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Next Shoe To Drop: Shoddy Solar Panels From China

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

The photovoltaic industry is in a perverse situation. To make power generation from solar competitive, prices of solar panels had to come down. Tens of billions in subsidies were plowed into the industry. Technological advances came along. And the price per watt crashed exponentially, from $76 in 1977 to about $7 in 1989. Then it leveled off. By 2000 it began to drop again, hit $4 in 2005, $2 in 2010, and a forecast $0.74 per watt in 2013 (graph).

But it wreaked havoc. Business models collapsed. Funding dried up. PV companies bled red ink. In the US, a slew of them, including Solyndra, went bankrupt. Others shut down or changed course. Tens of billions in taxpayer subsidies and investor capital spiraled down the drain.

In Germany, solar power was a political priority. They don’t have much sun, but they have more sun than oil, the logic went. Now even Bosch Solar Energy AG is fleeing the business after burning through $3.1 billion. Same story in France, in Spain. Bloodletting everywhere. They all blamed the low prices of Chinese solar panels. Complaints that led to anti-dumping proceedings in the US and aggravated the trade war between the EU and China [my take:  Germany Fires Salvo In Sino-European Trade War ... At Brussels].

But solar power generators, from utilities with large-scale installations to farmers with solar panels on their barns, were ecstatic about the low prices. They enjoyed subsidies, nearly free financing, and the hope that the system would more than pay for itself over the course of its 25-year life span. It would be a good deal.

But it might not be. The price war that Chinese manufacturers waged was a suicide mission. Now even they’re going bankrupt, including their erstwhile number one, Wuxi Suntech, when the banks pulled the ripcord in March. Existentially threatened, they cut costs ... and corners.

Defective solar panels can be costly. The New York Times described what happened to the PV installation on a warehouse roof in Southern California whose promise of a 25-year life span disintegrated along with the protective coatings on the panels after only two years, and part of it went up in smoke when defects caused two fires.

“Worldwide, testing labs, developers, financiers, and insurers are reporting similar problems and say the $77 billion solar industry is facing a quality crisis,” the Times reported. But instead of tracking defects industry-wide, manufacturers hide behind confidentiality agreements that treat their name as a secret. So no one knows the extent of the crisis. And it’s just the beginning: since nearly half of the 7.2 gigawatts of capacity in the US were installed in 2012 in a burst of incentive-fueled activity, most of the problems have not yet come to light. But some have:

Executives at companies that inspect Chinese factories on behalf of developers and financiers said that over the last 18 months they have found that even the most reputable companies are substituting cheaper, untested materials. Other brand-name manufacturers, they said, have shut down production lines and subcontracted the assembly of modules to smaller makers.

STS Certified, a French testing service, evaluated 215,000 PV modules at its Shanghai laboratory and found that defects had jumped from 7.8% in 2011 to 13% in 2012. An entire batch from one manufacturer was defective, but STS refused to identify the culprit – a company listed on the New York Stock Exchange – due to the confidentiality agreements.

German solar monitoring firm Meteocontrol found that 80% of the installations in Europe it had examined were underperforming. SolarBuyer, based in Massachusetts, audited 50 Chinese plants over 18 months; defect rates ranged from 5.5% to a dizzying 22%. During repeat audits, it found that plants were constantly substituting cheaper materials. Ian Gregory, SolarBuyer’s senior marketing director, warned: “If the materials aren’t good or haven’t been thoroughly tested, they won’t stick together, and the solar module will eventually fall apart in the field.”

Even Chinese insiders admit it: “There are a lot of shortcuts being taken, and unfortunately it’s by some of the more reputable companies, and there’s also been lot of new companies starting up in recent years without the same standards we’ve had at Suntech,” lamented Chief Technology Officer Stuart Wenham – the same Suntech that was pushed into bankruptcy in March.

There are still some lucky solar developers and installers who claim that they haven’t run into quality problems yet on systems installed in 2012. But they’re brand-new, with 24 more years to go. And some of the defective panels weren’t made in China; all manufacturers are under pressure to cut corners in order to survive. First Solar, a US company, has reserved $271 million to account for the expense of replacing defective modules sold in 2008 and 2009. No word yet of those sold during the binge of 2012.

The costs of these defects will eat further into the industry that is struggling to become financially viable. Yet, in a cruel twist, the price of solar panels must continue to drop for solar power to be competitive without subsidies. Taxpayers, stung by austerity in Europe and by the sequester in the US, are already less than enthusiastic about propping up the industry forever. At some point, it must be able to stand on its own, at still lower prices that magically allow manufacturers, and not only power generators, to thrive – an illusion, for now. But waves of “cheap” solar panels that suddenly become very expensive after they’re installed will cause more bloodletting and push the propitious date further into the future.

China pops up everywhere. Aircraft maintenance was once a highly paid blue-collar job that required education, training, and manual skills. A perfect American middle-class job with healthcare, retirement, and vacation benefits; and free flights! Working for icons like Delta, American Airlines, Continental, TWA, or Pan Am! Icons indeed. Read.... When Flight Safety Gets Outsourced To China

 

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Fri, 05/31/2013 - 06:26 | 3612885 Moe Howard
Moe Howard's picture

If it was good they wouldn't need to con you with fake rebates etc.

Example: GE "Heat Pump" hot water heaters. Huge rebate from FedGov. GE jacked up price to match the rebate.

Rebate ended, price back down  the exact same amount as the rebate.

The rebate was Tit for Tat graft from the FedGov for GE, thanks for the support.

 The heads of both organizations should be on pikes along Penn Ave in D.C.  

Fri, 05/31/2013 - 00:02 | 3612688 jonjon831983
jonjon831983's picture

Chinaaaaa they did it again!!!

 

Man, way to get kicked in the balls.  Who handles QC on imports... this is terrible.

Thu, 05/30/2013 - 22:46 | 3612529 robnume
robnume's picture

Such a great idea, outsourcing all those manufacturing jobs to China. China's done a bang up job, again and again. I know I trust their products! NOT!!

Thu, 05/30/2013 - 22:40 | 3612518 NoWayJose
NoWayJose's picture

I went online to look for a solar panel that is supposed to be cheap now. So much stuff is out there and there is no way to tell good from bad. Very few have complete packages that do anything useful. I assume this is just various resellers just dumping panels. This is like the early days of PCs, waiting for Wordstar and Lotus 1-2-3. Someone is going to have to standardize how to hook multiple panels together, and how to connect them to something that performs a useful function. Any of the ones that come close to doing this today are drowned out by all the other similar useless products out there.

Fri, 05/31/2013 - 09:21 | 3613218 Proofreder
Proofreder's picture

Here -

http://www.ebay.com/itm/Canadian-Solar-245W-Panels-1-17-watt-pallet-quan...

Cheap, good, works.  Finance it yourself.

 

Thu, 05/30/2013 - 22:25 | 3612473 BigInJapan
BigInJapan's picture

Workaround: install wind power, if it makes sense for your area, solar water heaters with an indoor thermal water bank which can be bypassed in summer, heat with wood, heat water with that wood fire in winter, turn off the damn lights and devices when you're not using them, and spend some time outside.

So yeah, go ahead and play with cheap Chinese solar panels or the alternative, grossly overpriced Japanese panels made by a company like SHARP, which may or may not continue to exist past the next two years. http://www.theverge.com/2013/5/14/4329382/sharp-2012-earnings-biggest-annual-loss-new-president

 

 

Thu, 05/30/2013 - 21:38 | 3612357 freedogger
freedogger's picture

I have a small solar panel on my greenhouse. It turns the fan on my vent window. When its hot and sunny, it spins like hell. When its cold and the heated wax driven piston contracts and closes the vent window, it slows down. That's about the only residential solar application that makes sense to me, even at a buck a watt.

Thu, 05/30/2013 - 20:06 | 3612106 Walt D.
Walt D.'s picture

Beware when something is being subsidized - it indicates that there is a fundamental problem that the product can not compete. Giving the producers a subsidy discourages them from doing any R&D an coming up with a technical solution.

We can look at ethanol subsidies. It is not break-even in thats the energy contained in the final product is less than the energy used to produce it. Brazil produces a much better product using sugar cane.

We can also look at the Chevy Volt - can't compete with a Prius, a car that people like and want to buy.

Ray Kurzweil is looking at a technology whereby "solar panels" would grow on trees, using genetically engineered leaves. However, this is unlikely to get off the ground while Congress believes that money grows on trees.

Thu, 05/30/2013 - 19:26 | 3611969 bugs_
bugs_'s picture

the landfills will be filled to the brim with it

Thu, 05/30/2013 - 19:24 | 3611960 snblitz
snblitz's picture

I published this in 2007:

I started this project in 1999. My 3000 Watt system went online in 2000 and for 6 years it was pretty much a disaster. On August 13th, 2007 I discovered that the manufacturer of the panels (Kyocera) was willing to swap the defective panels they had sold me for new ones. I still wonder why Arizona Wind & Sun never mentioned this known problem to me. Time will tell if things have improved.

Apparently, things have gotten worse.

Thu, 05/30/2013 - 18:45 | 3611837 SILVERGEDDON
SILVERGEDDON's picture

Where is Million Dollar Bonus ? " It only costs five dollars to get it out of the ground ! " Right up there on the Zero Hedge wall of shame.

Thu, 05/30/2013 - 17:56 | 3611682 WhiteNight123129
WhiteNight123129's picture

I believe that if you had shorted Railroads during 1873 or short radio during the 30s, or shorted data centers in 2002 you would probably feel as good as today shorting Solar.

You could also have shorted semiconductor firms and intel in 1981 on the premises that continuous declining costs is a terrible thing.

Here something for you Wolf, everytime the cost per Watt goes down and some firm close down, the future is brighter (no pun intended) for the survivors.

 

Fri, 05/31/2013 - 11:04 | 3613618 bluskyes
bluskyes's picture

The trick is being able to pick the survivors from among the crowd.

Thu, 05/30/2013 - 18:26 | 3611774 justinius1969
justinius1969's picture

Lets hope you are right...

Thu, 05/30/2013 - 17:49 | 3611662 SmittyinLA
SmittyinLA's picture

What could go wrong with an army of idiots financing disposable power plants with a longer payoff than the plants predicted* lifespan? (and that's assuming the cells last as long as they say they will and produce as much as they say they produce) 

 

BTW most of the solar installations in CA aren't metered, you get subsidized based on design specs, not actual watt production, the whole gig is a financial fraud.  

Thu, 05/30/2013 - 19:55 | 3612069 snblitz
snblitz's picture

While I understand the financial fraud, I am not certain what you mean by "aren't metered".  The vast majority use net-metering.

As to financial fraud it is far more insideous then one imagines.

The scam works like this: The presumption is that energy prices will go up 40% over the next 5 years.

I will give you an entire solar electric system for $21,000 which you finance over the next 20 years at 6 to 8 % interest.  You pay the financing and for the amount of eleectricity beyond the production of your solar electric system.  You pay the aveage rate for this excess which is around 16 cents per KwH. The financed amount includes warranty and maintenance.

All in all, the numbers look good spread over the 20 years.  You might even get some amount of rebate dollars from the Fed and State too.  Lowering the cost of the system by 1/3rd to about $14,000.

However, the system you purchased probably cost me (the installer) about $5000 to $7500 including installation.

Now aside from the $7000+ check you wrote me as profit up front, along with the finacing you are paying over 20 years ($19,000+ in interest) , I have one more trick up my sleeve.

When you consume more energy than you produce you are paying me 16 cents per KwH.  However, because of the way PG&E does tiered billing, I am paying in the range of 9 to 12 cents per KwH.

Now I could lose some of my profit if you suddenly installed a pool and heated it electrically to 104 degress.  But guess what?  The contract says you will maintain your projected energy usage and if you deviate in a way that eats into my profits you simple pay more.

Guess what else I capture?  Every time you make an energy improvement in your home, LED lights, new fridge, I get the monetary benefit not you.

And here is a bonus if you read this far:  That solar electric system I sold you, and you think will operate when the power goes out ... Nope. The Sun may be shining but when the service power goes out your system will be as dead as a door nail.  Feel free to read UL1741.  Well that costs too.

By the way, I take all my ill gotten gains and by PMs.

Does every seller have a 200% margin?  Are they all pulling the financing scam?  Or the excess electricity trick?  Probably not, but some do it all, and many are doing some of it, and perhaps somewhere there is a fair deal to be had.  I have no idea where.

(I have operated a solar off-grid co-op for 15 years)

 

Thu, 05/30/2013 - 23:13 | 3612599 disabledvet
disabledvet's picture

how about if i just bought it outright and used no financing? does that make it evil?

Thu, 05/30/2013 - 22:31 | 3612495 the grateful un...
the grateful unemployed's picture

assuming you don't need to finance and have the money in a zero interest ZIRP account investing in solar makes sense. also there's no reason you can't convert into a self sufficent solar system, but who wants all those batteries? if i lived in a part of the country where power dropped for days at a time i would do that. if you can buy the system for cash you are earning 5% a year in my neighborhood, better than bernanke bonds..

Thu, 05/30/2013 - 23:15 | 3612603 disabledvet
disabledvet's picture

what's the whole "you can sell that power back into the grid" thing about? with rates this low can i go cash flow positive as soon as i buy one those Solar One thingy's?

Thu, 05/30/2013 - 22:18 | 3612455 Killer the Buzzard
Killer the Buzzard's picture

+100 for the Colossus avatar.

Thu, 05/30/2013 - 21:13 | 3612306 therover
therover's picture

Thanks for that info. 

Thu, 05/30/2013 - 17:41 | 3611648 Cult of Criminality
Cult of Criminality's picture

Magnus

Might carefully check out the peel and stick if it is unisolar it will lose some power after about five years,they start out making more than advertised however.

Poly has been working for me better than mono and takes less room.

Thu, 05/30/2013 - 18:17 | 3611756 A. Magnus
A. Magnus's picture

Any luck with the CIGS fabric panels? They're pricey as fuck but I like the idea of them still making power even with bullet holes in them...

Thu, 05/30/2013 - 20:33 | 3612180 Cult of Criminality
Cult of Criminality's picture

Have not tried the CIGs fabric Magnus.

Love the idea they take a bullet though.

Cheers to you !

Thu, 05/30/2013 - 17:34 | 3611632 A. Magnus
A. Magnus's picture

I was looking at Kyocera and Sharp polysilicon panels, along with some CIGS fabric panels and some peel-and-stick flexible panels for good measure. Let's how the People's Liberation Army of China doesn't have ALL of those panel markets covered, otherwise my efforts at Going Galt may be going south...

Thu, 05/30/2013 - 17:32 | 3611627 Cult of Criminality
Cult of Criminality's picture

If..............

Thu, 05/30/2013 - 17:30 | 3611626 Quantum Nucleonics
Quantum Nucleonics's picture

Good riddance.  Solar for grid power is a stupid idea anyway.  Ditto wind.  If we'd invested all the r&d in thorium based fission, we'd have a safe, endless supply of grid power at competitive cost that doesn't require covering vast swaths of the country with big ugly panels and propellers. 

Thu, 05/30/2013 - 18:13 | 3611745 Nassim
Nassim's picture

There are excellent reasons why no one has ever successfully built a single commercial thorium reactor

Thorium Reactors

It is just another cornucopian fantasy

Thu, 05/30/2013 - 19:05 | 3611894 thisandthat
thisandthat's picture

Those reasons aren't exactly excellent, they're just military: you can't make military grade fissile material from thorium; but you can from uranium...

Thu, 05/30/2013 - 18:57 | 3611869 Quantum Nucleonics
Quantum Nucleonics's picture

And as to fantasy, you may want to check Norway and China, both of whom are doing design work on thorium reactors.

Thu, 05/30/2013 - 18:53 | 3611859 Quantum Nucleonics
Quantum Nucleonics's picture

Yep, you can't easily use one to build nuclear weapons.

40 years ago, when the current generation of nuclear reactors were being designed, no one could imagine a little rectangle of plastic and glass that fits in your pocket could be a phone, camera, and computer.

Thu, 05/30/2013 - 18:58 | 3611870 thisandthat
thisandthat's picture

And more powerful than a supercomputer...

Thu, 05/30/2013 - 23:17 | 3612610 disabledvet
disabledvet's picture

and more evil...

Fri, 05/31/2013 - 15:54 | 3614885 thisandthat
thisandthat's picture

Haven't seen a smartphone used to plan doomsday scenarios or weapons, yet, but who knows...

Thu, 05/30/2013 - 18:54 | 3611854 thisandthat
thisandthat's picture

In fact, they did; portable, even, just that the patents and all the work around it were classified (if not researchers down right murdered)...

Btw, your linked site seems hardly impartial about nuclear energies...

Thu, 05/30/2013 - 17:31 | 3611624 Cult of Criminality
Cult of Criminality's picture

If you do not think America cuts corners...Do construction for thirty years.

Totally agree with the article though,and saw it coming.

Why wait for somebody else to give subsidies do it yourself lazy greedy ass h----

People can talk their selves out of anything including, what is right or makes sense.

I would rather count on me and get the job done and tell the power monopolies to stick it (done) then whine and cry that somebody has to give me money and make me jump through hoops with mutitudes of bullshit but thats just me.

Thu, 05/30/2013 - 17:30 | 3611612 thisandthat
thisandthat's picture

You forgot another (very) important (and often ignored) aspect of solar energy: sun tends to shine mostly in dry regions (or vice-versa) and these also tend to be (naggingly) dusty; dust, for its part, both airborne and more importantly deposited, tends to cut light transmission, and the only way around this is through frequent (and costly) washing. Result is you'll probably end up with either a severely under-performing installation or (significantly) higher than expected costs.

http://www.practicalenvironmentalist.com/green-building/how-to-clean-a-s... (check the first pic)

Fri, 05/31/2013 - 09:11 | 3613186 Proofreder
Proofreder's picture

What Bullshit (!)

You have no experience with an actual solar plant.

I helped install a neighbor's 7.5kw ground installation (grid tie) in 2009 - the fair value tax credits paid for 65% of the hardware cost and he has no power bill, no maintenance cost other than a quick wash with a hose weekly to remove dust and bird poop.  Canadian Solar panels, Enphase microinverters, and no worries. Production is about 60 kw hours for a full-sun day and the grid is his battery.  A cloudy day cuts this in half, but 30 kwh isn't too shabby.

Solar panals degrade very slowly over their life - not 25 years, but more like 40 - 50.  Long after they have paid for themselves.  Keeps on ticking.  Solar Good.

Try to post from a standpoint of actual knowledge.

Fri, 05/31/2013 - 15:49 | 3614851 thisandthat
thisandthat's picture

Are you an idiot by nature or by choice - have you even read the original article (or the one I posted)? Canada isn't particularly sunny (that I know...), so I suspect dust might no be a primary problem there, but maybe I'm just being "ignorant"...

Also being taxpayer funded it's cost isn't being cost effective, just being "socialist", to use a recurrent meme - simple example: if everyone took advantage of it, a 100% funding would effectively result in 0% funding.

And btw, when I want solar energy, I go to the beach...

Thu, 05/30/2013 - 17:20 | 3611596 bluskyes
bluskyes's picture

That which is not economical, is not sustainable.

Thu, 05/30/2013 - 17:25 | 3611613 cougar_w
cougar_w's picture

Life is not economical. Life has no long term prospects, there are large investments required up front with no promise of return, and once costs are sunk there is no easy way to get them back (prostitution being the one exception that leaps to mind.)

But for some reason, we keep at it.

Thu, 05/30/2013 - 17:47 | 3611654 bluskyes
bluskyes's picture

Those who deploy capital without any hope of a return, are wasting, not investing.

From the very start, it was glaringly apparent that solar, and wind power have no serious near-term (next 50 years) value - except in specific cases. The fact that all of these so-called "alternative energy" sources have needed governement subsidies at all stages in the game, is proof-positive of this. Manufacture of components, installation of components, and ridiculous rates (some ove 80c/Kwh in Ontario) are being paid by the local utilities. This is all being subsidized by the taxpayer.

Now what's going to happen to the dufus who signed a 25 year contract @ 80c/Kwn, but his solar panels burn up, and the manufacture no longer exists to honor a warantee? Hopefully they go for the jugular, and bankrupt him in the process of getting back every cent they've paid for over-priced hydro.

But then again, I'm just venting.

Thu, 05/30/2013 - 23:20 | 3612618 disabledvet
disabledvet's picture

the Roman Empire lasted 500 years. that's without any economists period. think they called them "Senators" back then actually.

Thu, 05/30/2013 - 17:20 | 3611595 StarTedStackin'
StarTedStackin''s picture

 so the Obowel Movement lied to us?

Thu, 05/30/2013 - 17:17 | 3611590 cougar_w
cougar_w's picture

Everyone producing power gets a subsidy. If the price of conventional power production included the direct health costs to society of particulate and water pollutants (in the 100's of billions) and the now-accepted costs of climate change (certainly will be in the trillions) then the cost of coal and natgas produced electricity would be much much higher.

Fri, 05/31/2013 - 11:00 | 3613602 bluskyes
bluskyes's picture

What direct health costs?

Thu, 05/30/2013 - 23:25 | 3612629 disabledvet
disabledvet's picture

totally agree with this...don't understand the down arrows. "some energy metrics produce more liquidity than others" of course. that's why Wall Street loves oil and natural gas. talk about "merchant providers." can't produce too many gas guzzlers can they! seems the author agrees as well. hmmm. no surprise there. "imagine a Government solution that worked." one that involved in LOWER prices. haven't had that in 70 years that's fer sure. and that's why Washington loves Wall Street..."they pay for all that Government by making everything unaffordable." gee, thanks! "you're service to the war effort is duly noted"!

Fri, 05/31/2013 - 11:01 | 3613605 bluskyes
bluskyes's picture

Coal's pretty cheap right now.

Thu, 05/30/2013 - 17:18 | 3611580 Cult of Criminality
Cult of Criminality's picture

 

PVX spot market price index solar pv modules.

http://www.solarserver.com/service/pvx-spot-market-price-index-solar-pv-modules.html?gclid=CL690eWwt6wCFQaHtgodR1i2Hg

Price trends from May 2009

Thu, 05/30/2013 - 17:09 | 3611575 Cult of Criminality
Cult of Criminality's picture

Really happy that first solar was the real piece of shit as they would only sell to "commercial" customers and not the normal joe so ha,ha,fucking ha, second rate first solar.

Bet the CEO and President of the company are doing quite well.did`nt they get a bailout or government treasury welfare bailin by we the people forced by the roque government of this now USSA ?

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