Is this the end of low-quality solar panels in Australia?

Published in November 22, 2016

Tier 1 panel manufacturers are lowering their selling prices due to an over capacity issue in China. The price curve is hovering close to cost.  While this means a tough year ahead for manufactures and the potential closure of some smaller, lower quality manufacturers, it also means lower priced systems for the market and the opportunity for Australian retailers to move to higher quality panels without a price increase.

Why would you consider anything other than a tier 1 panel …

All the panels supplied by Sol Distribution are on the Tier 1 list by Bloomberg (Being on the Bloomberg list means the panel manufacturer has supplied their products to a large scale PV installation, backed by a third financial institution). Although it has been clarified that this tier list has no direct correlation with the quality of the panel, a manufacturer’s ability to sell and attract financial investments does have a strong impact on the number of quality controls that could be implemented in its production processes.

The list also provides a certain level of financial stability towards the company. Most panels have a standard product warranty of 10-years and a performance warranty of 25-years – if the company has a slim chance of staying in business for this period, then the value of the warranty diminishes.

This graph, from Bloomberg, shows the massive reductions of solar panels compared to the growth in solar panel installations over the last 40 years.

As shown in the graph above, 40 years ago panels were an astonishing $100USD/W, in 2015 they sat around $0.61USD/W and right now panel prices have dropped even further.

The marginal difference between premium and lower end panels is becoming a small factor in determining the total cost of the system. With the current price drops occurring in the PV market, manufacturers who do not have strong sales and financial backing might find it difficult to profit from products which will impact on their commercial longevity.

If panel prices continue to drop there will be little room for lower end panel manufacturers to operate in the market. So, why would you buy anything other than Tier 1?