PV Recycling: Counterparty Risk

Counterparty risk is one of the most misunderstood — and most consequential — elements of PV recycling. Most conversations stop at permit compliance, nameplate capacity, and recovery rates. Those topics matter, but for asset managers, project managers, EHS teams, and other decision-makers at renewable IPPs who are on the hook for outcomes, they rarely tell the whole story. This piece goes one layer deeper: why this risk shows up, where the industry tends to hand-wave it, and what owners can ask for to avoid learning hard lessons later.

Trust is Not a Control: the Three C's of Bankable PV Recycling

At Goldman Sachs Asset Management, one of the most common terms I heard in late-stage due diligence was 'trust but verify'. The phrase originates from a Russian Proverb ("Доверяй, но проверяй") and gained prominence in Western-speaking circles during the Reagan administration. At that time, I didn't fully appreciate the term, as on one hand it comes across as tongue-in-cheek, and on the other hand ... it makes a splendid amount of sense. In the early days (read: Wild West) of the ever-evolving and rapidly growing PV recycling industry, the idiom couldn't be more accurate.

My wife and I recently shopped for a minivan, and the amount of research we did was… probably more than we’d like to admit. As a buyer, we valued quality. Was price important? Absolutely. Perceived quality of product, however, reigned supreme. When we go to sell that same minivan, what will matter to us most? Highest price.

That concept holds true for module recycling, except what you’re “buying” isn’t just pickup and paperwork. You’re buying a service that offers verifiable outcomes and reliable processing capacity. Remember: if you’re paying for a service, you should know exactly what you’re paying for. That framing sets the stage for the Three C’s we use to assess the credibility of a recycler’s operations (and therefore your risk in “purchasing” PV recycling as a service):

1. Capacity of Recycler
2. Certificate of Recycling
3. Chain of Custody

Capacity of Recycler

This is the point most people vastly underestimate, yet has the greatest impact on the total risk to owner. First, let's define capacity. In module manufacturing this is a function of production capacity measured in MW/GW per year and is usually rated to the specific models they are producing at the facility at that point in time. Recyclers are the polar opposite of this. We receive tens of thousands of vintages dating from the early 2000's to modern construction losses, which as the seasoned renewable energy reader is aware, can range from 100W to 700W. Similarly, the same can be said for weight, size and material composition (bill-of-materials). Therefore, a red flag for us has always been people's inclination to quote capacity for recycling facilities in megawatt or kilo-ton terms - you can't reliably do so. You're effectively guessing an average wattage or weight per module.

To be clear, the conventional metals recycling industry lives and dies by price per ton. What we've found is that recyclers who operate bulk-shredders tend to quote on a per-pound basis (as this equipment is rated in material flow rate, e.g. tons per hour). Obviously, with a spec-sheet in hand it's simple enough to take a recycling fee and divide by the module weight to get a price-per-pound. However, bulk-shredding for PV modules from our experience isn't a durable long-term strategy as the process is quickly cannibalized by the hardened glass, and moreover the cross-contamination of glass into the downstream destroys the marketability of the end-products (with exception for aluminum via eddy current separation).

Translation: bulk-shredder operations are effectively an aluminum-only operation where the rest of the panel may as well be landfilled. We'll get into this more in the "Chain of Custody" section.

When we say 'capacity' what we're really speaking to is a recycler's ability to demonstrate throughput at a consistent and sustained rate for the specific type of module(s) that they purport to handle, e.g. monofacial, bifacial, CdTe, etc. In our sense, the most reliable way to quote capacity is on a per-unit basis: modules in per minute, per hour, per working day, per week, per month, per year by type.

Why does this matter? Well, capacity isn't just a brochure number. It's a compliance control and, especially at utility-scale, a schedule guarantee. Depending on permitting conditions, fire code and storage requirements, each state has well defined limits and constraints on how long material can sit on-site and how it can be stored and staged. If a recycler accepts volume faster than it can process and legally manage, the risk doesn't disappear. It becomes queue risk, compliance exposure and reputational downside for the asset owner.

Said differently, nameplate capacity ≠ available capacity. Here's a simple analogy most asset managers or procurement professionals will immediately understand: if a module manufacturer has 5GW of nameplate capacity and 100% of that is already contracted for the year, and you're "negotiating" a 500MW order... what exactly are you negotiating?

Certainly not capacity. At best you're negotiating allocation:

• Priority,
• Slot timing,
• Expedite economics,
• Who gets bumped when the system gets tight

PV recycling works the same way. A recycler can advertise impressive throughput, but if inbound commitments already consume it, your "deal" is effectively a negotiation over where you sit in the queue and whether your material will actually be processed inside the window your repowering schedule, regulations and reporting require. This becomes especially acute when retirements cluster in geographies.

Example: let's assume three asset owners contract with the same recycler in the same window, each with multi-site retirements that would exceed the recycler's available capacity. The recycler is implicitly promising everyone will be treated as the priority. Unfortunately for the owners, that's impossible. When capacity is oversubscribed, someone gets the short end of the stick:

• Material sits longer than expected,
• Staging and handling risks compound,
• Downstream schedules slip,
• "Recycling" quietly turns into a storage problem,
• and the last-in portfolio becomes the portfolio holding the bag

The diligence question here isn't "What's your nameplate capacity?" it's "How much capacity is actually available during my retirement obligation window and what is contractually committed ahead of me?".

For those of you who have worked with us recently, you will have noticed that we prefer quoting in-advance on an order book basis. It's transparent, allows for flexibility, and more importantly a fairer assignment of pricing.

All of this starts to have a compounding effect on the two other C's of bankable recycling: certificates and chain-of-custody. Recyclers who intake (and, let's not forget, are paid) to receive the modules then may feel pressured to provide certificates of recycling for a service that hasn't actually taken place. Unfortunate, but not uncommon and in the next two sections, we'll revisit much of the content covered here.

So how does an asset owner practically eliminate this risk? Our suggestions on what to ask recyclers for:

• Committed intake versus demonstrated throughput (not theoretical, marketing numbers)
• Orderbook visibility and allocation policy (even if redacted)
• Queue-time SLA: receipt → processing (with remedies if missed)
• Inventory aging: percent processed within 30/60/90 days
• Surge/contingency plan for multiple assets retiring at once or downstream outlets bottleneck

As the industry matures, we expect much of the above to become standard in procurement/investment recovery circles among sophisticated owner-operators.

Certificate of Recycling

A 'Certificate of Recycling' (CoR) is much more than a paper-receipt. In credible form, it is your defensible proof of responsible disposition: documentation that modules entered a defined process, in a defined facility, with defined outcomes and most importantly: backed by an audit trail you can defend later.

Some history here before we get into why this matters for PV module recycling. In other recycling and waste diversion business, such as ITAD and auto-recycling, the CoR is commonly referred to as a 'Certificate of Destruction' (we'll stick to CoR to avoid COD acronymic polysemy). The concept of a CoR emerged out of practical necessity where issues with sensitive information, title-transfer and other liability-related issues were present in the absence of verified destruction. Some examples:

• Your car has been in a horrible accident and is totaled; you sell it to a salvage yard for scrap, but weeks later you get a parking ticket in the mail for your old car.
• The U.S. government needs to dispose of computers that contained highly sensitive, classified information. They send the computers to an e-waste recycler and weeks later major security breaches occur.
• A medical establishment needs to dispose of old computers containing patient insurance and health records. The computers are sent to an e-waste recycler and weeks later customers report fraudulent claims and identity theft.

Think of a CoR as less of a 'death certificate' for a piece of property and more of a legally recognized document that provides irrefutable proof that the asset was permanently, irrevocably recycled. It's effectively a roundabout form of downstream liability insurance. For more great information on the origins of the CoR and proxies for use-cases in other industries, we'd recommend this quick article from US Law Explained.

Now, imagine that your solar modules need to be disposed and you pay a PV recycler to process them. Weeks later, do you want to find out the modules were resold, installed on a residential rooftop and involved in a thermal-event? Or, in a parallel example from outside PV, that your wind blades you paid $16,900,000 to "recycle" really ended up in an open-pit unpermitted landfill in Sweetwater, Texas?

This is the root reason the CoR matters: it’s not a box-check for procurement. It’s a legal instrument and if it isn’t auditable and accurate, it can quickly turn into a publicity nightmare and a prolonged fight with federal, state, and local authorities. In practice, the CoR becomes proof for:

• Investor reporting and sustainability disclosures,
• OEM and insurer requirements,
• Offtaker / counterparty diligence,
• Legal or regulatory reviews (now or later)

The key question: does the certificate have scope, methodology, boundaries and exclusions - or is it just a PDF with a logo? At a minimum, a credible CoR should clearly state:

• What materials are in scope (modules, racking, inverters, etc.)
• What "recovery" means (and what it does not mean)
• Where the evidence lives (tickets, weights, batch logs, downstream receipts)
• An attestation signed by management confirming the authenticity of the claim

In extreme cases (such as the U.S. government example above) many ITAD companies are able to provide photographic and/or video evidence down to the serial number as a supplement to the CoR - this level of certainty enables the recycler to provide a bullet-proof confirmation for the most stringent audit requirements. For what it's worth, OnePlanet may or may not be building that functionality into our next-generation of advanced recovery facilities.

If the certificate can't be audited, it's not a control - it's a marketing tactic.

Chain of Custody

The certificate may prove the material moved through a process, but beyond that lies an ocean of uncertainty as to where the material may actually end up going. Chain of custody is end-to-end auditability; from site to transporter to recycler to downstream end markets. It serves as a forensic trail that answers a simple question: after modules left my site, what happened? The certificate of recycling does play a factor in this, but it many cases the CoR is proof that the modules were processed, not necessarily where that material goes after processing.

This matters.

Think about the Sweetwater example above. I can almost guarantee that they issued a 'Certificate of Recycling'... The question of what happens after the processing still persists. Without a clear understanding of where the material went, you're effectively in a position where the CoR is 'half-the-picture' - sure, even under the most stringent conditions you can prove it was processed, but was 75% of the glass sent to a landfill because it was so heavily cross-contaminated that it wasn't a marketable product? Worse yet, did that same recycler provide you with an end-of-year ESG report that claims they 'recycled' that same glass? Did you publish those ESG figures in your annual Scope 2/3 reporting?

If you're wondering why this can't be included in the CoR, that's a fair question. The reason why it's a challenge for a recycler to do so is that in many cases the material will be processed, but may sit in inventory for a period of time prior to being sold. Effectively an inventory turnover dilemma. At OnePlanet we mint the CoR at the point the plant manager marks the production order 'Closed' on SAP at which point the system allows the CoR to be produced, otherwise our ERP prevents us from creating the document. Another useful control on how a sensitive document is generated - might be worth asking if that's true for your current recycler.

Even after your specific material is processed, end products (glass, aluminum, silicon, plastic, copper) are typically pooled with other customers’ orders. So when you see a report that says “X tons of glass sold,” what you’re usually seeing is pro-rata attribution; an estimate of your contribution to a pooled outbound sales order.

That can be fine if the recycler has strong mass-balance controls. But without them, pro-rata reporting can mask real uncertainty: was your glass actually recovered at the rate implied, or did cross-contamination force a large portion into residue or disposal? If you’re publishing ESG numbers based on those claims, you want to know the difference.

Example: your 1,000 ton order was theoretically 760 tons of glass, of which theoretically 722 tons were recovered and if the recycler sold 5,000 tons of glass in the quarter they received and processed your material, you contributed ~14.4% of that volume. You only ever see '722' tons of glass sold in your ESG report. In reality - you don't know if the recycler actually recovered 95% of the glass, or if the glass content was truly 76%.

The point here is that the CoR needs to be accompanied by the 'rest of the picture' in the form of a downstream traceability report from the recycler. In essence, the CoR is proof that the material was received, processed in a timely manner and in accordance with local, state and federal laws. The other half of the 'picture' should come in the form of a downstream traceability report. Fundamentally, there are three things that impact a recycler's ability to produce this detailed downstream chain-of-custody reporting:

1. Processing Technology ⚙️
2. ERP Capability 🔗
3. Operational Controls 📋

These three pillars determine whether chain-of-custody is a verifiable system or a story reconstructed after the fact. Chain-of-custody reporting is only as good as the recycler's ability to (a) physically separate and measure what happens to the material during processing, (b) digitally capture those events in a structured, queryable way, and (c) execute consistently enough that the data is complete and defensible. If any one leg is weak, you up with gaps, whether that be missing weights, broken batch links, unverifiable downstream claims - these all force customers to rely on trust instead of evidence.

Remember that random tangent about bulk-shredders earlier? The very same bulk-shredder can have the capacity to handle your order, can issue an auditable CoR, but they likely can't (or simply don't want to) produce a detailed downstream report on where that material went. Generally they're not outfitted with the reporting architecture to accommodate (pillar #2 and #3 above), and even if they were, the process employed (pillar #1) produces only one product that is marketable: aluminum. The glass, silicon, plastics and potentially copper and silver are so comingled that they don't meet any buyer specs for purchasing. That means that fraction from the shredder is probably going to a landfill.

Processing technology is the single most important component as it determines what can be measured and the efficacy of the 'recovery rate'.

If the processing technology and facility design can't reliably separate materials or if yields are highly variable and challenging to quantify, then your "recovery rate" is inevitably an estimate (see above 1,000 ton example). Good technology creates controlled, repeatable outputs with clear points to weigh, sample and certify - turning recovery from a purely marketing claim into a mass-balance problem that can be audited. In other words, technology is what makes "what happened" observable.

ERP capability matters because chain-of-custody is ultimately a data problem. You need a system that can link site → shipment → receiving → batch/lot → processing run → outbound commodity shipment → end-market receipt without broken references. Again, this is why we from the very onset chose to operate SAP and figure out the mechanics before rushing to market to sell a premature 'service'. A robust ERP (and namely the integrations around it, e.g. scales, barcode/RFID scanning, bills of lading, inventory and WMS integration) is what turns operational events into a time-stamped ledger you can query, reconcile and package into customer reporting. Without it, chain-of-custody becomes spreadsheets, manual lookups, and inconsistent definitions. Manageable at a small scale, but breaks down at multi-site operations when auditors ask for proof and your teams can't reproduce it.

Operational controls are the reality check at-scale: this is the discipline layer that determines whether the tech and ERP are actually used, correctly, every time. Think: SOPs for receiving and labeling, scanning compliance, lotting rules, weighbridge governance, segregation and storage controls, exception handling, QA/QC checks, and internal audits. Even the best ERP can't fix a missed scan and even great equipment can't produce credible reporting if material is handled inconsistently. Operational controls are what make the chain unbroken and what make the final downstream traceability report something an investor, insurer or regulator can rely on.

'Trust but Verify' = Third-Party Auditing

By now, if you're thinking, well that's great, Connor, but even if the recycler produces all of this information, how do we validate what's real and what's make-believe?

Great question! The same way you'd handle this dilemma in any other similar situation. An independent third party. We touched on this at the beginning of the article. I've said to folks "treat module recycling the same way you'd treat module buying". What I mean by this is, if you're willing to spend half a penny a watt to get inline QA/QC monitoring, FEOC compliance audits and UFLPA audits for the modules to avoid underperformance, warranty claims, and ITC recapture risks... why not spend a fraction of that to engage a third-party auditor to verify similar claims from the backend of the lifecycle?

From the get-go, my Co-Founder Andre Pujadas and I knew this would present a challenge for the fledgling industry both from his experience with e-waste from the conventional metals recycling industry, and my experience in solar asset management. That drove us to pursue the R2v3 Appendix G certification from SERI. However, we didn't stop there. The R2v3 certification is a great first step, but several key considerations are omitted from the R2 standard. Namely a facility mass-balance, complete and total downstream traceability, and importantly an environmental audit.

Given the heavy amount of QA/QC work that goes into getting a module into the field, we figured, why not approach the companies already providing that service to create a similar, complementary offering on the opposite end of the spectrum: asset disposition. We identified Intertek CEA (Clean Energy Associates) as our firm of choice and worked closely with their QA/QC group to help develop a standard that sets a very high bar for performance and compliance.

The Intertek CEA PV Recycling Verification audit covers monthly production reporting to get mass-balance across the entire year and speaks to recycler capabilities vis-à-vis capacity. They additionally assesses every sales order for material that leaves the facility as well as any material that is sent to landfills. Oh, and to boot, they also look at the environmental efficacy of the operation with metrics such as water usage, chemical usage, air pollution, and a variety of other factors to help quantify the impact reporting said recycler is warranting to you.

Since this roll-out, if you actively follow the space, you may have noticed the strange echo-chamber effect of recyclers suddenly talking about 'certified recycling' or 'verified recycling' with some AI generated image and catchy post. What a coincidence! When it comes to PV recycling claims, it doesn’t take two to make a thing go right… it takes three to cross the 'trusted and verified' threshold for the Three C's we've covered here.

If it's not third-party audited, take it with a grain of salt.

Words of Caution

It’s become obvious that “counterparty risk” has been used malignantly in the market to some extent, and I feel compelled to address it publicly. Commentary occasionally frames “demo-scale” operations as a risk factor for asset owners. In reality, early commercial facilities often exist precisely to validate the controls discussed above before scaling nationally.

To be precise, our current facility operates as a commercial demonstration plant capable of processing approximately 480,000 modules per year using the same core technology package deployed in several competing operations. The difference is that when your executive management hails from Nucor Corporation, DuPont, 3M, and Dow, you tend to have a different definition of what constitutes a “commercial demo” versus a full-scale manufacturing operation. And with the audit program we have in place, we’re not hiding anything: we physically can’t based on how stringent the requirements are.

This engineering and systems-first approach is intentional: as we scale into multi-million module capacity facilities across the U.S., we don’t want to be playing catch-up on technology, controls, data infrastructure, and reporting integrity across geographies, especially while raising institutional capital.

Conclusion

My thesis isn't complicated: PV recycling is not a feel-good endeavor. It's a counterparty you're underwriting for performance obligations. And like any other counterparty in renewables, the risk isn't captured by slogans ("certified", "95% recovery", "landfill-free"). It's captured by controls, evidence and independent verification.

That's why the Three C's matter. Capacity tells you whether your recycler can actually perform (in your window) without queue risk turning your disposition plan into a long-term storage and compliance liability. Certificates tell you whether you have defensible proof of disposition or just a paper receipt. Chain of custody tells you whether your ESG outcomes are auditable end-to-end, cradle-to-cradle - or whether you're relying on estimates, assumptions, and post-hoc narratives.

If there's one takeaway for asset owners, EHS leads, procurement teams and project managers planning retirements: don't buy recycling on faith. Buy verifiable outcomes. Require clear definitions in the SOW, require queue-time accountability, require downstream traceability, and (most importantly) require third-party auditing of the claims you are paying for and/or are publicly reporting. If a recycler can't withstand independent scrutiny, you're paying for deferred risk.

The PV industry matured by standardizing and auditing the front end of the lifecycle: QA/QC, traceability, compliance, warranty diligence. The back end is heading the same direction. As repowering accelerates and scrutiny tightens, the leaders of PV recycling will be the ones built on bankable, investment-grade controls - not self-reported claims. Because in the long-run, the cheapest recycling is the recycling you never have to explain twice.