Construction and demolition waste constitute more than one-third of the total waste generated in the European Union. The pursuit of sustainable renovation must progress further to encompass elements that ensure reuse or recyclability. A fundamental transformation, involving extensive renovation and a transition to circular renovation practices, is indispensable in effectively addressing the pressing challenge of decarbonization for the entire building stock in Europe. In this study, we have developed a circular deep renovation solution using prefabricated modular external additional insulation elements to achieve a nearly Zero Energy Building (nZEB). Circular prefabricated modular external additional insulation elements were formulated, manufactured, and installed. The potential for disassembly and reutilization of materials was developed and demonstrated for both a prototype and the complete deep renovation. The analysed prefabricated modular solutions exhibited greater potential for circularity compared to the traditional External Thermal Insulation Composite System (ETICS) due to their superior demountability and reusability characteristics. The overall cost of the renovation, which included the installation of a new heating system, replacement of water and sewer pipes, addition of 50 kW photovoltaic (PV) panels on the roof, installation of new balconies, addition of a balanced ventilation system with heat recovery, and replacement of the electricity system in common areas, amounted to 505 €/m². Following the deep renovation, the Energy Performance Value was measured to be 92 kWh/(m²·a), resulting in an EPC class of A. This implies that the building now meets the requirements for nZEB in accordance with Estonian legislation, with no performance gap.