At the World Economic Forum’s 50^th Annual Meeting at Davos, there’s a keen focus

on the energy transition and how best to pivot to more zero-carbon solutions like renewable energy, renewable gas, hydrogen and other promising fuels. While the rise of renewable energy sources, energy storage and other technology advances are on the tips of most people’s tongues, there’s limited discussion around the waste within the electricity industry. And that is a shame because turning waste into wealth through circularity is an economic opportunity worth half a billion dollars.

Across industries, the circular economy represents a radical departure from the old linear, “take, make, waste” production and consumption models. Instead it decouples growth from the use of scarce resources through disruptive technology and business models based on longevity, renewability, reuse, repair, upgrade, refurbishment, capacity sharing and dematerialization. A major circular economy impact stems from the electricity industry as providers shift toward renewable energy. But there is even more opportunity for electricity providers to adopt a circular mindset by working to pivot from the waste associated with coal-combustion, fossil fuels, retired equipment and even wasted energy lost in energy generation.

This remarkable notion is among the key circular economy trends featured in a new book by my Accenture Strategy colleagues, Peter Lacy, Jessica Long and Wesley Spindler, The Circular Economy Handbook, which was revealed this week in Davos. Among some of the more compelling insights of this sequel to Waste to Wealth is that up to $500 billion of value is at stake by 2030 in waste-to-wealth opportunities in the electricity industry — an industry worth $2.7 trillion today.

In addition to this mammoth business value at stake, there is also the call to action for businesses across industries to step up contributions to the 2030 Agenda for Sustainable Development; an urgency I’ve sensed around many Davos hallways and boardrooms. The UN Global Compact-Accenture Strategy 2019 CEO study — ‘The Decade to Deliver: A Call to Business Action’ — found that just 21% of chief executives believe business is playing a critical role in contributing to the Sustainable Development Goals, and less than half (48%) are integrating sustainability into their business operations.

 

What is limiting organizations from fully heeding the call?

Put simply, there are complex challenges to overcome. One of the top sustainability challenges for electricity providers is the pivot from waste – including coal-combustion waste, which is the second most abundant waste material after household waste – to investments in electricity generation using renewable energy including solar, wind and geothermal sources. The industry also has three other major waste areas in electric power generation besides coal: emissions from fossil fuels, essential wasted energy lost in energy generation, transmission and distribution because of inefficient processes and the pre-mature retirement of equipment and components.

The early retirement of equipment and components can generate significant negative environmental impacts. Yet, the impacts are avoidable, and value can be captured if the equipment is re-purposed or recycled, such as natural gas pipelines repurposed to transport eco-gases like hydrogen. Extending the use of equipment and components has the dual benefit of reducing or eliminating waste while also extracting otherwise lost value out of useful materials.

Consider that after just 30-45 years of operation for natural gas power plants and 30-60 years for coal and nuclear plants, huge amounts of demolition and waste – including metal scrap and chemical and radioactive waste – must be safely managed and disposed.

Renewable assets also need to be repurposed or recycled. For instance, TransAlta decommissioned Canada’s oldest wind farm and recycled 90% of the wind turbine materials by weight. That’s a total of approximately 1,250 tons of metal from gearboxes, generators, nacelles, towers, wiring and pad-mount transformers, plus 44,600 liters of oil.

Recycling and re-purposing is a lofty undertaking – Europe alone is slated to dispose of 300,000 metric tons per year of used wind turbine blades – but it must not be overlooked. So how will we solve this and other waste challenges in the industry? Digital technologies provide one avenue to accelerate the circular transition, as the industry further benefits from the ongoing rise of intelligent electric grids to enable the first multi-way flows of electricity and smart metering in homes, offices and power plants to better manage distribution and consumption.

Additionally, energy plants of the future will use the Internet of Things technologies and analytics to maximize assets such as running them longer than current assets using predictive maintenance and more accurate forecasting of demand and operations.

While these are key challenges to tackle, combustion plants lose 30% to 40% of heat and even more losses occur in distributing electricity. The shift to renewables and digital technologies will help solve this, but waste heat recovery is a significant opportunity that remains to be fully captured.

The great news is that this future is taking hold now. Companies are making strides to move toward securing a sustainable future with a circular mindset that re-thinks and transforms value chains to create waste-less and restorative systems, bolstering competitive agility and driving new value.

For example, just by increasing its share of renewables for its Dutch operations by 10%, Nouryon, formerly the chemicals division AkzoNobel, can achieve a reduction of 10,000 tons of C02 per year.

But time is short. Wind farms and solar photovoltaic (PV) have shorter lifetimes than fossil-fuel assets and will therefore need more frequent repowering. Already this is happening, with smaller, older turbines being replaced by larger, more efficient modern ones, as a whole new industry emerges in this area. The same is true for old electric vehicle (EV) batteries that are being repowered for home- and utility-scale energy storage and use.

To fully capitalize on a low-carbon-future for electricity, contributions from our governments, industries, consumers and other stakeholders will be essential.

While regulation is driving change, more support beyond commitments and financial incentives for renewable energy is needed from the public sector to advance a circular economy. For example, top priorities include creating new waste definitions, and evaluating whether existing taxation is effective to drive circular practices by consumers and companies.

Also important is access to financing, especially for building the infrastructure needed for the last-mile of connectivity, data security protocols and operational capabilities. This includes the communication infrastructure across regions that can serve intelligent grid networks.

So, whenever you see the headlines about the rise of great advancements including electric vehicles, solar power and energy storage, that’s just part of a far more complex, but critical opportunity we need to capture today to ensure a sustainable future for all.