The recall

Blue with yellow, red, and orange stripes: from the outside, all First Solar plants look the same, no matter whether they are located in Frankfurt an der Oder, Perrysburg, or Kulim. Sometimes Managing Director Burghard von Westerholt personally welcomes small groups of visitors in Germany. The leading manufacturer of cadmium telluride thin film modules from the U.S. presents itself as open and friendly, but there are issues that seem to be hard to address for First Solar.
One such issue is overly degraded modules. During the production period from June 2008 to June 2009, First Solar produced thousands of modules that lost their efficiency too early. These modules came equally from the three plants in Germany, in the USA, and in Malaysia.
This is easy to explain: First Solar uses a copy smart system. That means that all its plants use the same equipment and the same processes. All changes in production are extensively tested and then successively introduced in the different plants. “Initially, everyone had been happy with the June 2008 rollout, because we were able to achieve a significant increase in module efficiency,” said Petra Wagner, Director Quality, responsible for Europe, the Middle East, and Africa.
At the beginning of 2009, the first customer complaints started coming in: some photovoltaic installations had experienced a significant drop in performance within a few weeks, sometimes even within a few days. These also included systems that SK Solar had installed. Panels showed a sudden drop in efficiency of approximately ten percent. ”At the beginning, the problem was easily contained, and the modules quickly exchanged,” Stefan Kutscher, owner of SK Solar, explains.
The degradation of the lower power modules far exceeded the numbers First Solar allows its products in the warranty terms. “It quickly rose to 10 to 15 percent and then stabilized,” Petra Wagner confirmed. There were some differences, however. The modules that had been installed in the spring showed an earlier drop in performance because of the more intensive solar radiation than the modules that had been installed in the fall. First Solar’s intensive quality tests initially showed nothing unusual. “The modules looked normal from the outside, and measurements did not indicate a drop in performance,” Wagner said. In summer 2009, the first replaced modules were examined more closely at the First Solar plant in Germany.
It was almost a matter of “luck” that the degraded modules had also been installed in the Lieberose Solar Park only 70 kilometers away from Frankfurt (Oder). Since the Lieberose power plant has a detailed monitoring system, the significant drop in performance of some modules was quickly noticed. First Solar reacted fast, replaced the degraded modules in Lieberose, and used them for troubleshooting purposes. Just like other First Solar partners, juwi, the developer of the solar park, is very hesitant to comment on this issue. Press Officer Ralf Heidenreich admits that Juwi and its customers are affected by the exchange, but says that he did not want to give any detailed information “for reasons of confidentiality.” How were power plant operators and installers able to notice, however, that their panels were degraded modules? According to Petra Wagner, less than four percent of the modules that were produced between June 2008 and June 2009 were affected by the significant initial degradation. In a report published by pv magazine (10/2010), the company confirms that defective modules with a volume of approximately 30 megawatts have been produced. According to attendees of an information event for installers, however, there had been talk that about five to ten percent of the modules were affected. This matches the experiences of Stefan Kutscher of SK Solar. In some plants, 50 percent of the modules were degraded modules; in others, it was just two to three percent. Initially, he had not been able to figure out the reason for the drop in performance in the PV arrays. Kutscher explained that the only thing they had noticed was an asymmetry in the inverters. At first, he had looked for problems in their assembly or in the connections, but had not been able to find anything. Armed with a mobile flasher, he then started measuring the performance of the individual modules. The faulty modules were easy to identify. “In total, we installed five megawatts of First Solar modules, and the problem affects ten roof systems with a total performance of 500 kilowatts,” Kutcher explained further.
In the fall of 2009, First Solar sat down with its partners Belectric, Colexon, Conergy, Gehrlicher Solar, Juwi, Phoenix Solar, Pfalzsolar, and Rio to inform them about the malfunctioning modules and discuss how to proceed, Petra Wagner recalls. By the end of the year, the two sides had agreed that First Solar would pay for all replacement costs, regardless of the existing warranty terms. The partners decided to do a complete replacement in plants with an output of less than 50 kilowatts, but to only replace the affected modules in larger systems. The plant operator would also be paid compensation for the lost feed-in tariff. The first on-site replacements were carried out. They mostly took place in large plants that had noticed the performance deviation due to their detailed monitoring systems. For testing purposes, the specialists in the solar parks did not only dismantle the affected modules, but entire sections of the power plants.
Many operators of smaller power plants were still unaware of the problem at this time. This is also true for the private investor from Bavaria, who is known as “Polar Bear” in the German message board photovoltaikforum.com. He had a 30 kilowatt roof system by First Solar installed in April 2009. “At first, everything was running quite well,” he said. “After two months, though, I noticed that the system was no longer reaching its initial peak performance.” The drop had been approximately 19 percent. When he expanded the photovoltaic system by ten kilowatts one year later, the difference became very noteworthy. Since he has a good monitoring system, it was easy to compare the results. In the fall of 2010, the private investor contacted his installer, who provided him with initial information. “Only later, I received a letter from First Solar, which rather downplayed the problem,” he reported. He believes that First Solar would like to keep the problem with the degraded modules under wraps in view of the share price.
Petra Wagner can understand the dissatisfaction of some of those affected by the problem. ”At times, a year had passed before the information reached the customers,” she said. She added, however, that First Solar had learned a lot from the events. Customers appreciate honest and open communication. This was also confirmed by Stephan Dautel, Managing Director of Futurasol. He had attended the information event organized by First Solar in February 2011, which had been held to inform installers on the situation and how the company would handle it.

“You have to walk the talk”

During this event, First Solar representatives openly admitted that they had messed up, but ensured everyone that they would bear all the damages, confirms Kutscher, who had also attended. “This will require some patience,” he continues. Dautel adds: “You have to walk the talk.” All experiences have been and will continue to be included in a continuous improvement process, First Solar says. “In 2009, none of us was prepared for such a major event, but we were able to learn a lot from it,” Wagner summarizes in retrospect.
Many installers and plant operators were not informed about the significant initial degradation of some modules until spring and summer 2010. First Solar then extended its reporting period for affected plants. By November 30, 2010, the partners had simply reported all power plants to First Solar that contained panels from the production period between June 2008 and June 2009. “As a precaution, we reported all plants of which we knew that they had received modules from the period in question to First Solar,” explains Sarah Wulle, Press Officer at Gehrlicher Solar. Customers had received a memo outlining the reporting process. Gehrlicher Solar had reviewed all inquiries regarding this issue for completeness and immediately forwarded them to First Solar, Wulle explains.
“Now we also got quite a few small systems that were reported just to be on the safe side“, Petra Wagner says, without wanting to give actual numbers. Stephan Dautel estimates that 4,000 to 5,000 projects could fall into this period. He himself reported PV systems with a total output of ten megawatts. Certainly, First Solar did not have enough personnel to handle the issue when it first surfaced, the managing director of Futurasol believes.
The company actually hired staff to deal with processing the reports. Now, First Solar is working with its partners in a concerted action. This includes the development of a joint database to handle complains more efficiently. The number of employees in technical customer support and quality is now much higher than in 2009. They deal with customer inquiries and conduct on-site modules tests. The quality department Petra Wagner is in charge of has grown to 60 employees. Her staff works five days a week in three shifts to measure and analyze all replaced modules. First Solar has also developed software that helps check the reported systems, and has purchased 1,000 sets of weather data to compare system performance with actual performance.

Replacements to be intensified

First Solar is now informing its customers about the results of the analysis in several steps. “First Solar is doing a pretty good job considering how extensive the problem is,” Dautel says. He has the impression that the company is really trying. “You have to be a little patient. I would have liked for things to move a little more quickly,” Kutscher says, and adds in view of experiences made with other manufacturers: “If everything takes place the way First Solar has announced it, then the way it was handled is something installers can live with very well.” Kutscher chose a very unique method to address the problem with the degraded modules. He is currently replacing all affected modules in his ten systems, even though he has only heard from First Solar about two for which it will bear all costs. He estimates that the replacement costs approximately 20 euros per module. His supplier has given him a better term of payment. This way, he hopes to bridge the time until he receives confirmation from First Solar. “We plan on having addressed the problem by the end of the first quarter. I did not build my business to have to replace old equipment. I would finally like to be able to get back to my real business,“ says Dautel, who is currently also exchanging, but is generally waiting until he hears from First Solar.
The lower power module exchange that had started months ago is scheduled to be completed by the end of April. “The exchange is scheduled to be completed by year-end,“ said Petra Wagner.
“Polar Bear” is not happy with the timing, especially with regard to small systems. “This is something you’d like to be done with. It also leads to a gap in financing,” the Bavarian investor said. Until the end of March, however, “Polar Bear’s” hands were tied. He wanted to give First Solar this time to fully handle the matter. He has already voiced his criticism during a meeting with the company’s representatives. In the meantime, it turned out that more than half of the modules have been replaced, but this only affects a minority of everyone affected. Many owners of smaller systems are still waiting. Stephan Dautel has some good advice on how the process could be speeded up: “First Solar should decide to certify ten companies that would carry out the characteristic curve measurements and remove the respective modules from the installations on-site, send them to First Solar, and replace them.” So far, the company has been handling most of the testing of the reported systems itself. There is only one subcontractor that is authorized to test or replace on behalf of First Solar.
Aside from replacing the modules, First Solar also pays a compensation for lost feed-in tariff. The company has formed more than 30 million U.S. dollars (USD) in additional reserves in the 2010 balance sheet. In the first 2010 quarter, it had been USD 23.4 million. First Solar increased this amount during the fourth quarter by another 8.5 million dollars.
It is not clear yet what will be done with the replaced modules. Wagner and Kutscher confirm that after the premature drop, the degraded modules show a stable performance curve. Therefore, First Solar tests all exchanged modules again and labels them in accordance with their efficiency. Stefan Kutscher believes that it is quite possible that these modules will be installed again. “It would be a mistake to scrap them or to ship them around the world, so that they can ultimately be installed in the Arizona desert.” Everyone who was interviewed puts a great deal of trust into the promises of First Solar. “This is where you separate the wheat from the chaff,“ said Kutscher about the reaction of manufacturers. “What is just really bothersome is that the matter is not settled and that you worry whether there won’t be a U-turn at some time,” “Polar Bear” says. He wants to take a very close look at how First Solar calculates lost earnings. “I want to finally get this issue resolved,” says the private investor from Bavaria. A sentiment that can be heard again and again from everyone affected by this and certainly something First Solar would also agree with, too.