SNEC Vibes-What Value Solar Module Warranties?

At SNEC Shanghai, between the usual bustle and rush to see as much as possible, the one refrain that was obvious was the issue of shrinking margins for solar players. From the largest players like LONGi, JA solar and Jinko, to the smallest module players, many unknown in India, the common refrain was the issue of sustainable margins.

That brought to mind the matter of module warranties. As we have explained earlier on our SolarFAQS section. Between product (Manufacuring defects) and performance warranties(module efficiency or degradation), solar panels are well known for their 25 year or more lifespans, but it could all be worth nothing if the firm goes under, no? We checked with some insurance firms, and they were categorical that insurance does not cover warranties, just the overall project from well established risks like fire, storms  or other kinds of unexpected damage etc.

While the CEO of solar major LONGi has already indicated that lower-than-expected module price results in order losses, prices in China have apparently gone as low as the equivalent of Rs 9/watt, mostly from smaller manufacturers desperate for liquidity. That will ensure prices remain low well into 2025 as we have indicated earlier, especially as China has this unique ability to keep firms going much longer than other markets with local government support in many cases.

But there is no doubt that doors are beginning to shut  on many of the 100 odd forms listed China’s key stock exchanges. News that ST Sunhine (600220.SH) has been served notice for a possible delisting due to its shares trading below 1 RMB for 20 consecutive days at the Shanghai Stock Exchange has already shaken up many listed forms who see a similar risk for their stocks.

Akome, a much more well known mid level manufacturer has also suffered the ignominy of being delisted at the Shenzhen Stock Exchange from June 19.  The 18 year old solar panel manufacturer was listed since 2011. However,  Akome remains listed as a tier-1 PV module manufacturer by BNEF for the 2nd quarter of 2024, indicating just how risky and important it is becoming for buyers of panels to pick their sources well.

During the last major situation in 2022-23, when modules were in short supply and prices shooting up, the majors had been at pains to stress that buyers should not risk going to smaller manufacturers for precisely this warranty risk while chasing lower costs. Those warnings have indeed come to fruit sooner than expected, and that too due to prices falling through a cliff.

At a broader level, the same caveat emptor will apply to other markets as well where manufacturing is ‘booming’, especially India  and soon, the US, as the risks of oversupply remain absolutely real, and as local incentives are phased out, the future remains unpredictable, to say the least for many of the players rushing into the market.