Rebates Killed Quality Solar Systems

Over the past 4 years the solar rebates and excessive feed-in-tariffs allowed for cheap solar power panels and less quality installations to take hold in the solar industry, resulting in scores of unhappy solar customers.

Customers paying very low prices for poor quality were likely to accept a dubious solar product and rushed installs, especially when rebates or feed in tariffs were ready to end. Only now is the true extend of system failures coming to the forefront, when these solar experiments have been on people’s roof for 12, 18 and 24 months.

An audit in June 2011 by the NSW Department of Fair Trading of grid connected solar systems in the North West of Sydney had 658 solar systems inspected. 121, or 18.5% of these systems had significant defects and 417 or 63.5% had minor defects. Only 120 solar systems were installed correctly.

The Office of the Renewable Energy Regulator (ORER) inspections during 2012 revealed systems with 10 panels facing north and 2 panels facing south, low quality fly-leads perishing fully exposed on metal roofs and cheap panels with hotspots and corrosions due to water penetration. Many of the installation companies who offered such poor quality have already left the industry.

There are many stories of solar companies installing low quality invertors and panels, who turned over millions in one year, only to go bankrupt the following year, when all the complaints and fix ups overwhelmed the cash flow. In such circumstances calling in the liquidator seems to be an easy solution. In 2012 Australia wide over 150 solar companies went bankrupt.

Quality solar installation companies are already receiving calls in record numbers from exasperated consumers with failed cheap systems and their original installer nowhere to be found. In many cases it’s out with the cheap and in with some quality. The old saying “buy cheap, buy twice” clearly holds true.

The new code of conduct for the solar industry coming via the Clean Energy Council is definitely a step in the right direction and hopefully it will help in reducing poor solar installation outcomes. So where do the end customers stand in all of this? What about their rights and warranties?

I always believed that when solar manufacturers offer a 25 year output warrant this means that the customer is looking for a 25 year relationship with their panel manufacturer. So how many solar only manufacturers can actually deliver such a long term commitment?

According to a recent Climate Spectator article a large number of the current module manufacturers are likely to disappear over the coming years as the increasing oversupply of modules leads to ongoing price cuts. This race to the bottom in pricing is likely to spell the end for many solar only manufacturers. LG on the other hand is a diversified manufacturer and committed to solar for the long run.

In 2012/2013 most panels leaving solar factories lost the manufacturer between $20 and $50 if all true expenses were counted. To demonstrate the enormous cut in margins one needs to consider that a 200 Watt panel did cost $1200 in 2005 and is now available for around $180 or even less.

Naturally such losses can be absorbed by sole solar module manufacturers only for a given time, before hard decisions will be made by their banks. Suntech has just experienced such a development and went into bankruptcy proceedings.

A similar development occurred in the early 1990s with TV manufacturing when over 20 leading manufacturers consolidated to less than 5. Today LG is one of those “survivors” and represents one of the world leaders in Plasma and LED television manufacturing. This success came from our high commitment to research and development.

LG has a similar strong commitment to R & D in the solar field. For example LG Electronics has registered 209 solar patents in Europe and the USA since 2009, over 40% more than the next highest contender and many volume manufacturers registered less than 20.

As a result of this research LG will release during 2013 a 300W plus high efficiency panel on the same footprint as our current standard 260W Mono-X range. This efficiency increase will be a benchmark for the solar industry, and many no frills manufacturer will not have the funds available to re-tool and innovate and inevitably they will fall by the wayside.

So where does this leave the end consumer with a panel where the manufacturer has gone bust? Most likely they will need to search on overseas websites, using Google translator to find a compatible panel, a most unenviable position.

Therefore I see the Australian solar customer of the future considering the back up support and likely survivability of the solar product manufacturer as a key decision making point. Installers with bricks and mortar businesses in their local town, a solid track record in quality installations will win out over fly by night operators offering only cheap systems, but no long term support.

The question consumers will ask themselves is this: Should my system fail in years to come – do I want local support, or do I have to call the overseas manufacturer or in worst case scenario find a 2nd hand model of my solar panel. With over 12,000 different solar modules registered in Australia, good luck in finding your module again.

As we move to larger solar systems in the commercial and industrial space, again bankability, quality and reliability will win the race.

The solar module manufacturers dominating the industry of the future will be diversified manufacturers like LG who manufacture to high standards, possess the bank balance to invest in innovation and have a brand name that is widely recognised and trusted. I am therefore looking forward to the Australian solar industry in the future, when quality systems will dominate the market.

About LG Solar

LG Solar is a division of LG Electronics.

  1. LG Electronics worldwide headquarters are in Seoul, South Korea
  2. The Australia head office is in Eastern Creek, Sydney - with offices in Queensland, Victoria, South Australia and Western Australia.
  3. LG has an Australian call centre with 75 staff, open 7 days from 7am to 7 pm
  4. LG Electronics has 96 offices worldwide, including Germany, USA, Japan, India, and China
  5. Solar manufacturing facilities: Gumi, South Korea
  6. History in the industry: LG Electronics has been involved in solar research and wafer production for over 20 years through other companies in the LG Group. LG solar module production commenced in 2009.