years of experience working in the secondary solar market, he has never seen such high demand for used panels than in 2020, and he expects demand to increase through the decade.
A buyer’s market for second-hand panels spans throughout the Middle East, Africa, Latin America and the Caribbean. Afghanistan is currently the top market followed by Pakistan. Other major markets include Djibouti, Somalia and Ethiopia in Africa. Buyers in these areas aren’t so much concerned about purchasing modules with no warranty because they have enough sun radiation (two-times more than temperate climates) that affords them ample energy production from used panels.
“Any panel that is 10 years old or newer and ranges from 100 W to 350+ W has resale value,” Granat noted. “Buyers from developing nations like doing business with the U.S. because sellers tend to be honest and straight-forward. Plus, the module quality is usually in excellent condition and newer technology.”
Increased demand is driven by three economic factors.
First, consumers are concerned about grid reliability and are looking for ways to be self-sufficient, as is the case in regions prone to wildfires, hurricanes and other natural disasters and where grid infrastructure is vulnerable.
Second, international and national scares, like coronavirus, create spikes in demand for off-grid energy preparedness. Third, consumers with tight budgets are considering affordable alternatives.
As these drivers imply, the bulk of used panels are sold for off-grid solutions. They are installed for home energy, solar well-pumps, Wi-Fi sites, solar irrigation, battery charging and other uses. According to the World Bank, the off-grid market is a $1.75 billion sector. Additionally, second-hand modules are deployed as replacement parts, installed in small power grids/microgrids and purchased by price-conscious homeowners, businesses and non-profit organizations that want to generate renewable energy.
Buyer considerations Several considerations are taken into account when buyers are faced with the option to purchase second-hand modules. Such factors include age and efficiency level, price and condition.
According to NREL, the average degradation rate of a solar panel is less than 1% per year. This rate measures how efficiently sunlight is converted into power. Most manufacturers guarantee their panels will produce power at 80% or higher for the first 20 years. Credit: Kent State University
Second-hand module buyers rely on this rate as well to calculate the number of panels needed to achieve their desired energy output. Used panels that are between one and nine years of age still operate at high-efficiency rates but are cheaper in price. The average price ranges from 50-75% less than new modules. EnergyBin tends to see second-hand modules for resale starting at $0.10/W. The price depends on the age and efficiency level.
“You may think that non-transferable warranties may deter buyers from selecting used panels. But the lower price is more attractive for many buyers than a manufacturer’s warranty,” explained Kuehl.
A number of equipment resellers test used panels to guarantee product safety and verify amp and voltage performance levels. They reposition the product for sale in the secondary market, which may come with a limited-term service warranty. Some sellers offer a money-back guarantee based on a verified energy producing level.
Laid Sahraoui, owner of R3 Tech Limited, has also seen demand for second-hand modules increase in recent years. He commonly gets calls from buyers asking for 25 containers per order. Recently, he dealt with a large distributor in Texas on an acquisition of 25 MW. They were in “like new” condition but were decommissioned due to an insurance claim.
“We exported the panels to Karachi and then to northern Afghanistan. They were delivered to warehouses and sold in smaller quantities to villages and farmers,” he said. “Consumers in these markets have a need for sustainable energy. They are especially looking for ways to access energy and water to support agriculture and livestock.”
R3 Tech follows a strict practice to ensure decommissioned panels are properly sorted for resale or recycling. First, panels with broken glass are set aside for recycling. Those without broken glass are inspected for backsheet conditions. If the backsheet is falling apart, the panel is recycled because defective backsheets are fire hazards. The remaining panels undergo testing and then remarketed in the secondary market.
Working with a solar equipment broker Solar installers faced with decommissioning projects can partner with a solar equipment broker that has experience with second-hand equipment to properly handle used material. Brokers are connected to buyers throughout the world. They know what’s moving, what has resale value and how to price used components. They are well-versed in export/import requirements. They can also recommend what equipment is better suited for recycling. “As long as the panel still has at least 10 to 12 years of energy production and is functional, it has resale value. But rubbish goods are never acceptable for resale,” advised Sahraoui.
When brokers assess decommissioned equipment for resale value, they do everything from sorting to packing out for delivery to their warehouses and recycling facilities. Oftentimes, brokers will offer a cash buyout for the entire lot. They seek to ensure material is properly redirected to resale and recycling channels.
Both Sahraoui and Granat are committed to playing a role in the solar industry’s circular economy and see the secondary market as one way to reduce unnecessary waste. In other words, the resale of second-hand material prevents energy-producing modules from prematurely ending up in waste streams.
“What we really want field technicians to remember is that any panel that is not shattered or damaged is usable by someone somewhere in the world,” said Granat.