End of Life Decommissioning and Recycling of Solar Panels in the United States. A Real Options Analysis

Abstract

It is estimated that hundreds of thousands of tons of solar panel waste are going to be produced yearly just in the United States from the year 2035 on, most of which could be recycled. This paper estimates the amount of scrap material to be produced from solar photovoltaic panels decommissioning and determines the optimal date and location to establish centralized or regional recycling centers to better deal with this issue on its early stages, between the years 2024 and 2042. Solar panel recycling could become a multi-billion USD industry over that time, however the main challenge today is to keep its overall costs down while allowing for the majority of panels to be recycled. Real Options Analysis is deployed to assess the optimal solution to face this challenge. This approach allows determining the optimal time and location to invest in recycling centers and the best strategy to undertake among different alternatives. The goal of this paper is to set a cornerstone for dealing with solar panel decommissioning and recycling at the end of their useful life in the United States, and we also determine a model that accounts for optimal location of the recycling facilities, which is a novel approach. This paper also offers a new application of the ROA modeling for estimating the optimal investment date for solar panel recycling plants from the investor perspective of the U.S. government in Washington D.C. Further applications of the model proposed in this work could allow for a similar analysis at an international level.

Keywords: Asset Deployment, Recycling, Real Options, Investments Under Uncertainty, Photo Voltaic Systems, Solar PV