Managing uncertainty in the solar module supply

As 2022 draws to a close, the industry is still riding the “solar coaster” of ongoing policy issues in the United States. In March of this year, the Department of Commerce announced it would investigate the circumvention case brought forth by Auxin Solar. Within one month, the Solar Energy Industries Association (SEIA) reported that 70% of projects had been canceled or delayed, directly impacting the more than 230,000 Americans currently employed by the solar industry at more than 10,000 companies. Investors were also concerned; in 2021, the solar industry generated nearly $33 billion of private investment in the American economy.

Fortunately, in June, some relief came to the industry when President Biden announced a temporary moratorium, creating a 24-month PV module supply bridge for developers as domestic manufacturing scales. However, the months of uncertainty had already pushed developers to look for new sources of module supply, causing another concern: quality assurance for these new products. In a tighter procurement environment, it’s critical that as developers look to secure modules, the process for maintaining quality in the supply chain is maintained.

By August, the passage of the historic Inflation Reduction Act brought a new wave of optimism to the industry, along with investments of approximately $369 billion for clean energy projects. The law extended and expanded the solar Investment Tax Credit from 26% to 30%, while also providing tax credits for stand-alone energy storage projects. However, according to Wood Mackenzie, the industry isn’t expecting to feel the impacts of these investments until 2024. In the meantime, solar project developers may be wondering how to best procure high-quality PV modules for their near-term projects.

Below, PVEL and PI Berlin, both members of the Kiwa Group, outline the steps that companies can take to ensure that the modules they are deploying in their projects meet quality standards for the U.S. market. These steps are best practices when working with established suppliers, and are especially critical when working with new market entrants to the U.S. PV module supply landscape.

Minimum requirements for U.S. market entry

For EPCs and developers on the hunt to find new module suppliers, there are several steps that procurement managers need to consider before committing to an order. To begin with, they should have a clear understanding of the minimum bankability requirements for market entry into the United States. These go beyond basic product certification requirements and are more focused on what independent engineers and project investors are focused on for acceptable due diligence.

First, module manufacturers should submit their products to a suite of comprehensive testing with an accredited lab. PVEL’s Product Qualification Program (PQP) is a series of extended reliability and performance tests that have become the de facto standard set of tests used to evaluate PV modules for downstream market acceptance. Each PV module undergoes a sequence of testing that has been designed by PVEL based on regular feedback from the market including downstream buyers, independent engineers, manufacturers, and leading research institutions around the world.

The PQP process begins with a factory production witness of the test samples to be shipped to PVEL. While onsite, factory inspectors will oversee the production of each sample module, from the opening of raw materials process to wrapping the completed pallet in tamper-proof tape.  This is done to ensure the components actually used to build the modules submitted for testing are independently verified, which is not a requirement for certification testing. Once the samples are received at PVEL’s labs, they are evaluated across a series of tests, including damp heat, thermal cycling, mechanical stress, hail stress, potential-induced degradation and other tests to identify known module failure modes.  Ultimately, the PQP reports help inform the bankability reports that developers need in order to access and optimize financing for their projects.

Second, it’s important that the buyer requires independent audits of the factory or factories that will produce the modules for specific projects.  These are often undertaken by factory inspectors such as PI Berlin who work on behalf of the buyer.  The audits ensure that the quality of the manufacturing process meets well defined expectations before production commences.  Then a combination of regular production supervision, module inspection and testing ensure that quality expectations are maintained throughout the production build and before the modules leave the factory. A key aspect of this work involves checking that the components used to build the modules for the project are the same as those used for the extended reliability and performance testing.

How to handle module acceptance at the project site

After modules have shipped and arrive onsite, service providers such as PI Berlin and PVEL can assist developers with on-site module acceptance. Module acceptance testing can help verify modules have not been damaged in transit from the factory to the project site. By testing a statistically significant sample from every week’s delivery as a recurring service throughout the delivery schedule, developers can have better insights into potential issues before they ultimately accept and install the modules.

Don’t underestimate small changes

Results from over ten years of testing at PVEL across 400+ bills of materials (BOMs) show that specific components can dramatically impact product performance and reliability. It is therefore recommended that developers and module suppliers proactively communicate to prevent potential issues. If a supplier asks to change a BOM component, the developer can require additional testing per PVEL guidelines to ensure that additional risk is being mitigated.

With policy uncertainty continuing to dominate the solar industry, these tools are critical to help buyers evaluate the quality, reliability, and performance of the PV modules produced for a given project. By working with technical advisory professionals like PVEL and PI Berlin, developers can ensure that quality is maintained even in the face of a shifting supply environment.

 Tristan Erion-Lorico is vice president of sales and marketing at PVEL  He has over 15 years of solar and electrical industry experience that spans manufacturing, testing, project development and operations and maintenance. As vice president of sales and marketing at PV Evolution Labs (PVEL), Tristan oversees PVEL’s commercial activities including collaborating with PV module buyers, investors and manufacturers to develop innovative test programs for product qualification. 

Ian Gregory is managing director at PI Berlin North America. He manages a multi-disciplinary team that assists banks, investors, developers, and utilities in assessing and managing solar power equipment quality and performance. With over 19 years in the solar industry working in a mix of technology development, product management, marketing and sales roles with major companies, Ian has gained a wealth of experience that can be leveraged the company’s clients. Ian founded SolarBuyer in 2011 and successfully grew the company until its takeover by PI Berlin in 2018 and the subsequent acquisition of PI Berlin by KIWA in 2022.