Taking it to the bank

It’s a phrase that is increasingly becoming pervasive in PV: quality. It applies to module components, manufacturing, project components and also to a company’s leadership and finances. But in the current market environment, where consolidation is an ongoing feature, ensuring quality and therefore bankability may not be as straightforward as it sounds.
“We have been getting general feedback that module quality in general is becoming more and more of an issue.” Stefan de Haan is a principal analyst with IHS Solar and he notes that two years on from the major installation boom in Germany, there is a growing awareness of module or component failure amongst project developers and financiers.
On the material supply side, quality is a theme that many companies are keen to push. “We’ve noticed a deviation in module standards, reliability and the durability of products in recent times,” says DuPont Photovoltaic Solution’s Conrad Burke, “partly as a result of module manufacturers’ fight to survive.” At the Intersolar North America trade show in San Francisco in July, DuPont took its message to attendees hosting a PV Reliability reception event, highlighting component quality. DuPont supplies silver pastes and Tedlar backsheets to cell and module manufacturers. Naturally it is in DuPont’s interest to put quality on the agenda, to position itself as a supplier of quality components, in opposition to newer market entrants into the backsheet and lamination space. However that does not discount Burke’s point. “Talking to the downstream segment, there’s a growing awareness that not all modules are the same,” says Burke. “There have been suspect materials moving into the PV space and while we don’t want to be alarmist, we are educating the industry that materials do matter.”

Proving quality

But it’s not only materials that matter. To gain the confidence of banks and financiers that an installation will last the distance, there are a range of factors that need to be communicated. Recent insolvencies of module manufacturers continue to demonstrate how the only warranty that is worth the paper it is written on is the one where there is a company behind it to fulfil the warranty. While some industry insiders were aware that Suntech Wuxi was not in good financial health, the rapid demise of the manufacturer caught others by surprise.
Suntech had been successful in building a brand and reputation as one of quality and reliability, and suggestions that the warranties behind the company would not be honoured would have been rejected. However, with the entire Suntech operation teetering on the brink, and founder Shi Zhengrong surrounded by controversy, the bankability of Suntech modules is suspect at best.
Suntech is also far from alone in being in this position. Manufacturers with a long and prestigious history in PV have stumbled and fallen, often with implications for warranties. Q-Cells went from market leader to insolvent with alarming alacrity. Conergy has been the most recent high profile insolvency. SolarWorld’s quarterly financials have been heading from bad to worse leading one observer to publicly note after Q2 2013 revenues were announced, “How low can they go?” A myriad of tier-2 and tier-3 Chinese crystalline producers are not in robust health, and an assessment of leadership and financial health is presently growing in importance.
“Consolidation is a very clean term,” says DuPont’s Burke, “but there is a lot of carnage that comes with it.” He compares the process of consolidation in the telecoms sector unfavorably to that which has taken place in PV. “In the telecoms industry, one thing that was never compromised was quality. But in PV what we’re seeing is the opposite.”

OEM production

Another major trend on the PV landscape has been the emergence of vastly increased OEM production. Spurred on by tariffs and duties imposed on Chinese module producers supplying the U.S. and the ongoing trade case machinations and negotiations regarding Europe, increased OEM production has been observed (see crystalline rankings, pv magazine 07/13 pp. 44-49). This further complicates the matter when assessing module quality, tracking down not only components and materials, but also ascertaining whether process best practice is being followed and ongoing measures taken to ensure modules will go the distance.
Another dynamic driving increased information gathering regarding an entire project and components is the evolution of the PV market from small and entirely subsidy-driven to a market where project scales have vastly increased and electricity output over time is vital. The ramping up of project scale is relatively simple to observe. While in 2005 an installation of 1 MW in size was deemed large, in 2008 it was more like 30 MW and in 2013 something like 150 MW is seen in the same light. Quite simply, the stakes are vastly increased and if quality is not assured, losses can be substantial.

Process evaluation

With such a diverse set of drivers underpinning the increasing necessity for more thorough quality assurance and project and supplier bankability, the development of processes to do this has been rapid. Providing all the checks and assurances required by financiers is no simple task, but that’s not to say it’s a thankless task. “I love to do it, to help a company present itself to banks and financiers,” says an animated auditor with Accelios Solar, Christian Leers. Accelios has carried out manufacturing auditing and assessment for manufacturers all over the globe, from China, Japan and Korea to Germany. Leers says that demonstrating project bankability is a multifaceted process (see box p. 81) and can only be demonstrated on a case-by-case basis. Leers adds that the process is best carried out by independent auditors, who can provide the transparency that banks require before putting their money on the table.
Bankability is also an ongoing and evolutionary process. Leers sets out how following a factor audit, remedy actions can be recommended regarding certain process steps. If a red flag report is issued advising remedy action be taken, it is important that follow-up checks are carried out to ensure that the measures have been taken, and in a timely fashion. It is also important that such actions must be implemented on a permanent basis and that manufacturers don’t allow bad habits to return.
An example that Leers uses is for the application of EVA encapsulate. Not only should supplier specifications regarding temperature and lamination time be followed closely, but also a clear logic behind why certain settings have been applied should be shown. “It’s important for manufacturers to know not only the what but the why,” says Leers. Following an audit, an auditing findings list is compiled and following assessment, a rating given to the manufacturer. “The rating should be between 80 and 100% as a minimum to trigger bankability,” says Leers.

In black and white

How then to compile and present the various information required is also an issue. The creation of bankability books is becoming a more common way of meeting this challenge. In May, China’s ReneSola announced that it had completed a bankability book to help get projects supplied by ReneSola off the ground, in terms of financing. Accelios Solar worked with ReneSola to provide the independent auditing and analysis for its bankability book. Accelios auditors visited ReneSola’s 1.2 GW manufacturing facility in Yixing, China, on a number of occasions as a part of the process. “It’s one of the most comprehensive processes towards bankability that I’ve been involved in,” says Leers.
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“We want to lead the solar industry in terms of providing the information finance houses need,” said ReneSola CEO Xianshou Li in a statement announcing the book’s completion, “so that our customers can get on with making money from their ReneSola panels at the earliest opportunity. We want to be transparent about our work and this document will help investors, installation companies and banks get everything they need.” ReneSola says that it hopes the book will be particularly helpful for small to medium-sized businesses, which may not have much experience in the solar industry.
ReneSola’s bankability book is a “live directory,” the company says, meaning that it will be updated on an ongoing basis. This is because many of the elements demonstrated in a bankability book are actually dynamic and the data included in such a document must be constantly kept up to date. Forming a database of sorts, an up-to-date bankability book can be provided to potential project financiers on a case-by-case basis, ReneSola is far from being the only module manufacturer working towards putting together such a document. Chinese manufacturer Talesun is working towards producing bankability documentation of a similar type. Talesun’s Frank Qi says project investors and lenders need confidence in the product and that can only be provided through proof and documentation. Qi says that Talesun has strengthened its quality assurance team and leadership.
Also important, says Talesun’s Qi, is a pipeline of projects, and references from investors. In Europe, Talesun has developed 100 MW of projects, half of which have ownership fully transferred to the investors. Qi notes that testimonials from these investors can be important.

Beyond modules

While vitally important, the module is not the only part of the PV power plant where quality must be ensured and bankability triggered. Other components such as trackers – when they are employed, mounting systems, and the complete BOS must be proven to be of bankable quality. Accelios Solar’s Leers says that the falling cost of modules is demonstrative of why this is the case. “In 2008 or 2009, when modules were selling at €2.50, modules made up 65% of a project’s cost,” says Leers, “today, that’s dropped to 50%.” When it comes to inverters, quality is paramount, says Hans-Thomas Fritzsche, the CSO of Sputnik Engineering’s SolarMax. “If the inverter fails then the complete plant fails, if one module fails then maybe you lose one string,” says Fritzsche. An equally important factor underpinning the importance of inverter technology, argues the Swiss firm’s CSO, is that the inverter is technologically a more complex device than a PV module: “With an inverter you have many thousands of electronic devices, which automatically increases the theoretical failure rate.” When establishing inverter quality, Fritzsche says that inverter design is a crucial factor. By way of example he cites the question as to whether electrolytic compensators or foil compensators are used can have a major impact on inverter durability, and therefore bankability. The upside to this: SolarMax reports that the at times extreme price competition in the PV module space has not played out in quite the same fashion with inverters.
Quality assurance and bankability are issues that certainly are not going to go away any time soon and methods for establishing and demonstrating these are evolving and becoming more sophisticated. In some ways the importance of the issue is one that concerns the whole PV industry, as a failing power plant is a black spot on the reputation of the technology and industry in a time when direct competition with thermal power sources is heating up.
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