How can we create circular opportunities for energy access?

Exploring opportunities for integrating the circular economy in energy access agendas.

Jamie Cross, Elif Gül Demir, Owen Grafham and Patrick Schröder, 20 May 2022

NGO developed solar panels in the Kutupalong camp for Rohingya refugees in Cox's Bazar, Bangladesh on 18 October 2018. Photo: Kazi Salahuddin Razu/NurPhoto/Getty Images.

Developing countries are beginning to embrace the concept of the circular economy as a means of moving beyond the unsustainable developmental trajectories of countries in the Global North. But what does this mean for bringing about energy access? What opportunities are there for integrating the circular economy in national energy access agendas? And how can energy access initiatives create circular opportunities rather than e-waste challenges?

Policy focus

Delegates from around the world gathered in Kigali in May 2022 for the Sustainable Energy for All Forum (SEforAll). The forum sought to drive faster action on SDG7 – delivering access to affordable, reliable, sustainable and modern energy for all by 2030 – by bringing together leaders from across government, business, civil society, the private sector and philanthropy.

Globally, around 750 million people are without access to electricity, and around 2.5 billion people are without access to clean fuels and technologies for cooking. Therefore, achieving full access to electricity by 2030 will require connecting almost 100 million people every year – 25 per cent of which will gain access through standalone systems – while achieving full access to clean cooking will require nothing short of a revolution in terms of access to cooking solutions.

The challenge is stark but many of the solutions have already been identified. Decentralized mini-grids and solar home systems, for example, are increasingly providing power to many of those who have been hardest for the traditional grid to reach. In addition, for cooking, more efficient cookstoves, cleaner fuels and electric cooking all offer the potential to substantially scale back on dangerous and polluting fumes emitted during cooking with wood fuel.

The end-of-life challenges associated with the rapid deployment of solar and battery technologies are increasingly well-known. Whether this amounts to examining the likely scale of solar panel waste by 2050, or the likely material intensity of off-shore wind, or the scale of battery demand needed to reach an SDG7 compliant future, the material consumption that will be linked to a more renewable energy future is becoming increasingly known. However, less widely discussed are the end-of-life challenges associated with bringing about energy transitions in the Global South.

The energy revolution in Africa will be led by decentralized renewable energy which means recognizing a different set of opportunities and challenges. Firstly, the scale is different. Successfully addressing the end-of-life challenges associated with decentralized energy technologies means influencing the design, repair, re-use and recycling challenges associated with thousands of companies and suppliers, millions of individual households and managing the use of diverse materials including metals, plastics and complex electronics.

Secondly, thinking about the circular economy in relation to customers of decentralized energy demands that market actors ensure people are served adequately. Specifically, a world in which repair and re-use are prioritized requires that small-scale companies and distributors make supply chains work backwards as well as forwards, for example, by picking up a product to service it.

Finally, tight household budgets and continued pressures on affordability mean that decentralized energy suppliers and producers face a trade-off between successfully embedding sustainability within products or focusing purely on cost which is often the metric of primary concern for those at the bottom of the pyramid. Can companies, suppliers and distributors incorporate additional costs in their business models in a way that also keeps them competitive with their target markets?

Opportunities and challenges

Embedding circularity in renewable energy systems and strategies for energy access are essential if we are to ensure that new solutions do not generate new problems. The challenges are upstream in the field of product design as much as downstream in the field of waste management. The design of energy technologies determines the performance during use, options for repair, maintenance, and end-of-life issues including the potential for recovery and disposal of related secondary materials. Current approaches to the design of cookstoves, solar lanterns or solar home systems, for example, continue to emphasize affordability over repairability thereby minimizing opportunities to extend the lifetimes of equipment and its components or even to keep materials in circulation.

Despite this, there is a strong economic rationale for designing energy systems for material circularity. The increased appetite for renewable energy technologies around the world is driving up demand for many minerals and metals, potentially leading to increasing prices and supply concerns. Designing for circularity – and enabling repair, re-use, lifetime extension, recovery and recycling in products and materials – may ultimately be in the best interests of ‘energy access industries’. For example, the Global Battery Alliance has suggested that the high-quality repurposing of lithium-ion batteries could lower battery prices by an estimated 30 per cent, creating livelihoods and upskilling opportunities for the populations of many low-income countries.

Meanwhile, off-grid solar is being financed through a wide range of established financial instruments, from grants, venture debt, securitization, convertible notes, high-risk mezzanine debt and development impact bonds, to more innovative methods, such as reward and equity-based crowdfunding and peer-to-peer lending for small-scale systems. But few, if any, of these financing mechanisms address end-of-life issues for off-grid solar energy products.

In 2020, 68 per cent of investment in off-grid solar went to just 10 companies. This startling statistic represents both an opportunity and a challenge. Firstly, it is a challenge because it clearly shows that investment has yet to emerge at the scale or depth compatible with the change needed. Secondly, it is an opportunity because simple and small changes in investor behaviour could prompt decisive changes in company behaviour.

Over the past two years, off-grid solar companies and their industry associations, for example, have rightly been vocal in calling for increased financial, political and legislative support in the face of COVID-19 related challenges. Indeed, linking improved financing to improved end-of-life practices would be one way to ensure we continue to build back better and set up a more sustainable base for the global energy transition.

Meanwhile, the largest institutional customers for decentralized energy technologies – including governments and international agencies – have a major role to play by introducing end-of-life criteria into their procurement policies. In 2020, for example, 12.5 per cent of global sales of quality assured solar lamps that meet international consumer product standards were purchased by one international humanitarian agency – equivalent to cash sales for this product category across the whole of West Africa. At this scale, the introduction of circular economy principles into framework agreements with manufacturers and technical specifications for specific products represents a major lever for change across the industry.

Another way to build back better would be to encourage local manufacturing and assembly. As cookstove company, BURN Manufacturing, discovered when they set up a dedicated facility in Kenya in 2013, localizing production brings down transportation costs, shortens working capital cycles and enables product designs to be rapidly iterated in response to feedback from consumers.

At the same time, embedding energy access in a circular economy demands not only a focus on individual products but also an understanding that we must change energy ecosystems. For example, a wholesale revolution of cooking across the African continent implies huge volumes of cookstoves and enormous levels of new infrastructure to supply different fuels according to need, strategy and context. Focusing on bolstering the productive use of energy – and transforming agricultural productivity – also implies a raft of new equipment and products each of which come with opportunities and challenges for maximizing the efficiency of future resource use. But, a multitude of companies, such as Ener-grow,
and development projects, such as Power for All’s Utilities 2.0 approach, have prioritized setting up an enabling environment for energy supply which encompasses products, asset finance and capacity-building.

In this type of environment, product failure also becomes a collective failure and so incentives are aligned to repair, replace and re-use products when they no longer work. Indeed, even when such companies and development partners are lacking, relationships between suppliers and last mile distributors could offer opportunities for both playing an increased role in taking e-waste back from customers.

Existing interventions

While the opportunities are significant, and the need is great, the Global South is starting from a limited base of existing interventions. Rwanda – host of the SEforAll conference – is well-positioned to demonstrate leadership in how to close Africa’s energy access loop. Indeed, the Rwandan government started to address e-waste and battery waste issues more than 10 years ago and now has regulation and mandatory enforcement of standards relating to lithium-ion battery recycling. It also requires end-of-life management plans as a prerequisite of financing from the Development Bank of Rwanda and other major development actors. The government also set up an e-waste dismantling facility which has accumulated 11 metric tonnes of lithium-ion batteries and a stockpile of non-reusable batteries although work is continuing to assess how best both can be utilized to extract value.

For example, the key to addressing the end-of-life challenge of solar photovoltaics (PV) are multi-stakeholder partnerships to bring about technical, logistical and business solutions. Experiences from Ghana’s PV waste management, for example, show that public-private partnerships and a well-designed framework are crucial to defining the specific roles of different stakeholders and building networks for value creation from repair, lifetime extension and recycling practices.

Policy frameworks also have a role to play. African countries are importers of PV panels and the recycling costs are, in practice, being assumed by the importing countries. Viable options for recycling and creating markets for recovered secondary materials off end-of-life PV panels would be the establishment of policies to extend producer responsibility for the costs of recycling and disposal of hazardous materials after decommissioning such as is the case in the EU. Extended Producer Responsibility (EPR) is already being applied to address e-waste management issues, however, the application of EPR to off-grid energy products is only in the very early stages.

Certain circular solutions for solar in countries of the Global North could be applied in developing countries and cover small-scale energy access technologies, such as PV CYCLE, a public-private partnership initiated in 2007 by stakeholders of the solar PV industry and European governments. It originated as a voluntary initiative in Europe for recovery and recycling and has, to date, prevented about 30,000 tonnes of solar PV waste going to landfill.

Furthermore, Product-Service Systems (PSS), which provide access to a product’s service for a period of time, are widely seen as a key circular economic model to stimulate resource efficiency and reduce waste generation. This can be applied to solar energy technologies to reduce the volume of discarded products entering the waste stream. For example, funded through Europe’s Horizon 2020, the large-scale pilot experimentation programme, CIRCUSOL, developed circular solar product management with ‘second-life’ paths for residential, commercial and utility end users.

Humanitarian sector as a first mover

There is significant potential for the humanitarian sector to take the lead in setting a forward-looking agenda for circularity in the energy access sector. Currently, there are more than 102 million people forcibly displaced from their homes around the world and these people are among the most likely to miss out on the global goal for universal access to energy by 2030. But energy access has rapidly risen up the agenda of humanitarian and developmental groups around the world as attention has been drawn to the necessity of integrating energy into an approach that prioritizes self-reliance.

Furthermore, although refugee camps around the world have been frequent sites for the distribution of solar lanterns, solar home systems, cookstoves and various other energy-related equipment, it has so far been uncommon for energy products and systems to be managed appropriately during their use or after their expected lifetime. This is not the fault of displaced people, but rather because refugees are often provided with products without instructions on how to use them or because products are often of low quality and because there is often significant limitations in the availability of spare parts and tools for repair.

However, humanitarian organizations, and their partners, are introducing a range of experiments which hold the potential for unlocking new models of cooperation. In Rhino Camp Refugee Settlement in Northern Uganda, for example, a pilot for developing a business model for e-waste management is being developed through the GIZ ESDS programme.

Similarly, in Bidi Bidi refugee camp in Uganda, the International Organization for Migration (IOM) is working with TotalEnergies, BRIGHT products, Solvoz and Aceleron to holistically address the waste value chain around electronic products, from manufacture and distribution, to repair, recovery, recycling and procurement thereby reducing the potential for lead pollution, generating income opportunities and extending usage.

While acknowledging the fluid nature of refugee markets, these interventions offer the potential to trial new solutions in the context of a relatively bounded geographical area and population, a relatively accessible and traceable market system and an ‘anchor client’ – the major off-taker and payee of electricity supply – responsible for doing no harm. Success in such an environment will not automatically translate to wider successes outside of the refugee setting but may demonstrate the inherent soundness of the concept while helping to gauge the relative costs and benefits associated with a given intervention which should help in scaling appropriate solutions.

Next steps

Progress towards global energy access goals, enshrined in SDG7, that fails to address what happens to technology at the end-of-life, creates another future energy challenge. Yet there is enormous opportunity in effectively embedding decentralized energy in the circular economy. The Kigali Sustainable Energy for All Forum, for example, provides an opportunity for organizations, governments, industry representatives and wider stakeholders to reflect on what these circular opportunities can do to accelerate a just energy transition across Africa. But, there are three short-term opportunities for action that can better connect the SEforALL agenda to the circular economy.

First, SEforALL stakeholders can support the development of supply-chain-wide studies of circularity across specific product lines and energy technologies . The Efficiency for Access Coalition, for example, has mapped the material challenges and opportunities in the off-grid solar industry, highlighting pathways to increasing repairability for small scale pico solar devices. However, as yet, there are no equivalent studies for larger solar home systems, cookstoves, solar-powered water or refrigeration systems or for other adjacent energy access technologies.

Second, SEforALL stakeholders can identify and use the market levers – from procurement policies, product standards, consumer warranties and results-based financing – that will drive the growth of a circular economy for decentralized energy. What happens, for example, when you tie results-based financing to circular economy goals? Conversations with, and between, SEforALL donors and investors can drive a proactive engagement with standard associations, industry bodies and the manufacturing companies they represent as well as the largest institutional purchasers.

Updating the minimum quality assurance standards for energy technologies to better reflect changing expectations for sustainability in the composition of products, and in the provisions for end-of-life that are built into technologies ‘by design’, can be a catalyst for circular innovation in the energy access arena. Indeed, there is an opportunity for major institutional buyers, including UN agencies, humanitarian organizations and governments, to develop new guidelines for circular procurement and to use them.

Finally, SEforALL stakeholders can interact more directly with existing circular economy businesses and policy-makers such as the African Circular Economy Alliance (ACEA). Working collaboratively to expand international and bilateral commitments to support national or local economy ecosystems – for example around repair and repurposing – will be beneficial for energy access objectives and wider sustainability goals.

Governments in donor countries, as well as in recipient countries, can do more to explore policy options for extended producer responsibility and to promote the growth of circular businesses. Several initiatives are currently in the planning or implementation phases across the humanitarian SEforALL sector which incorporate the repair of solar products into workplans. These projects are producing valuable data that can help inform the sector. Supporting and learning from these projects will help to answer questions of how to best supply spare parts, how to promote local ecosystems for circular businesses and who should take responsibility for driving change.