By Brian Hansen

This article was originally published in pv magazine – October 2023 edition.

The US module supply market is rapidly changing. Regulatory, technical, and market dynamics are in flux, creating new challenges for module procurement, writes Brian Hansen, associate director for supply chain management at Clean Energy Associates (CEA).

The process of procuring photovoltaic modules has transformed significantly, as this dynamic industry continues to evolve. A few years ago, cost-per-watt, of panel generation capacity was the sole consideration in this process for many buyers. The more recent interplay of tariffs, regulations, and emerging technology increasingly demands a comprehensive approach to selecting vendors. Buyers – whether they are developers, residential solar installers, or engineering, procurement, and construction services companies – can make informed choices by understanding the following evaluation principles. Success in the industry relies on forging the right partnerships that can help arrive at well-informed decisions that extend beyond traditional financial considerations.

Global trade

In the context of global trade, regulation and compliance exert a major influence over vendor choices. For example, compliance with the Uyghur Forced Labor Prevention Act is paramount in determining the risk of modules being subject to US Customs and Border Protection-related detention. Similarly, the Department of Commerce’s recent tariff decision needs to be carefully weighed, as future tariffs may impact the cost and availability of solar panel components.

Location, capacity

Along with the solar investment tax credit extension introduced by last year’s US Inflation Reduction Act, other tax benefit “adders,” for domestic content, can make US-sourced components particularly attractive for projects developed in the United States. Securing such incentives is easier said than done, however. Domestic manufacturing capacity remains limited and the manufacturing plans announced to date are not balanced between modules and cells – while there is lots of new capacity for modules under development, there is much less new capacity for cells in the pipeline. Evaluating whether and how much to source from North American factories is now a key driver in the decision process for US developers. In this ever-changing environment, it is critical to keep on top of rapidly changing module supply dynamics, coupled with partnering with the right inverter or tracker supplier.

Financial stability

In an industry where projects are in service for decades and require financial backing, a supplier’s stability is of the utmost importance, especially the ability to weather economic challenges. Key steps in this sort of evaluation involve digging into financial data and performing risk analyses to evaluate a vendor’s trustworthiness, and the level of long-term support they are likely to be able to provide. The days of a few module suppliers supporting most domestic installations are over; more suppliers are entering the North American market and their track records are relatively unknown to many buyers and financiers, so extra diligence may be warranted.

Tech sophistication

As technology evolves, staying ahead of the curve is essential. Innovation often drives success, such as in the shift from passivated emitter rear contact (PERC) to negatively doped, n-type solar technology. A supplier’s position along the technology roadmap, and whether it is a pioneer or a follower in such a transition, can influence its suitability for an enduring partnership. In addition, newer technology often trades higher up-front costs in return for increased energy production over a project lifetime.

Quality and performance

Quality assurance is the bedrock of any successful solar project. A meticulous approach to benchmarking suppliers in terms of quality includes pre- and postcontractual diligence by first setting the parameters for module production, followed by comprehensive factory audits, inline production monitoring, and preshipment inspections. By taking a systematic approach, buyers can confidently choose vendors based on whose modules will reliably perform in the field.

Contractual terms

The commercial aspects of vendor relationships play a vital role in ensuring smooth project execution. When considering the dynamics of working with suppliers, a key metric to evaluate is how flexible they are in terms of up-front deposits, payment terms, shipping, warranty, and other contractual details. Having this information ahead of time can enable buyers to select partners that best align with a project’s financial and logistical requirements.

Third-party validation

Third-party reports and proprietary data significantly shape perceptions. CEA produces some great reports on suppliers, technology, and costs. Direct communication with suppliers and proprietary data are invaluable tools to provide a full picture. Accessing a broad spectrum of information allows a more well-rounded view of potential partners. A strong vendor evaluation methodology is a strategic advantage that separates the winners from the losers in a dynamic industry. Partnering with a specialist typically offers an advantage over traditional procurement methods by ensuring buyers are looking at every facet of a supplier’s profile. To be sure, bottom-line financial information remains a bedrock underlying a solar project’s viability. This is joined by increasingly critical factors that range from import-related legal risk to a vendor’s ability to remain in business in challenging economic times. A prudent and risk-averse company will seek out the right partner to help sift through vast amounts of data, thereby enabling efficient, effective decision-making.

Brian Hansen is passionate about operations and negotiating, which is why supply chain is his field of choice. Hansen joined installer Vivint Solar in 2017 as a commodity manager responsible for smart technology. When Vivint was acquired by home solar business Sunrun, Hansen became director of operations for mounting systems specialist SnapNrack. He joined market intelligence and supply chain manager CEA in 2022.