First Solar responds to concerns over higher warranty rates for hot climates

"Our experience has shown that our warranty rates for hot climates are slightly higher than for temperate climates," said First Solar’s Mark Widmar during an analyst meeting held last week. While the manufacturer has played down the comment, industry analysts have expressed concern that it could cause trouble later on.

As USA Today remarked, "First Solar took a $37 million fourth-quarter charge to set aside money to handle potential warranty claims related to temperature, and it plans to set aside a larger portion of its sales going forward to cover warranty expenses." It adds that the problem was first spotted when the manufacturer shifted its business focus from cooler and overcast geographical areas, to places like India and Australia.

"The warranty issues are a big deal, to us at least," Credit Suisse analyst Satya Kumar wrote in an investor note. "This is the first time First Solar is talking about this issue, although we have heard of this issue in our discussions with industry contacts." Satya added, "The fact that First Solar is reporting performance issues in the field in the first few years and is accruing higher charges on an ongoing basis is worrying, as the hotter regions tend to make more sense for solar. We are concerned this may not be the last time we hear of the warranty-related issues for First Solar."

However, in an interview with pv magazine, Brandon Mitchener, director of public relations at First Solar said that the statement was taken out of context, and that it is not true that all its modules are not suited to hot climates. "Our modules have some important advantages in hot climates, such as our technology’s lower temperature coefficient, which means that it performs better under high-temperature conditions than conventional PV technologies," he said.

He added that First Solar’s modules have "some important" advantages in the heat, such as a lower temperature coefficient. He further explained, "Third-party testing and commercial results validate that First Solar modules produce higher energy yields than silicon modules and systems using First Solar modules produce higher performance ratios as a result … We conduct extended accelerated life tests beyond the requirements of international standards to demonstrate our modules’ robustness."

On the issue of failure rates, Mitchener said that heat serves to accelerate the physical processes for all photovoltaic technologies. "Therefore we believe, and stated, that our PV modules are potentially subject to increased failure rates in hot climates. Again, we expect this to be true for all PV technologies."

He continued, "Our experience so far shows that warranty return rates from hot climates are slightly higher than the return-rate from temperate climates. As a result, we are taking a prudent and conservative approach and increasing our warranty accrual rate proportionally (by one percentage point) because we expect a greater percentage of our production will be installed in hot climates going forward. We have not changed our expectation for system performance in hot climates."

When asked what First Solar’s strategy would be in the notoriously hot markets of India, Malaysia and the Middle East Asia, Brandon replied, "Hot climate performance has become a key factor in how we engineer and manufacture our modules worldwide. We are incorporating what we have learned through testing, real-time monitoring of in-field performance, and analyzing warranty returns to make our product even better."

Edited by Becky Stuart.