Solar panel quality has become an issue worthy of widespread attention.
In 1960 one of the first commercial solar cells ever built cost about $400 for every watt of electricity produced and converted sunlight to electricity with just 10 percent efficiency. Today, efficiency has virtually doubled, and selling prices are down to $1 or less per watt. Advances in technology and cost improvements are driving renewables to become a growing part of our energy mix -- currently, 14 percent and counting. The amount of new solar panels installed in the United States grew to 3,313 megawatts in 2012, up from 1,887 megawatts in 2011, marking 76 percent growth and another record breaking year for the American solar industry, as per GTM Research. Globally, the solar power industry is on track to become a $100 billion market by 2015.
That said, the solar panel manufacturing industry is in a fight for survival. With prices plummeting 80 percent in just the last six years, operating margins for solar panel manufacturers are in the red. Some estimates show that there are more than 20 gigawatts of excess solar panel manufacturing capacity in the market today -- a market that will consume about 28 gigawatts of solar panels this year. One industry source (GTM Research) predicts that 180 solar panel producers will be out of business by 2015, 54 of which are in China. Another industry source, Photon International, expects fewer than 50 module suppliers will be around by 2016.
As solar panel manufacturers face daunting challenges of overcapacity, falling prices, financial losses and consolidation, there is growing evidence of corners being cut to reduce costs. Less reliable solar panels, often made with unproven or inferior materials, are becoming more prevalent in the marketplace. SolarBuyer LLC, an independent firm focused on solar panel quality ratings, recently reported defect rates of 5.5 percent to 22 percent during audits of 50 factories over the last 18 months, as reported in the New York Times. The solar industry cannot afford quality issues that erode consumer and investor confidence that the industry has carefully built through years of scientific advancements in this vital source of renewable energy.
While tension between the pressure to cut costs and maintaining high quality standards can be hard to bear, a single-minded focus on cost-cutting can be expensive. Here’s an example from the fiber optic industry. In the late 1990s, the fiber build-out was well underway. Hundreds of thousands of miles of fiber cable and components were laid, a lot of them underwater, across oceans and seas. In one particular case, transmitter repeater units were manufactured with an inferior, untested epoxy glue to reduce price. The glue deteriorated hundreds of feet underwater, where the repeater units were not easy to replace. The eventual cost came to tens of millions of dollars for the company running the infrastructure.
Substituting unproven or inferior materials in solar panels similarly has the potential to cost hundreds of millions of dollars or more if the reputation of the industry is irreparably damaged. Evidence of early system failures due to compromised quality is in fact starting to emerge. For example, recently, solar panels on two dozen San Diego school campuses had to be taken down when it was discovered they might cause roof fires due to premature corrosion. The panels were only five years old, and as a result, school officials expect to pay an additional $400,000 for energy in the coming years. Repair or replacement, under a warranty, if there was an applicable one on the panels, is questionable since two of the companies involved, including the panel manufacturer, filed for bankruptcy.
Solar technology has been accelerating and setting new expectations in the minds of investors -- the solar industry at large could suffer if widespread system failures begin to more frequently occur. What needs to happen for the solar industry to stay on its successful course? There are three key paths to follow: continued increases in the efficiency with which solar panels convert sunlight into electricity; lowering the overall cost of solar installations; and most importantly, maintaining reliability and durability of solar panels over their expected 25-year lifetime as a minimum. A solar powered system’s lifetime is the most critical element for determining the economics of such a system. Most all solar projects are financed on the assumption they will generate electricity for 25 years or more. Any negative deviation in performance can have dire financial consequences.
The point from which these three paths emerge and ultimately converge again is at the materials level. Materials make up roughly 60 percent of the overall cost of producing a solar panel and determine the panel’s durability and energy output over the system lifetime. Polyvinyl fluoride films used in solar backsheets, for example, have been proven to protect solar panels in harsh environments for more than three decades. Metallization pastes used to collect and transport energy from solar panels have been responsible for doubling efficiency over the past decade.
The good news for consumers is that solar power is better and more affordable than ever. But the industry must be vigilant to stay on course. At this stage, the industry cannot afford product failures or performance setbacks that will undermine consumer confidence. A term often used in the solar industry -- bankability -- must now not only measure the panel manufacturer’s viability but also the ability of the panels themselves to deliver long term results -- with no failures or performance degradation.
It is time to develop stronger standards for solar and borrow from some of the pioneering work done by the NASA’s Jet Propulsion Laboratory, known for its extensive testing in harsh environments and absolute insistence on reliable solar power for the long term.
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Conrad Burke is Global Marketing Director at DuPont Photovoltaics.