New research from the Netherlands has shown that product-service-system business models applied to the PV business encourage the use of high-quality PV products and maximizing system lifespan. Their alleged connection with circular economy principles, however, was found to be weak, with financial considerations being prioritized by customers.
A group of researchers from Maastricht University in the Netherlands and the Bern University of Applied Science in Switzerland has investigated how the so-called product-service-system (PSS) business model could be used to run companies active in the solar installation sector and has found that its adoption would be mostly driven by financial considerations rather than the final users' environmental concerns.
“PSS models theoretically shift the focus from product ownership to PV system performance and lifecycle value,” the research's lead author, Roger Nyffenegger, told pv magazine. “Our study highlights that third-party- and community-owned solar PV business models – typical of product-service-systems (PSS) – align financial incentives with PV system performance. This encourages the use of high-quality PV products and long-term maintenance, making them well-suited to support circular economy principles.”
“However, practically, financial motivations currently outweigh circular economy ones in current PSS implementations,” Nyffenegger went on to say. “Although PSS models have the theoretical potential to enhance circularity, their real-world adoption is primarily driven by financial considerations. The surveyed providers' value proposition elements show that financial arguments are key, while sustainability and energy independence are of secondary concern.”
In the study “Product-service-system business models in the photovoltaic industry – A comprehensive analysis,” published in the Journal of Cleaner Production, the research team explained that the PSS model consists of the provision of tangible goods and intangible services to fulfill customer needs. It substantially differs from traditional purchasing models characterized by self-ownership a one-time sale, as it seeks constant delivery of customer satisfaction and value.
The academics focused their analysis on third-party-owned and community-owned solar PV business models, which reportedly incentivize the optimization of system sizing, performance, and reliability, while shifting the business focus from short-term sales improvements to long-term asset management.
The survey participants were selected based on the deployed PV capacity, net electricity consumption, and their market presence in Switzerland. Different approaches were taken for businesses on one side and governmental and quasi-governmental organizations on the other.
The group also developed six decision criteria for evaluating PV business models: Cost structure, revenue opportunity, investment requirements, flexibility in property development, competency distribution, and life cycle management. These are designed to guide procurement decisions and policy design.
“Both focus groups covered the same topics, were moderated by the same facilitator, and observed by three researchers to ensure data validity and methodological rigor,” the scientists stressed. “The organizations were identified in collaboration with the national Swiss Solar Industry Association, Swissolar, which maintains a comprehensive database of solar PV entities operating in Switzerland.”
They contacted 92 organizations and only 6 of them indicated that they did not offer PSS, with 23 completing the survey and yielding a response rate of 26 %.
The analysis showed that potential customers are skeptical about the PV PSS business models within the context of a circular economy and prefer traditional sales models.
“Our survey revealed the customers perceive PSS models as complex and inflexible,” said Nyffenegger. “Traditional models are perceived as less complex in terms of legal structure and less restrictive regarding property development compared to PSS offerings. Focus group participants expressed skepticism toward PSS due to legal complexity, dependency on providers, and long-term contractual obligations, even though they appreciated the operational benefits and lack of capital commitment.”
The scientists also concluded that their study does not align with the existing literature, which outlines PSS as a key enabler for circular economy principles. “It also highlights the ongoing difficulty in bridging the gap between conceptualization and practical implementation of circular business models, particularly beyond initial pilots and demonstrators. In this context, policy support may be essential,” they stated.
