Interview: certification and quality

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There is a growing sense that quality of components and construction is a major issue for the solar industry. How would you characterize the feeling amongst investors at present?

Everything depends on quality, FIT’s are receding and you need a quality investment to ensure that, as an investor, you get your money back and you get your returns. What we see is that many companies and parties along the chain of developing a PV installation don’t deeply understand the necessity of quality.

It’s not only about the module, it’s not only about a good price, good design, or good procurement, it’s about everything. All the pieces have to fit together to make sure that you have the quality as an investor that you want. It’s a chain and there shouldn’t be any weak links in it. Unfortunately many investors are not in a position to oversee this entire supply chain. That means it depends on other parties. And if you are not able to combine all of the right qualities you will end up with an installation, with an investment, that will not meet your expectations.

Would you say that investors are aware of this?

There’s a growing awareness, but there isn’t enough yet. Many inexperienced investors rely on what, for example, banks say and how financing parties look at it, and they have a different kind of view on what quality is. Banks and financing parties tend to look at whether they can get their money back, not whether an investor can make enough to do the same and profit.

Insurance companies also look at quality, but we look at the way the risk of damage can be minimized. We look at whether the construction is done in a way to withstand weather conditions, even extreme events like a hurricane, to prevent theft, vandalism, short circuit, fire, etc. But we don’t look at quality so much in terms of return on investment.

So for investors awareness about quality is coming. However many are still focused on getting a system for the lowest price, with the expectations of the highest return. Investors need to look at the total cost of ownership and not only the construction costs.

You spoke of the chain of quality that needs to be ensured, how important in that chain is the process of the certification of components?

Looking at the current certification method that is used for components, it is probably helpful to focus on the module and inverters. What you see is that the IEC certification process is basically a random certification. It says more about the capability of producing quality at a certain moment rather than the continuity of producing quality all year round.

There is therefore an increasing need for a process of certification or qualification where not only the materials and the modules are certified but the entire factory and the entire mentality of the company. The awareness of quality of the PV module maker in general needs to be assessed.

Do you think that there remains a reliance on the current certification process?

That’s the general opinion in the market and also is still the opinion of many buyers of PV modules. What you see is that last year we started our own module manufacturer due diligence process, where we inspect module manufacturers for which we, after approval, can insure damage caused by inherent defects of modules for the investor/owner.

In what way is inherent defect cover different?

We can insure every PV system with IEC approved modules against lightning, fire, theft and other kind of external disasters. For a limited number of module manufacturers, which are approved and certified by Solarif, we can also insure against inherent defect. This means that if something happens from within the module, that causes damage to the module or to the entire PV system, that damage is covered, not only the module itself, but also the costs of labor, transportation and production loss.

Don’t warranties already do so?

No, not entirely, they mostly only focus on the material damage to the module itself and not the circumstantial damage. Our insurance is regardless to whether there is a warranty in place or whether the manufacturer is bankrupt. We cover inherent defect and all circumstantial damages. Off course the warranty claim has to be done first.

Insuring inherent defect means you really need to know the quality of the modules that you are going to insure. So we started looking at all types of test reports, all types of certificates, everything available in the market and we found out that nothing was sufficient to convince an insurer, like us and the ones behind us, that the quality is at such a high level that we can take up the cover and actually back it up for 20 years for an acceptable premium.

So we started our own due diligence process, an in-line inspection and factory audit. It starts with the existing certifications. Of course the manufacturer has to be able to produce according to these certifications, but we also look if the manufacturer is really producing every module according to these certifications all year round. Our due diligence goes even further and looks e.g. at what a manufacturer does with modules that are assessed as not being up to the standards. Do manufacturers really take sub-standard modules out of the production line? Are all in-line tests done, is the BOM list unchanged, how are the modules being shipped?

We also look at other factors like labor and environmental conditions. An extensive financial assessment is also part of our due diligence.

We say that if a manufacturer can provide reports from someone else, we are more than willing to look at it, but so far no other company has come up with a report or certificate that satisfies all of our questions yet.

Investors are increasingly requesting this type of cover. It’s a policy for the investor himself, so there are no parties in between. However, to be able as investor to take out such a cover, the manufacturer has to open up, cooperate and proof that his quality isn’t just a sticker or certificate. What’s important is a consistent quality that we and others can rely on, giving us the possibility to back-up the quality promise of the manufacturer.

What about the additional cost that this due diligence adds?

Well it actually can save the manufacturer costs and can increase his sales. Nowadays manufacturers often pay for a, relatively expensive, limited warranty insurance giving their clients nearly or no cover at all. These kinds of insurances are not needed anymore and by terminating them it can save the manufacturer a lot of money.

To understand this better, nowadays it’s like buying a car while the dealer is insuring your car. This doesn’t feel right, because the dealer wants to buy the cheapest cover possible fulfilling his needs, with no interest at all in protecting your interests the best way possible.

In our proposition it’s not the manufacturer who is paying for the insurance, but the PV owner himself. The manufacturer has to go through our due diligence to get approved/certified by us. Manufacturers can then go to clients with the statement: ‘we are approved/certified by Solar Insurance & Finance, they have visited our factory, did their due diligence and we have proven to produce with a good, consistent quality. We are trustworthy.’

This means that if an investor doesn’t want to rely on the manufacturer entirely, he can take out our insurance inclusive cover of inherent defect.

In that way an investor can mitigate the risk drastically, he is the one taking out the insurance in his interest, according to his wishes and is also the party paying the premium. Investors are responsible for their own risk and therefor of their risk mitigation strategy, including the insurances; the manufacturer is responsible for the consistent quality they have to produce.

Jan Willem Vos will be speaking at the Solarpraxis ‘Quality for Photovoltaics’ conference on September 12, in Berlin, Germany.