Connecting circular economy and energy industry: A techno-economic study for the Åland Islands

Energy plays an essential role in circular economy because circular activities such as material processing require power and heat. In parallel, the rate of the transition to renewable energy is not adequate to meet the increasing energy demands. The objective of the study is to evaluate whether circular economy could increase the value of variable renewable energy investments and hence accelerate the transition towards renewable energy. The study involves a combined energy system and material flow analysis. The study is performed on a selected case region as the processes in circular economy and the availability of renewable energies are always local and depend on regional conditions. The angstrom land Islands was used as a case platform in the study as the electricity generation capacity from wind power in the region is expected to increase significantly in the near future resulting in high variability in the local power supply. Four alternative scenarios are analyzed in which the variable regional renewable energy supply exceeding the local demand is integrated for different purposes: power exports, circular economy, partly electrified transportation sector and district heating. With the highest annual system net profit (0.72 MEuro), integrating the power production peaks of variable renewable energy into circular economy was found to outweigh the annual economic benefits of power exports (-0.43 MEuro), the partly electrified transportation sector (-0.50 MEuro) and district heating (-0.27 MEuro). Therefore, the value obtained from the products derived from circular processes increased the value of the renewable energy system and would hence promote investments in renewable energy in the region.