Pros and Cons of Tier 1 vs. Tier 2 solar panels
When you buy a solar panel you are effectively getting two things. A physical product that produces solar electricity and a promise from the manufacturer that this product will continue to produce that amount of power for its warranted life (usually 25 years). The question you have to ask yourself is:
- What brand of solar panel do you expect will last the longest (see our discussion how long do solar panels last) and is it likely that one brand of solar panel will produce more power for longer than another solar panel; and
- If there is a problem down the track what is the chance that the manufacturer will honor their warranty?
One of the things the industry has come up with to try and answer these questions is a tiered classification system for solar panel manufacturers.
Generally speaking Tier 1 solar panel manufacturers are defined as those that:
- Have been producing solar panels for 5 years or more;
- Are either publicly listed on a stock exchange or have a strong and stable balance sheet;
- Have fully automated production and a high degree of vertical integration
- Invest significantly in marketing their brand
Tier 2 and Tier 3 manufacturers are all those that don't meet one or more of these criteria.
Typically tier 1 solar panels are 10-30% more expensive than tier 2 and tier 3 solar panels.
Solar panel manufacturers that claim to be Tier 1 include: Sunpower, Solarworld, Panasonic, LG, Trina, Jinko, Rene Solar and Canadian Solar. My apologies if I missed anyone off this list.
Solar panel warranties
The value equation that tier 1 manufacturers use to justify their price premium is that:
- They have a better manufacturing process and so it is less likely their will be defects in their products.
The SolarReviews view: We think this is generally true that all tier 1 manufacturers have quality manufacturing processes but we also think it is true that both tier 1 and tier 2 use solar cell production lines and solar module assembly lines that are designed a built by the same engineering firms and so many second and third tier manufacturers may also have high quality automated manufacturing processes.
- They have invested a lot in building their brand and being able to charge a small premium and so they are going to be more careful in quality control process to avoid defects.
The SolarReviews view: We think this is probably generally true but again there may well be second and third tier solar panel manufacturers that also have excellent quality control. In my Australian business I have for some 6-7 years imported a small brand of Chinese solar modules from a family owned Chinese company I have have not yet had a single panel with a defect. I wont mention their name because they don't sell into America but over the same period their have been a number of quality related recalls from tier 1 manufacturers. I have 30kW of these cheap Chinese panels on my home in Australia.
- Their corporate strength and quality manufacturing means that if their ever is a quality problem they will fix it.
If a company has invested a large amount of money in promoting their brand then they are less likely to allow any defective product to damage this brand. Their investment in their brand means they have an incentive to invest in quality control in their manufacturing and also to respond favorably to warranty claims.
The SolarReviews final say: We think it is worthwhile to pay a small price premium, in the range of $.20-$.30 per watt to use premium tier 1 panels. We can't say for sure that it will make a difference to either quality or long term reliability (but it may), and we cant necessarily say any particular tier 1 vendor will be in business in 10 or 15 years, but we do think these brands will want to protect their reputation and so will be more likely to respond to warranty claims if they are still in business.
We think a big issue to look at is the amount of assets that a solar panel manufacturer has in America. If a foreign solar panel manufacturer has few assets in America and there is a major quality issue in the future, it is likely they will simply liquidate their American subsidiary.
I have seen this with a different second tier manufacturer in Australia that when micro fractures were found in a high proportion of their solar panels they simply packed up and left Australia. Solar panel manufacturing is a very competitive business and their will be more losers than winners in the long term.
If you use our site to get quotes we will usually try and get you quotes for a number of different options including tier 1 and tier 2 options. You can then listen to the sales spiel of each and decide if you think it is worth the premium to buy tier 1 solar panels.