Investigating the manufacturing Bankability and Tier requirements of PV Solar
The term bankability is used in the solar industry to ensure the viability of a solar project getting financed. In general the idea is that if a panel, inverter or EPC is bankable then it is able to be financed. To be bankable the equipment comes from a high quality manufacturer who makes a good product with an assumption that the manufacturer will be around long enough to stand by the warranties provided.
However in reality it is a very vague term. Bankable by whom? Every investor has their own idea of bankability. Large banks are very proprietary about this information. Even newer panel or inverter manufacturers can be bankable because it relates to the quality of manufacturing and the reporting during the manufacturing process.
Reflecting the value of the so called "bankable" solar companies is questionable considering that Suntech, Satcon, Schott, Shuco were all once bankable, not now. Others are still bankable such as Q Cell because they were purchased by another manufacturer along with others less notable.
So does the term have any real relevance? Is it still valid? Yes, but it should be based on factors which are the most important aspect, which is quality manufacturing. The reason why quality manufacturing is the single most important factor is because although the above companies went out of business their products are still functioning well in projects all over the world. The key element is purchasing quality manufactured products. The reason manufacturers pay for 3rd party reviews on their manufacturing process and pan files in the case of PV panels is to prove the quality of the end product.
Managing bankability is closely related to the concept of managing quality and today quality is managed actively with focused attention given by companies’ top management and technical production management teams. These teams serve as a key differentiation factor in global competition across many industries. The PV industry is well-advised to apply such concepts to the crucial issue of achieving bankability for projects.
The following report outlines promising approaches for doing so. One of the only available lists of bankable modules is kept by Bloomberg New Energy Finance. Their PV Module Maker Tiering System is available to subscribers. But in an interesting document they describe their system for how they tier PV module manufacturers.
1. Why divide the PV market into tiers?
Bloomberg New Energy Finance is frequently requested by clients for a list of 'major' or 'bankable' suppliers - in common industry parlance, tier 1 and tier 2 suppliers - for use in manufacturing forecasts, preliminary competitor analysis, and other internal comparisons. It is very common for industry players to refer to 'tier 1' or 'tier 2' players, but these terms are seldom defined or described, which is unhelpful for firms outside the solar industry trying to get a basic overview.
'Bankability' - whether projects using the solar products are likely to be offered non-recourse debt financing by banks - is the key criterion for tiering.
2.1. Tier 1
Tier 1 module manufacturers are those which have provided products to three different projects, which have been financed non-recourse by three different (non-development) banks, in the past two years.
In closing the most important factors in bankability and tiering is to purchase a quality product that has been reviewed by 3rd party IE Report, pan files and UL testing.