A question of quality for European manufacturers

Discussions of module production in Europe tend to revolve around trade disputes, import duties and the question of whether mandated minimum prices are justified. How poorly European manufacturers are doing also gets plenty of air time; whether because of the crisis in the German solar market, which began three years ago, or because of Chinese suppliers, who are now three to ten times bigger than European suppliers and can deliver at cheaper prices.
But that is not the topic at hand. pv magazine has sought to present a completely different take on European manufacturers. What is being investigated is in what areas EU manufacturers aim to excel, how high a premium they officially place on the quality of their products, and what they are doing to attain it? Additionally, it was asked what they saw as the biggest threats to their strategy, apart from the minimum price issue.
The first step, however, is to take stock of the current situation. Who is actually producing how much? Karl Melkonyan, a senior analyst at IHS, calculates a production capacity in Europe of around 4.7 GW in 2016. That is 20% more than in 2015. But this figure is not very significant without considering utilization. In 2015 utilization was at 50 to 60%. This means that European factories likely contributed less than 5% to global module production.
Nonetheless, manufacturers with production facilities in Europe are still on the IHS list. Most of them are in Germany. These producers occupy the top six slots on the list of European producers.
pv magazine also asked European module manufacturers about their strategies and the role of quality as a unique selling point. After all, that has long been one of the key arguments for why investors should spend a few cents more per watt for the Made in Europe label.
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• Automation is seen by some as an enabler of quality, but it can reduce flexibility in production.

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getica also focuses on the BIPV market segment.
Manufacturers not specialized in entirely niche segments almost all name PERC and bifacial modules as their field’s technological innovation. They also mention glass-glass, 1,500 Volt-, AC- and BIPV-modules.
Under some circumstances, environmental concerns may be a differentiator for European module purchasers, enabling them to command higher prices than the competition. SolarWorld cites the meeting of EU environmental and social responsibility policies as a part of its strategy. Sillia sees reducing its carbon footprint as a field of innovation – and it is not the only French manufacturer thinking along these lines. This may also have something to do with the critical role that CO2 balance typically plays in the large scale project tender process in France.

Question of quality

Quality was a top priority for all of the companies surveyed. The question, however, is how quality can work as a unique selling point in the B2B business. “No one in the B2B sector buys something because it’s high quality; everything is high quality,” said Carsten Baumgarth, professor at the Berlin School of Economics and Law and branding expert, in an interview with pv magazine .
A large portion of European production not exported to the U.S flows to the end consumer market. Other rules apply

there. In the 2015 pv magazine installer and EPC survey, 29% of respondents said that the “Modules from Germany” label was a basis for recommending a product to their customers. Quality and reliability was cited by 45%, and 36% said that price was the basis of their recommendation.
But the old dilemma remains: buyers have trouble correlating quality and price. “The key factor is presenting the difference in quality credibly,” said Milan Nitzschke, the SolarWorld company spokesman. “We do this with cars. It’s even more important for solar modules, since they are expected to last for
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30 years or more.” Customers do not know who to trust to assess quality. What they do understand is that many things have to be done differently in Germany, where wages are significantly higher than in China, and that a higher degree of automation and better selection of materials can positively influence the service life.
Different rules apply to calls for PV project tenders. Many survey respondents emphasized that investors are often only concerned with the lowest price without any consideration of reliability. One reason for this is due to tender criteria themselves. However, this cannot be the only reason. The more general question is, why are the investors not looking for long-term returns? Also if PV projects are to be resold after a short while, the value of the plant should depend on long-term target revenue. Nevertheless, market mechanisms obviously emphasize the very narrow view of low investment costs – that is, “getting in cheap and getting out quick.” This contradiction could not be resolved in conversations about the survey.
The reason might be that the investors don’t understand the details of the quality discussion, as CS Wismar CEO Kirsch explains. They often use the same degradation values in ROI calculations for different modules. Doing so, the cheapest supplier always wins.
As expected, “unfair competition” was often considered the largest threat to sustainable business development. Policy uncertainty was frequently mentioned as a problem. This was a concern of Detlef Neuhaus, the CEO of Solarwatt. “For me, the question of how high subsidies are is explicitly not the issue.” But the mere discussion of the EEG levy on solar electricity consumed onsite created major insecurity, even among those who are not affected or whose profits are not excessively burdened.
With regard to glass-glass technology, acceptance in the market is an issue as the panels are still relatively expensive. According to Neuhaus, marketing and patience are the only way forward. Neuhaus is not concerned that Chinese companies could also begin to reliably manufacture glass-glass modules. “We’ve built a strong brand,” he notes.
Mastering the technology is also no mean feat. In the survey, SolarWorld and Sonnenstromfabrik also said they were committed to glass-glass technology. When asked about the introduction of new technologies, the respondents answered that limited market acceptance for innovations and a lack of financial resources were impediments. They also said that borrowing money to fund technological advances and keep development times as short as possible were further challenges.
Glass-glass modules lack market acceptance, for example. They still cost more than glass-backsheet modules. Still, they can pay off for buyers. Nevertheless, potential customers are often unwilling to stump up the extra money for them. This gets back to the discussion about whether low investment costs may be overrated.
The same discussion surrounds bifacial modules. Kirsch estimates the additional yield with this technology in most use cases to be more than 10%. The additional costs are, according to Kirsch, far below that margin. However, “it is difficult to give an exact number for the extra yield,” he adds. “Therefore it is probably not so easy to convince investors.” The discussion also showed that the degrees of automation might not only be a differentiating factor between European and Asian manufacturers, but also between factories in Europe. One question is, which processes need automation for a good quality assurance? Thomas Volz, CEO of Astronergy in Germany, has an interesting and somewhat unique insight. Astronergy factories in China, for example, have a lower level of automation than the company’s factory in Germany when it comes to the stringing of cells (see pp. 58 – 61). In all factories the modules are tested for mircocracks using EL testing. “We can not say that the automated soldering is better,” says Volz. The automation works more uniformly and was cheaper in Germany, but less flexible. The reduced flexibility in automated lines is also an issue reported by CS Wismar’s Kirsch. In this sense, automation is the enemy of innovation. The CS Wismar fab, located in Wismar itself, was planned with this in mind. Intelligent automation is the key. In some processes it has increased quality (e.g. for cell soldering), in other processes it has resulted in decreased flexibility.
Regardless of whether European manufacturers distinguish themselves from the stronger Asian competition through better development, a focus on niche segments or higher quality, there are good reasons to buy European that simply have to do with geography. Christoph Sekura, technical manager at Aleo Solar, sees the proximity of European production to the European market as a competitive advantage: “We have around 250 different items in our warehouse,” he said. Companies that merely have a sales branch in the country, or indeed continent, quite simply cannot warehouse this variety of products.