Circular Economy Policies and Business Models in the EU Renewable Energy Sector: The Case of Solar Photovoltaic Industry

Abstract

The circular economy is an approach to decouple economic growth from environmental impacts. In Europe, its development is driven by policies that guide market dynamics through regulations and by businesses innovating with new circular models. However, top‐down policies and bottom‐up business efforts are often misaligned, and their interplay remains poorly understood. This study addresses this knowledge gap through a case study in the renewable energy sector. We investigate to what extent circular economy policies influence the emergence, diffusion, and scaling of circular business models in the solar industry. We identify four archetypes of business models, explaining how they function, interact, and whether they align with intended policy goals. As a result, we propose six industrial and policy interventions to improve circularity, thus waste management and resource security in the sector. Conceptually, we outline three key circular business model patterns: policy‐gap‐exploiter, policy‐follower, and policy‐pioneering. These insights contribute to bridging the gap between policymaking and business innovation.