Recycling – when energy infrastructure becomes hazardous

Around 1.7 million tonnes of solar panels are expected to be discarded by 2030, and up to 60 million tonnes by 2050 globally.¹ In the EU alone, 25000 tonnes of wind generator rotor blades will reach end-of-life by 2025. Neither the solar panels nor the rotor blades that will come to end-of-life in the next two decades were designed with recycling or disposal in mind. The potential for accidents involving hazardous materials or others will become an issue for insurers in the years ahead.²

The responsibility for the safe disposal of these infrastructures will lie across value chains from the original producers, to the operators and to the agents in charge of repair and disposal. Therefore it may be difficult to apportion the liabilities resulting from incidents that cause property damage, bodily injury or financial loss. This ambiguity will become important for insurance claims.

The EU and other countries/regions are now moving in the direction of a circular economy, with a requirement that products be designed for sustainable disposal.³ However, solar panels and rotor blades have previously been designed for performance. This has meant use of composite materials technologies, whereby components are glued, baked or via other means closely connected for best performance.⁴ The problem is that it is very difficult to take components apart at end-of-life.⁵

Technologies to recycle renewable energy infrastructure are still under development. This creates a disconnect between the push for renewable energy for climate reasons and compliance with the demands of a circular economy. How regulators will resolve this is not clear.

Disassembling the physical frames for solar panels and towers for windmills for recycling is relatively straightforward. But the photovoltaic cells within the solar panels and the rotor blades are amalgams of many materials. There are currently two main processes to take these apart: pyrometallurgy⁶ and hydrometallurgy.⁷ Pyrometallurgy requires the component to be heated to high temperatures with little or no oxygen present. Hydrometallurgy involves leaching the components with solvents, such as strong acids or other hazardous compounds. Both processes carry risks. High temperatures can trigger fires and potentially explosions, leading to property and casualty losses. Hazardous substances can injure and kill people, and damage physical assets. The result could include property, casualty and environmental liability losses.

Inadequate disposal of panels or blades can contaminate the soil, water and air, which in turn can trigger claims for bodily injury, property, environmental and/or financial losses. And where waste is exported and inadequately disposed of, this could violate future regulations like the EU Corporate Sustainability Directive.⁸ If such a violation becomes public, the share price of listed companies involved could come under pressure. This may spark D&O claims.

When insurers look to offer coverage to corporates, they should investigate the firms’ risk management practices. Technologies have developed fast in recent years⁹ and the waste and other products that need to be recycled may present different levels of hazard risk. Insurers should consider that current recycling capacity and capabilities do not match demand, and that new players are entering the market. New facilities designed with safety procedures in mind are needed. This is true for windmills, solar and other technologies like batteries and fuel cells used for the green energy transition.¹⁰ Recycling will be important for the energy transition and a circular economy, and close cooperation between insurers and recyclers can provide means forward for its insurability.¹¹