The surging solar generation market offers many benefits, from helping reduce carbon output to acquiring valuable federal tax credits. However, as smaller solar projects from cooperatives and municipalities enter the landscape, the difficulties associated with procuring solar panels are becoming increasingly obvious.

Large suppliers of solar panels are accustomed to working with large solar developers that can guarantee multiyear procurement commitments. Without that extended guarantee, utilities are stepping into an incredibly strained supply chain. Original equipment manufacturers (OEM) that sell to the largest solar companies in the market are effectively sold out for 2021 and much of 2022, limiting panel availability to those with remaining self-production capacity.

Also adding to the limited supply chain challenge is the fact that the supply of wafers — an essential component of the solar cell for photovoltaic power generation — is transitioning from 158.75 mm to 166 mm and larger sizes. This manufacturing switch may mean that projects with trackers and inverters designed to the old wafer size may have increased difficulty procuring modules.

With that said, large-scale, multiyear programs will continue to have access to panels from large suppliers that supplement their own production through long-term commitments with OEMs. For those projects that cannot guarantee a long-term commitment, midsized suppliers are potentially available. However, project owners should consider several points to reduce risk before procuring directly from a midsized manufacturer:

  1. Large orders might not be feasible as they put too many eggs in one basket for a midsized manufacturer. Five to six customers is probably the optimal target for these midsized suppliers, with orders spread fairly evenly amongst all.

  2. Purchases from a midsized supplier will require an independent evaluation of quality programs and panel performance claims. Large suppliers accept responsibility through reputation and financial risk when buying from an OEM. Midsized suppliers do not. Independent quality assurance/quality control (QA/QC) evaluations also will need to be conducted in production facilities, many of which are located in Asia. This reality has been made much more difficult due to restrictions from the ongoing pandemic, delaying the ability for new customers to have ready access and become confident in a midsized supplier.

  3. Flexibility is limited if bin-class wattage issues arise in production. Large solar suppliers can often transition up or down within each wattage class through alternative OEM procurement. Midsized suppliers that are manufacturing directly for a customer, however, may only have the flexibility that the production line is affording. Though it might seem simple to predict future bin-class ratings, risk remains if the panel bin-class distribution shifts, potentially raising costs and missing targeted performance for the overall project.

  4. Ability to weather market disruptions could be far less with a large producer. Midsized companies may not have the financial backup or reputation to remain competitive following a significant market correction.

Despite the current solar panel supply limitations, the market is starting a transition from a developer-based to a more utility-based focus. With prospects of a direct pay option for solar tax credits, many smaller-scale solar projects with cooperatives and municipalities would enter the market competing for the constrained wafer and panel production capacity. By carefully considering a midsized supplier partnership, owners can increase the potential of their projects moving forward efficiently and cost-effectively.


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Grant Grothen is a principal at Burns & McDonnell. He focuses on the engineering, procurement and construction of renewable and emerging generation projects.