Introduction

Solar energy is an essential part of the renewable energy transition. The solar power industry, and specifically solar photovoltaics (PV), is expected to grow exponentially in the coming years. In the EU alone, the European Commission’s REPowerEU plan aims to install over 320 GWAC (400 GWDC) of solar photovoltaics by 2025 and 600 GWAC (750 GWDC) by 2030 [1, 2]. This strategy aims to displace the use of fossil fuels, reduce associated greenhouse gas emissions, and enhance European energy security. It is expected that solar power can be rolled-out rapidly and reward citizens and businesses with benefits for the climate and - given the rapid decline of PV system prices experienced over the past decade - also energy cost savings [1].

In this rapidly growing industry, key innovation challenges comprise a continued strive for higher conversion efficiencies (thereby boosting material and resource efficiency, as well as reducing space requirements for PV installations) and for increased circularity across the entire product life cycle [1]. This paper focuses on the latter aspect of essential innovation in the PV sector: enhancing circularity of solar PV panels through reuse, remanufacturing, and recycling. This is essential, because, as the solar PV market is expected to grow significantly in the coming years, and the innovation pace continues to be high, so will the demand for raw materials rise, and the potential waste volumes from PV panels at the end of their lifetime. Globally, PV waste is estimated to amount to 60–78 million tons of cumulative waste by 2050 [3, 4].

In response to these emerging challenges, CIRCUSOL (www.circusol.eu), an Innovation Action project funded by the Horizon 2020 programme of the European Commission sought to unlock the potential of circular business models, in particular product-service systems (PSS). The aim of this project was to ensure that material aspects of the energy transition will also be sustainable. At the time of this study and project (2018–2022) circularity, and particularly strategies of reuse and remanufacturing, in the renewable energy industry was only an ad-hoc and niche activity and only starting to become more widely recognised in policy and practice. Given the nascent stage of circularity in the solar power sector, this study draws on five demonstrator case studies that were part of project CIRCUSOL, each of them set up with the aim of trialling novel circular business models. The cases included (1) Waasland Co-housing (Belgium), (2) REScoop PV (Belgium), (3) Cloverleaf (Belgium), (4) Scaling-PSS (Switzerland), and (5) SunCrafter (Germany). Within each of these five cases, aspects of circularity, such as repair, optimised maintenance, or reuse of PV panels, as enabled through service-based business models, were explored and trialled.

While most studies at the crossroads of solar PV and the circular economy deal with technical and technological aspects of recycling [5, 6], research on circular solar business models increasingly identifies value propositions, barriers and enablers in several market segments [7,8,9,10]. The underlying business innovation process behind these circular solar business models, however, remains an important research gap.

Therefore, we address in this paper the following research questions:

  • RQ1: How can tools and methods support the transition of existing organisations in the solar industry towards adopting circular business models?

  • RQ2: What can we learn from emerging cases and practices?

As this work builds on emerging practice, this study therefore uses an action-based case study approach, which means that the researchers had an active role in the five cases. The aim was to spur the development of circular business models for each of these cases during the project. To achieve this, a range of tools and methods were applied through workshops and other interactions with the case companies and end-users. The remainder of this paper is structured as follows. In Sect. 2 we introduce the background on business models and circularity in the solar PV sector, tools and methods for circular business model innovation, processes for circular business model innovation (CBMI), and a CBMI framework building on literature. Section 3 describes the action-based case study method, Sect. 4 the results, and Sects. 5 and 6 comprise the discussion and conclusions, respectively.

Background

Business Models and Circularity in the Solar Power Sector

Most studies on circularity in the solar PV sector deal with technical aspects, mostly considering recycling [11,12,13] and product design [5]. Presently, recycling is the default pathway for decommissioned PV panels, enabling recovery of high-value raw materials [14, 15]. Rabaia et al. [16] review technical challenges on design and recycling of solar PV and present a circular PV industry business model to align incentives along the PV value chain. However, opportunities for other circularity strategies, such as repair and reuse of PV panels that have not yet reached their technical lifetime [6, 17, 18], as well as the potential of digital platforms to foster data-enhanced circular practices in the solar PV industry [19] have only recently received increased attention.

Strategies higher up in the waste hierarchy can be supported by new business models. Repair, optimised maintenance, and reuse can be fostered by product-service systems (PSS) [10, 20, 21]. One subset of PSS are Third-Party-Ownership (TPO) models, of which leasing and Power Purchase Agreement (PPA) models are most common in solar PV markets [22]. In a leasing model, consumers pay a monthly or yearly fee in exchange for access to a PV system and the energy it produces. In a PPA, the consumer pays a predetermined fee per kWh of electricity generated by the PV system. These PSS configurations allow customers to benefit from solar energy without having to purchase a PV installation, eliminating the burden of bearing upfront capital expenditures [23]. PSS models may also incentivize service providers to optimize product lifetimes [24]. With regard to fostering a circular economy, PSS contracts may also remove barriers related to potential user concerns about the reliability, safety, and remaining lifetime of reused PV panels as technical and financial risks are unburdened by service providers [25].

Research on solar PSS models in residential markets validates its ability to reduce or eliminate up-front adoption costs, facilitating PV adoption among younger, less affluent, and less educated households [7, 26,27,28]. Emergent survey research shows that solar PSS models for PV reuse are considered most interesting among younger, highly educated, migrant, and less risk-averse customer segments [9]. Moreover, empirical evidence shows a strong relation between residential interest in circular solar business models and institutional trust. Importantly, vulnerable groups in society appear to be most prone to these trust issues [29]. In other words, developing strong circular solar value propositions is not straightforward as customer segments that could be helped most with a solar PSS offer are not necessarily most interested to adopt. Likewise, informational asymmetries, missing markets, and incoherent legislation in a highly regulatory policy environment render the development of new business models in renewable energy challenging. Therefore, it is not sufficient to investigate value propositions, barriers, and enablers, but also important to enhance understanding of the innovation process behind circular solar business models.

Tools for Circular Business Model Innovation

Circular Business Model Innovation (CBMI) is about innovating a business model (i.e., revising parts of an established business model, or creating an entirely new business model) to integrate and take advantage of circular economy practices [30, 31]. Such practices may comprise different circularity strategies to slow resource loops (e.g. via enhanced product durability and design for product life extension) and close loops (e.g. via recycling) [32]. CBMI can result in incremental or more radical innovation of a business model [30, 33].

By reconsidering the process through which a firm creates, delivers, and captures value, business model innovation can be an integral technique to align a firm’s value creation logic [34,35,36], also explicitly including circular principles [37]. Especially in incumbent firms, CBMI involves exploring and testing a variety of models to assess their desirability, viability, feasibility and sustainability [38] as well as triggering internal change processes within the organisation by engaging internal and external stakeholders [39]. To support business model design, management literature and practice recognised that the innovation process requires guidance to structure and focus thinking [40].

CBMI is a relatively novel field, where most tools and methods to support this innovation process were recently developed [41]. However, in the fields underlying the CBMI concept, a plethora of tools and methods have been popular for a few decades. Examples are eco-design and innovation tools [42], including many contributions in the field of Design for X, where X refers to various sustainability strategies such as recycling and reuse [43, 44]. Later, numerous tools and approaches to facilitate the design of (sustainable) PSS emerged [45, 46]. Also, an increasing number of ‘sustainability tools’ for business model design [47] have been suggested.

Typically, tools manifest as various forms such as guidelines (e.g. widely applicable, but little detail), checklists (in-depth, but narrow with, e.g., focus on selected stages of the product development), or analytical tools (e.g. offering in-depth and systematic analysis, e.g. via life cycle assessment) [48,49,50]. Tools might encompass single or multiple facets of the product life cycle [51] and can possess either qualitative or quantitative attributes [52]. Tools usually centre around conceptual design, ideation, and engagement with the supply chain, while also integrating considerations from stakeholders, customers, and management [47].

In spite of the wide array of available tools, research indicates a scarcity of tools that truly align with the needs and expectations of companies [42, 51]. Many commonly used generic tools and approaches (like Osterwalder & Pigneur's [35] business model canvas or Ries' [53] Lean Startup approach) seem to be employed in flexible ways in practice, but without a specific focus on CBMI. However, without adequate facilitation, the extensive utilisation of these more general tools could potentially dilute the emphasis on sustainability or the circular economy [54], leading to traditional business cases that lack a distinct positive environmental or societal impact. Moreover, some tools might prove excessively intricate or time-consuming due to the number of steps in the process, or they might be too context-bound. Lastly, tools often emerge within specific disciplines (such as engineering, business, design) [42], failing to harness insights from interdisciplinary approaches that could enhance their practicality. As an example of work trying to integrate different disciplines, design science has gained prominence in sustainability business-oriented tools, by specifically using a stakeholder and user perspective (e.g [55, 56]), using techniques from design science such as prototyping [57], and, more generally, testing tools with users iteratively in practice [58].

Tools designed for Circular Business Model Innovation often draw from established concepts in conventional management literature [41, 59]. For example, they utilize frameworks such as the Business Model Canvas, emphasising the concept of ‘value creation’ [35, 58, 60,61,62]. Well-known innovation methodologies, such as effectuation (learning from entrepreneurial practice) [63] and Lean Startup (prioritising rapid and iterative testing of new ideas) [53], have been foundational in shaping recent CBMI approaches [64, 65]. Various other types of tools that centre around ideation for CBMs are also emerging. These encompass serious games [66,67,68], case databases [69], hackathons [70], and typologies [71]. Yet, many of the tools have not yet (or to a limited extent only) been applied in businesses transforming their business models towards circularity.

An Experimental and Iterative Approach to Business Model Innovation

Innovating a business model is rarely a linear and straightforward process with all micro-steps being defined from the beginning. In particular, firms operating under high levels of uncertainty and dynamic business environments face challenges in innovating their business model [72]. Here, an experimental and iterative approach to business model innovation is considered instrumental [65, 73]. Experimentation can positively affect radical innovation [74, 75] and has been suggested and applied to circular business innovation [65, 76]. Given the rapid growth and dynamic business environment of the PV industry and the relative absence of circular practices in this sector, an experimental and iterative approach is expected to be useful.

Such an experimental and iterative approach to business model innovation under conditions of uncertainty has been encapsulated by the Lean Startup approach by Ries [53] and Blank [77], involving a trial-and-error philosophy that has been conceptualised as the build-measure-learn cycle [53, 78]. While initially developed for start-up firms with limited internal resources, established businesses have adopted this approach to challenge their (unsustainable) business models [65]. The build-measure-learn cycle involves repeated, validated learning or experimentation [77], to empirically test business assumptions with data obtained from real users and customers. These assumptions can comprise different business model parameters, including the value proposition, customers segment, and mode of value delivery [79].

The Lean Startup methodology as a cyclical process is grounded in a set of activities in which entrepreneurs (1) map their business idea visually on the business model canvas as testable assumptions, (2) test these assumptions, and (3) evaluate the results [53]. Invalidated assumptions are to be replaced and new assumptions are to be tested until a minimum viable business model is achieved [80]. Following the launch of a minimum viable business model in the market, a sequence of additional iterations in the build-measure-learn cycle can help the firm to further improve and refine the value proposition and the underlying business model mechanisms to deliver it [81]. This approach is also highly relevant for CBMI, which involves a novel proposition integrating the circular economy, and addressing new and yet to be explored customer needs for potentially new customer groups [37, 38].

The Circular Business Model Innovation Framework

In support of the action-based nature of this study, a dedicated approach to support circular business model innovation was developed: the “CBMI support framework” (see Fig. 1). This framework integrates different tools and processes, with the aim to guide and support companies in designing and experimenting with novel circular business models in practice, and to overcome common challenges. Although the solar power sector was used as a development vehicle, the framework itself is generic and is designed to be applicable for a variety of sectors. Building on various strands of literature, the framework is characterised by the following underlying approaches:

  • Visioning is an essential starting point of the CBMI process [82]. It is about setting out an ambitious vision and goal for the future of the business, potentially with partners [39].

  • The CBMI process is characterised by an iterative and experimental approach that relies on multiple learning and innovation cycles to ultimately achieve this vision or goal [53]. Iterations are common, and even desirable to ensure validation before proceeding to the next stages, which usually require increasing resource commitment and organisational change [58, 65, 83].

  • A business model perspective, depicted by the value proposition, value creation and delivery, and value capture mechanisms [34,35,36], serves as the framing concept in the CBMI framework.

  • A perspective of life cycle thinking on the environmental and (micro-) economic impacts of circular business models is included. Life cycle thinking involves consideration of a product’s full life cycle, from cradle to grave, thereby ensuring that environmental problems are not shifted from one phase to another [84, 85] and to achieve the desired positive environmental impacts in the circular economy [86].

  • Co-creation ensures a strong involvement of the firms’ stakeholder network when designing novel circular business models. Co-creation brings together all stakeholders, not only in the supply chain, but also end-users, civil society, public authorities, financiers, etc. This fosters the widest acceptance and support of the new business model [87, 88].

Following the development of a strategic vision, the CBMI support framework distinguishes between four key operational phases in the innovation process: (1) ideation, (2) design, (3) experimentation, and (4) scaling. These are based on the work by Frankenberger et al. [83] and Guldmann et al. [89] on CBMI. For each phase, several tools are available to support the circular business model innovation process, and many of the tools can be used in multiple stages (Appendix 1 in supplementary file). In the framework, the elements of the business model canvas serve as a structuring device to depict how the different building blocks of the circular business model evolve across all four phases [35, 61]. For ease of exploration these are characterised according to the value proposition, value creation and value capture mechanisms [36]. The CBMI process typically starts with the value proposition and circular strategy [37], before proceeding with the practicalities of value creation and delivery and value capture mechanisms. The conceptual framework in Fig. 1 was used as an artefact during the study and wider CIRCUSOL project.

Fig. 1
figure 1

Circular business model innovation (CBMI) support framework. Note. CBMI phases of ideate, design, experiment, and scale phases building on: [83, 89] and [53]. Business model elements building on [34,35,36]. Circular strategies: [32, 37]

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Method

This study uses an action-based case study approach [90, 91]. It involves a participatory, action-led way of research with practice involving the use of collaborative, deliberate, and exploratory methods over time [92]. This approach was deemed useful because of the exploration of a novel phenomenon, i.e., the development of new circular business models in the solar PV industry, in collaboration with industry partners.

Specifically, this research was conducted as part of project CIRCUSOL - Circular Business Models in the Solar Power Industry (www.circusol.eu) - an Innovation Action project funded by the Horizon 2020 programme of the European Commission (2018–2022) - which aimed to test and deploy circular PSS business models. The project evolved around five demonstrator cases (see Table 1), focussing on a variety of circularity strategies, such as reuse, repurposing, lifetime-extension through monitoring and preventive maintenance, as well as repair and recycling. The core technologies deployed and investigated in the demonstrators were solar photovoltaic panels and discarded electric vehicle batteries, the latter being repurposed for solar power storage. The PSS concept [24] was the envisioned business model to enable these strategies, aligning interests between companies and customers to optimize product lifetimes and partially resolving asymmetric information in PV reuse.

The demonstrator cases were selected to represent different segments of the solar power market, including residential, commercial, and mobility applications. In 2023, the EU solar market for new installations amounted to 56 GW, which was evenly distributed between the three key market segments (1) residential, (2) commercial and industrial, and (3) utility-scale, each accounting for a third of new capacity in 2023 [93]. Since 2018, the share of the residential market segment (as represented by CIRCUSOL demonstrators A, B & D) had increased from 26 to 33% [93]. Using solar energy for electric mobility (as represented by CIRCUSOL demonstrator E) is presently still a niche segment but expected to grow strongly in coming years [94].

In terms of geography, the selection of cases focused on three European countries (Belgium, Germany, Switzerland), representing well-developed PV markets with a long-year track record. In these markets, the volume of discarded PV products is expected to increase in the near-term future, making them suitable and relevant cases to investigate circularity strategies. Choosing cases from three countries also allowed for gaining improved understanding of the role of country-specific factors in relation to circularity. For each case, a demonstrator lead firm was in charge of developing a circular business model and for deploying the actual demonstrator project.

Table 1 Circular solar PV demonstrators - project CIRCUSOL - used for this study
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Tools and Methods used in the Case Studies

Following the CBMI framework (Fig. 1), different tools were applied across the demonstrator cases for each of the phases of the business model innovation process, see Table 2. In a co-creative process, the demonstrator lead firms collaborated with a range of stakeholders (Appendix 2 in supplementary file), including partnering R&D organisations that had appointed researchers as contact points to each demonstrator. Regular follow-up meetings between the demonstrator lead firms and these contact points were organised with the aim of closely monitoring and safeguarding the circular business model innovation process. In many situations, researchers and/or the demonstrator contact points initiated the choice of a certain tool or method to address specific questions the demonstrator lead firms were interested in. In some situations, the demonstrator lead firms independently choose a method from the portfolio of the CBMI framework.

Table 2 Tools per case and/ or phase, building on Fig. 1
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Data Collection and Analysis

In this paper, the unit of analysis is the role and process of using the CBMI support framework (including its associated set of tools and methods) in enabling the development of novel circular business models in the solar power industry. Empirical data were gathered by means of direct observations in project consortium meetings, workshops and co-creation sessions, meetings and discussions with project partners, as well as from document reviews of internal reports produced within the CIRCUSOL project. The outcomes of the workshops and other meetings were collected in written documentation (notes, reports). These were used to report on the process, tools and methods used, and the lessons learned from the CBMI process as observed through the cases.

All three authors were directly involved in the CIRCUSOL project in different roles, including the development of the project proposal and formulation of research aims, leadership of work packages, drafting of the CBMI support framework report, organization and facilitation of workshops, co-creation sessions and focus groups, as well as other project-related research tasks. Through these participatory roles, authors were able to gain first-hand insights into the concrete use of the CBMI support framework and its associated tools and methods, as well as contribute to the production of scientifically and socially relevant knowledge [95].

Results

This section compiles experiences from the five cases on the use of different tools and methods to support the innovation process of circular business models in the solar power sector. The CBMI framework (Fig. 1) including the different phases and elements was used as an artefact for the whole project bringing together the overall working approach. Yet, throughout this study, the business model canvas by Osterwalder & Pigneur [35] served as an important structuring device to conceptualise a firm’s existing business logic, as well as to systematically structure an envisioned circular business model. It was used by all participating firms in the five cases throughout the CBMI process, thereby helping them structure their communication, thinking, and reflection about the business logic and value proposition.

Visioning

The CIRCUSOL project was kicked off by a set of three co-creation workshops to facilitate knowledge sharing about the solar PV value chain, to identify barriers inhibiting circularity in the sector, and to develop a shared vision towards a circular solar power industry. The workshops were attended by the firms leading the five cases and other stakeholders from the solar power value chain (PV panel manufacturer, recycler, solar service firms, energy cooperative, utility, PV panel producer responsibility organisation, building consultant, battery repurposer), as well as researchers from universities and public R&D organisations who facilitated the co-creation activities. Based on the discussions, the action researchers developed a vision document, describing (1) guiding principles to enable a future circular solar energy system, (2) required systemic changes and innovation to support the transition towards a circular solar energy system, and (3) short and long-term actions to address these changes required. At the project end, the vision document was revisited during a final workshop and a new document was drafted, incorporating the experiences and collective lessons learned throughout the project period.

Ideating

Building on the initial vision, the business leaders of the five demonstrator cases started exploring and ideating tentative circular value propositions that would fit their respective context and case. In order to investigate user needs and preferences, the firms used a variety of methods and tools, including (1) the jobs-to-be-done approach, (2) surveys, (3) one-to-one interviews, and (4) focus groups.

Jobs-to-be-Done Approach

The jobs-to-be-done approach focuses on identifying what customers seek to accomplish from a product or service [96] and was used in Cases A and D. In Case A, the user group comprised a co-housing community that had already subscribed to a PSS contract for electricity from reused PV panels installed on their building. The aim of the solar service firm was to develop a revised value proposition to further enhance customer value and the degree of circularity. The jobs-to-be-done framework was used during a co-creation workshop to identify the cohousing group’s preferences and needs regarding electricity from PV, specifically by mapping the group’s jobs, pains and gains in relation to PV. “Increasing self-consumption from the existing PV system” was identified as a priority for a revised service contract, leading to the development of several scenarios that were assessed in subsequent steps.

Case D was led by a distribution system operator (DSO) with an existing pool of electricity customers. In the case, the firm’s project team seeked developing a circular PSS solar power offer for private homeowners. During internal brainstorming meetings, the team used the jobs-to-be-done approach to map the functional, social, emotional and supportive tasks and gains a PV-system could solve to their customers, as well as the problems and barriers customers encounter when acquiring and using a PV-system. Insights from the exercise were further validated in interviews with customers and eventually used for the development of the prototype business model.

Surveys

Three surveys were used to map user perceptions towards circular and service-based solar power business models. A first survey (n = 199) was deployed by the lead firm of demonstrator A via an email database of Flemish residential PV owners. Results indicated positive interest among a subset of the respondents towards a service model with reused PV modules, if priced competitively. A second and a third survey were deployed by action researchers, focusing on user perspectives on a specific offer, and general interest in solar PSS and PV reuse in Flanders. Results from the second survey (n = 59) enabled the demonstrator lead firm of case B to understand user reactions towards their envisioned service-based circular value proposition in the municipality of Eeklo. Results of survey three (n = 3,583) provided insights into how service-based circular business models could address consumer adoption barriers to PV [9].

One-to-One Interviews

Another method to gain insights into user preferences were one-to-one interviews with potential solar PV users. In Case D, the DSOs project team interviewed potential clients who represented different backgrounds. The focus of the questions and conversations was on the respondents’ needs, how respondents approach the topics of solar power in everyday life, what concerns them, and how they perceive the firm’s tentative business model offer. During the set of interviews, the firm’s product team continuously developed the business model prototype, enabling them to test the improved version in subsequent interviews.

Focus Groups

Using focus group techniques allows to gather expert perspectives, experiences and implicit domain-specific knowledge. In order to explore the viability of circular solar business models in market segments that were not serviced by the five demonstrator cases, a team of action researchers organised focus groups in the market segments of (1) non-owner residential markets, (2) public and social infrastructure, and (3) companies and commercial real estate. Results from the focus groups provided insights on value propositions, barriers, and enablers in these markets [10, 97]. An advantage of focus group research over individual interviews was found to be the interactive approach, inspiring participants to react and contribute.

Designing and Testing

Across the five cases, the demonstrator lead firms, in collaboration with action researchers, used for the design and testing of circular business models different tools and methods, including (1) customer journey approach, (2) prototype website, (3) scenarios, (4) financial models and least-life cycle cost analysis, (5) life cycle assessment, (6) choice-based conjoint analysis, and (7) pilot projects.

Customer Journey Approach

The customer journey approach is a framework to support the design and management of services [98]. Using this approach, the firm’s product development team in Case D modelled the steps and actions that a customer would take throughout the life cycle of a service-based contract for a (circular) solar power system, starting from the pre-acquisition phase. Based on this conceptual model, the team developed a first high-level prototype, which subsequently was tested on real customers (e.g., in an interview format), and then iteratively further developed and continuously improved. Given the novelty of service-based business models in the solar power sector in Switzerland, understanding the customer journey was critical for designing the elements of “customer relationships” and “channels” of the envisioned business model.

Prototype Website

Websites are an important channel for firms to reach out to and interact with their clients, thus being critical to establish and maintain customer relationships. In Case D, a website was envisioned central in the digital onboarding and customer acquisition process for the newly developed solar power offer. Building on insights gained from customer tests with paper models and the customer journey model, the demonstrator lead firm created a clickable mock-up prototype website, which offered a platform that allowed for iterative development. The procedure of using a test website with limited functionality offered important advantages, such as enabling more concrete internal discussions in the project team, early involvement of the contracted website developer, as well as allowing low-cost modifications and iterations to the mock-up before programming the full website.

Scenarios

Scenario techniques were used in several cases to assess business model design alternatives. In Case A, co-housing residents, the involved firms, and action researchers co-created three technical scenarios: (1) expansion of the electric vehicle (EV) fleet, (2) installation of a remanufactured EV battery for solar power storage, and (3) demand side management. These scenarios were assessed from a technical, environmental, and financial perspective, and it was eventually collectively decided to add a remanufactured EV battery to the existing PPA-contract. The scenarios helped visualise a variety of future design options, thereby reducing complexity and facilitating comparison and decision-making of several alternatives. Qualitative scenarios were effectively co-created with input from non-experts (co-housing residents), thereby gaining buy-in for innovative circular solutions. Building on the qualitative scenarios, quantitative calculations and assessments (technical, environmental, and financial) underpinned the design options with “relevant data”.

Financial Models and Least-Life Cycle Cost Analysis

The use of financial models in the assessment of business models is standard practice for any business firm. Across the five cases, firms applied a least-life cycle cost (LCC) perspective to the various business model configurations that were assessed during the design stage. Taking a life cycle cost perspective was important to account for the financial flows of service-based circular business models across the entire contract period. This also included the end-of-life stage in which costs and revenues associated with disassembly, resale of reused/repurposed components, and recycling occur.

Financial models developed in the CIRCUSOL project suggest that under present market conditions reuse is financially challenging for healthy panels which are 10–12 years old with a remaining lifetime of 20 years, given an average lifetime of 30 years [99]. To illustrate, Table 3 depicts the key specifications and results for two scenarios for Case A: In the business-as-usual Scenario A, the residential building is equipped with new panels, while in Scenario B the PV system comprises of reused PV panels that were decommissioned earlier from different sites. Taking a lifecycle perspective, Scenario B exhibits some financial savings in the capital expenditure (CapEx) phase due to the use of reused solar panels. However, these savings are partly compensated through the higher area-dependent balance-of-system CapEx that occur due to the lower efficiency of reused panels. Furthermore, the cumulative electricity production in Scenario B is noticeably lower due to lower efficiency and shorter remaining lifetimes of reused panels. In sum, the results in this model case show that the levelized cost of electricity are about 32% higher in the reuse Scenario (B), as compared to using new panels (Scenario A).

The model does not account for any differences in end-of-life management costs for the user, as presently in the EU due to the extended producer responsibility system the collection, sorting, and recycling of PV waste is prepaid by the panel manufacturer or importer. However, potential future legislation that disincentives the pre-mature disposal of functional products might make a reuse scenario financially more attractive. The financial viability of the reuse business case is also influenced by additional country- and case-specific parameters, such as the grid tariffs that determine revenue and which can fluctuate substantially.

Table 3 Scenario specifications for new and prematurely decommissioned PV panels
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Life Cycle Assessment

In several cases (A, C, E), life cycle assessment (LCA) was used to assess and compare alternative technical and operational designs from a resource use and environmental impact perspective. In Case A, LCA results showed that increasing the inverter capacity of the PV system, as well as storage of solar energy in batteries of the residents’ electric vehicle(s) would bring along environmental benefits. In Case C, LCA analysis of several scenarios were conducted, including the integration of new and repurposed batteries for solar energy storage. Results showed that using a repurposed battery would be environmentally more favourable than using a new one. In case E, LCA methodology was used to compare for off-grid charging systems for micro-mobility vehicles whether new or reused PV panels, respectively batteries, are favourable from an environmental perspective. Conducting LCA requires expert knowledge which was provided by the projects’ participating R&D organisations.

Choice-Based Conjoint Analysis

Choice-based conjoint (CBC) analysis, a technique for measuring importance given by users to different features of a product or service [100], was used in two experiments to test user reactions towards two novel applications for circular PV. In Case E, the first experiment focused on solar-powered charging stations for shared micro-mobility services, assessing the relative importance users give to location and design of the charging station, sustainability and circularity aspects, as well as pricing. The survey was distributed online to a sample of potential micro-e-mobility users. The data indicated that on average users value sustainability aspects of the charging station (type of electricity, circularity aspects) in the same order of magnitude as convenience-related attributes and cost savings. Besides, data suggests that users prefer locally generated solar energy from charging stations being assembled from reused components.

A second experiment focussed on gathering user perceptions towards a novel market segment that was not addressed by any of the five case demonstrators, i.e. solar-powered charging of electric vehicles (EV) at the users’ residential premises. The CBC survey provided insights on the relative preference of users towards four product attributes: (1) solar self-sufficiency, (2) circularity aspects, (3) financial aspects, and (4) ownership and payment model. Results showed a strong preference of the majority of respondents towards owning the solar charging system themselves, high solar self-sufficiency, along with some cost savings. Regarding circularity aspects, only a marginal user preference towards reused panels over new ones was expressed.

Pilot Projects

Pilot projects enable testing of novel circular business concepts in a real-life setting, resembling the context in which users/consumers interact with a product or service. Pilot projects were used for experimentation in Cases A and E, amongst others. In Case A, the experiment involved real-time monitoring of solar power production and electricity consumption of four selected households of the co-housing cooperative. The data collected allowed assessment of different options for demand-side management (DSM) as a means to increase solar power self-consumption. In Case E, circular solar-powered charging hubs were deployed at several testing sites, in collaboration with local public transit companies. These pilot projects were critical to test the design and usability of the charging station and the business model. Specifically, the projects generated insights on the technical performance, durability in urban environments, how to optimize the site selection, as well as legal-administrative barriers encountered with the deployment of solar-powered charging hubs.

Scale-Up

Upon successfully having ideated, designed, tested and iteratively refined a business model, scaling remains the final phase in our conceptualization of the Circular Business Model Innovation process. However, given the early stage of development of most demonstrators, this phase was the least mature and only applied in an ex-ante perspective through two specific methods.

Business Plans for Replication and Scale-Up

For all cases A-E, the lead firms developed business plans with roadmaps of how to replicate and scale-up the circular business models that were initially developed in the respective demonstrator. Key elements of the plans comprised the firm’s circularity strategy, the business model canvas, a hypothesis map, and an analysis of desirability, feasibility, and viability of their respective model. This process was organized in a series of co-creation meetings attended by all firms. Business managers of the five firms independently populated their business plans, and subsequently discussed them with the other members of the working group. Developing the business plans provided managers the opportunity to reflect about the business ecosystem and the underlying assumptions and hypotheses, and enabled them to identify potential roadblocks and develop strategies to address these.

Ecosystem and Policy Simulations

Exploring long-term trends are critical for firm managers to be able to take strategic decisions in relation to scaling and the mainstream adoption of circular strategies. Addressing this need, action researchers developed a dedicated ecosystem and policy simulation model and tool that accounts for the legal, social, and economic drivers and barriers of circular economic business models in the solar power sector. Simulations within the model allowed exploring the interplay effects between a circular business model and its respective business ecosystem, as well as testing of various policy interventions. The simulation model was populated with data for the PV market of Germany, illuminating the complex interplay between various parameters, such as financial support schemes, electricity prices, growth rates of installed PV capacity, failure rates, volume of PV modules available for reuse, age cohorts selected for reuse, repair types of used PV, as well as collection and recovery rates, amongst others.

An Experimental Approach with Multiple Learning and Innovation Cycles

An iterative and experimental approach that relies on multiple learning and innovation cycles has been the key framing principle of the CBMI support method. A single learning cycle can be structured into the four phases of (1) hypothesis development, (2) hypothesis testing, (3) evaluation, and (4) revision of the hypothesis. Based on the revised hypothesis, a new learning cycle is launched.

Case D serves as an exemplary illustration of how this approach was implemented in practice. Hypothesis development involved gaining an understanding of customers’ needs through internal brainstorming and customer interviews, leading to the development of a minimum viable product (MVP) to meet these needs. For hypothesis testing, the MVP offer was launched in a local community (“W”), but customer response remained modest, significantly below the firm’s target. An evaluation helped understand the reasons for this low response, using methods such as debriefing sales personnel, Google data analytics, customer interviews, and informal conversations with community members. Based on these insights, a revised hypothesis was developed, leading to a modified product offer that was successfully launched in two other communities (“I” and “H”) and further refined in additional learning cycles. Despite the low customer adoption, the experiences made in community “W” were critical for learning and also delivered necessary components (infrastructure, website, calculator, flyers, internal processes, trained personnel, customer insights, etc.) to efficiently roll out the experiments in communities “I” and “H”.

Discussion

Circular Business Model Innovation Support Framework and Process

This study offers several cross-cutting lessons on the use of tools and methods to support firms in innovating circular business models. First, this study shows that in a dynamic market with rapid technological development and declining prices, using key principles of the Lean Startup approach and iterative experimentation through multiple learning cycles [53, 77] is appropriate for established firms wanting to transform their business models towards circularity. This echoes earlier work that found similar processes in established businesses wanting to transform for the circular economy (e.g [65, 101]). Rather than relying on analysis of trends and PESTLE type of analysis, the focus in the demonstrator cases was on testing new value propositions with customers early on. The success of circular business models stands or falls by the adoption of these models by customers, which confirms the need for exploring non-technical aspects of circular solar PV adoption, i.e., whether a business model is desirable, feasible, viable, next to more sustainable [38].

Second, the study shows the value of using a multitude of tools and methods to support firms in innovating circular business models. Using multiple tools provide firms with complementary insights for the different stages of the CBMI process. The choice of the specific tool/method is dependent on different factors, such as nature of the user groups (e.g., well-defined and known users vs. anonymous user groups from new market segments), the purpose of the investigation (e.g., refining an existing business model vs. ideating a new business value proposition), and the firm’s resources (e.g., incumbent large firm with abundant resources vs. start-up firm with limited resources). It was found that the level and types of resources needed to apply a tool or method vary widely [102]. Qualitative tools such as prototypes, prototype website, and customer journey approach allow for relatively quick and low-cost testing of circular business models (or selected business model elements) necessary to compare alternatives. Quantitative tools such as simulations, LCA, LCC, and financial models have more demanding data requirements and require specific expert knowledge. However, they are essential to assess financial viability and quantify environmental benefits for more developed and tested business models. Also, testing on a full-scale pilot project is more capital intensive and has a longer lead time. While this makes it less easy for firms to use them for multiple learning cycles, pilot projects are close to reality and hence can generate valuable insights to the development of circular business models.

Third, confirming earlier work (e.g [39, 89]), visioning has also been an essential starting point to reconfirm the joint circular economy ambition. Given the diverse composition of the project consortium, co-creating an initial joint vision was found vital to maintain focus, and facilitate communication, inter-firm collaborations, knowledge exchange, and mutual learning across actors of the solar power value chain.

Fourth, researchers in an action-oriented role were vital to bring together disparate knowledge on circular economy, business models, CBMI processes, and tools and methods to be used. This echoes earlier work on the importance of well-informed facilitators that steer the positive outcome of sustainable innovation processes [54, 103]. The businesses involved typically had knowledge of some of these aspects but not all, so the value of the action-oriented work was to bring together this knowledge and apply it to complex new demonstrator cases in a yet unproven field. The role of action researchers in this project has been found to contribute to the identification of opportunities that exceed the strategic scope and mental bandwidth of individual firms and their intrapreneurs. Likewise, the independent and non-commercial background of researchers can be trust-enhancing within project consortia, help to overcome conflicts of interest and informational asymmetries, and may even allow to capture positive informational externalities along the value chain. Access to scientific resources and expertise of experienced researchers within the consortium also contributed to ensure and enhance the methodological quality of the application of tools and methods of the CBMI framework (e.g., by preventing sample bias in surveys and focus groups), and to overcoming confidentiality issues that business-developers might encounter.

Lessons Learned for Replication

While the proposed CBMI support framework is industry and product agnostic, its application on a specific case requires some context-specific calibration. Firstly, solar PV installations are a capital good, being purchased for an expected lifetime of 20 to 30 years. This renders experimenting and fast learning cycles difficult in comparison to non-durables and especially fast-moving consumer goods [104]. Secondly, the solar PV market is a highly regulated market, including strict product standards, liability regulations, and requiring grid connection permits, hence testing innovations in a real-market situation is not straightforward. Thirdly, the policy environment on solar PV was very volatile during the CIRCUSOL project, creating trust issues among various customer segments [97]. Here, developing dedicated methods and tools for risk analysis and assessment could help firms in timely identifying factors that pose risks to their envisioned business models and develop targeted mitigation strategies. Finally, an important specific parameter is the timing of this project, being an era where the COVID-19 pandemic obstructed the set-up of co-creation activities and value proposition testing under ‘real-life’ market conditions. Furthermore, unexpected geopolitical events, such as the war in Ukraine, severely affected energy markets and stakeholders of the cases under study.

Nevertheless, this study provides insights of value to other sectors. Firstly, a promising field of application are the rapidly evolving circular innovations in the field of other renewable energy technologies and storage solutions, including solar thermal applications, wind energy, heat pumps, or smart energy storage configurations and HVAC-installations [16, 105]. Secondly, lessons from this study are transferable to circular business model innovation for other electronic devices that operate in a less-regulated environment or have shorter design lifetimes, including laptops, mobile phones, and other household electronics [104, 106, 107].

Future Research and Limitations

From a geographical scope, the cases in this research represent densely populated, high-income European countries, with a regulatory rich and multi-layered institutional framework. Therefore, we suggest performing future research on circular business model innovation in remote areas and in developing and emerging economies. Sunlit areas with limited regulatory frameworks may offer smooth conditions for ideation and experimentation. On the other hand, business development in developing economies may encompass other specific challenges, including access to finance, limitations with the existing (grid) infrastructure, and other formal and informal barriers such as a lack of legal certainty. In order to capture the importance of specific institutional contexts on circular business model innovation, we consider future comparative research as a promising pathway.

The cases in this study focus on the early stage in innovating circular business models and implementation of ambitious circular strategies was not achieved in all demonstrators during the course of the project. Scaling strategies were only explored with ex-ante methods but not empirically validated. Future research could therefore focus on ex-post evaluations of scaling strategies for ambitious circular strategies, considering both successful and failed business models, in order to learn about optimal business model innovation support mechanisms. Relevant aspects to evaluate scaling conditions are replication strategies, internal and external economies of scale, resilience towards changing market and policy conditions, and conditions to support circular intrapreneurship.

The use of the CBMI support framework was accompanied by different methodological and practical challenges. It is noted that reality is often more complex than the stylized linear process flow of ideation, design, experimentation, and scaling would suggest. Real-life innovation processes are typically characterised by a set of multiple and in many cases (partially) parallel and overlapping innovation and learning cycles. Therefore, future research should address and evaluate the benefits of innovation action projects (such as CIRCUSOL) where firms from different parts of a value chain collaborate and learn from each other in order to overcome these complexities. Future research could also deepen our knowledge on the role of partnering R&D organisations and action researchers in supporting the learning and circular business model innovation process.

Conclusions

Based on five action-based case projects, this study shows how a set of tools and methods could support firms in the solar power industry towards adopting circular business models. In this dynamic and fast-growing renewable energy sector, an experimental and iterative approach was found critical to explore innovative service-based circular value propositions. The circular business model innovation support framework presented in this paper captures this multi-stage process and includes multiple tools that provide firms with complementary insights when ideating, designing, testing, and scaling business models. As such, the study’s empirical testing of tools in a circular economy context complements earlier theoretical conceptualizations of business model innovation processes.

The co-creative approach taken in the project consortium, and facilitated by the Circular Business Model Innovation (CBMI) framework, illustrates the importance of inter-firm collaboration and learning for transforming an industry sector towards Circular Economy. Therefore, we recommend solar PV manufacturers to invest in value chain collaboration and engage in co-creative activities to enhance circularity. This can enable solar PV manufacturers to increase their knowledge on critical conditions to implement design-for-recycling, design-for-repair, and design-for-reuse while safeguarding a viable business case. Likewise, we recommend solar service providers to generate feedback loops to PV manufacturers, transmitting their learnings from end-user experiences throughout the product life cycle.

The use of the CBMI framework is not restricted to the private business sector. Similarly, the tools of the framework can be of value for public authorities, e.g., when designing and implementing innovative public procurement schemes, a process that will benefit from a co-creative approach along the value chain and a strong involvement of end-users. This is particularly relevant for solar PV applications in public infrastructure, health and social care facilities, schools, and social housing, where roles of those who decide, use, and pay are often scattered across divisions or between contractual parties.

Finally, the study highlights and discusses the role of action researchers in circular business model innovation, who have been found to be trust-enhancing and contributing to the identification of opportunities that exceed the strategic scope and mental bandwidth of the companies and value-chains they support. Support of action researchers to firms in using the tools was vital, and we recommend supporting such collaborations, as the hidden cost of badly implemented tools may be high. Recommendations for action researchers themselves include investing in an early-stage identification of end-users, their needs and disqualifiers, as well as nuanced role positions on who pays, who uses, and who decides on adopting the business model. Given the complexity and interdependencies of circular value chains, it is likewise important for action researchers to challenge and test assumptions in real market settings, and to identify externalities and split incentives between value chain actors. Specifically, when supporting the development of circular business models, it is important for action researchers to be aware that markets for reuse and recycled components may be incomplete, and that their role should encompass identifying conditions for further market development.