The costs of obsolescence in renewable energy

Solar and wind are highly effective forms of sustainable energy production and show immense promise moving forward. With the potential for energy independence, reduced overhead expenses, and tax benefits, it’s easy to see why a growing number of businesses are investing in renewable energy. One issue, however, that is concerning to many companies is the degradation and disposal of solar panels and wind turbine equipment.

For instance, experts say that six million tons of dead solar panels may be thrown out annually by 2050. Recycling is an option, but the price of recovered materials doesn’t always add up to the costs of processing a used panel. This makes obsolescence in renewable energy something that organizations need to address head-on.

What is obsolescence?

Obsolescence is outdated equipment or one that’s becoming less relevant over time. e. As materials degrade with the elements, hardware can lose its efficiency or stop functioning completely. Additionally, equipment may become incompatible with newer advancements or fail to meet updated regulations. As a result, owners will eventually need to replace their assets, leading to sunk costs and more waste.

Within the context of renewable energy, there are two main types of obsolescence to consider:

• Technical obsolescence is when equipment may still be working but is no longer valuable or wanted. This happens when a more recent version of the equipment comes out.
• Functional obsolescence is when equipment can’t handle operational needs anymore. This happens when it becomes outdated to the point that it’s no longer viable for use.

While technical and functional obsolescence are issues that can be minimized or overcome, they are factors that a business should consider before committing to investments in renewable energy.

Understanding obsolescence in renewable energy

Regardless of whether it’s technical or functional obsolescence, this issue is problematic for organizations and individuals investing in sustainable energy production. After all, it’s difficult to justify spending a lot of money on a solar or wind system if you’ll soon need to replace and dispose of it.

A real-life example comes from the UK and Ireland, where wind farms built in the mid-1990s are becoming obsolete because the utility-style 1.3MW turbines that they use are no longer commercially available and cannot easily be replaced. As you might imagine, this functional obsolescence is creating difficulty for those wind farms and has created both a financial and logistics headache.

Here are some other examples of issues that can arise when equipment becomes obsolete:

• Reduced efficiency of solar panel cells over time;
• System incompatibility where old solar panels or wind turbine equipment no longer matches a new system;
• Maintenance issues where it’s difficult to find compatible replacement parts for old equipment.

These possibilities represent obsolescence risks that organizations should account for when investing in renewable energy.

The consequences of obsolescence

Let’s look at some specific costs associated with obsolescence, which stem from older obsolete equipment or new equipment becoming obsolete in the future.

Installation and upgrade costs

In many cases, the initial costs of upgrading an older, obsolete system to a newer, energy-efficient system might cost more than upgrading a newer, less obsolete system. A brand new rooftop solar panel system for an older business building could come with upfront investment costs. However, businesses can recover much of these costs through rebates, tax incentives, and energy savings within the first few years. Maintenance and future upgrades could also contribute to additional costs, but that depends on various factors.

Future devaluation of investments

The value of renewable energy investments can decline over time. If, for example, future technology makes the current version of your renewable energy system outdated and unwanted, it could force you to replace it earlier than you’d like and greatly reduce the resale value.

In turn, you may not get a solid return on your investment. With technological innovations occurring so frequently, obsolescence risk is a real concern even if you invest in the latest, most cutting-edge technology. Therefore, funneling big money into innovations like these isn’t something organizations should walk blindly into.

Lack of standardization and integration

Another common issue many businesses encounter is a lack of standardization with renewable energy solutions. If the purchased solar panels or wind turbine equipment isn’t properly standardized, it’s likely to create compatibility and integration problems with existing infrastructure and future upgrades. Needless to say, this can create major complications and additional expenses.

E-waste burden

Once solar or wind turbine equipment is obsolete, it becomes what’s known as electronic or “e-waste,” which is the fastest-growing category of solid waste in the world. In this regard, renewable energy efforts can contribute to unsustainable practices if the full product lifecycle isn’t properly managed.

Second, obsolescence creates a financial burden, especially if it’s a large-scale renewable energy system. Whether it’s due to technical or functional obsolescence, disposing of solar or wind turbine equipment comes at a cost. The more equipment there is to dispose of, the greater the expense.