Solar Panel Reliability an Issue?

Today, the New York Times published an article on defective solar panels.  The article is located here:

At issue is the corner cutting being taken by certain photovoltaic panel manufacturers, leading to premature panel degradation.  For instance, they mention one west coast installation where panels with an anticipated lifespan of 25 years began failing after just 2.  This led to losses of hundreds of thousands of dollars in missed revenue for the operator.

The solar industry is justifiably concerned with manufacturing integrity.  Solar power has been rapidly gaining credibility in both the residential and commercial sectors after early skepticism, but manufacturing defects that torpedo the lifecycle cost of solar installations could reverse that trend very quickly, and they know it.  A combination of industry-wide materials and manufacturing standards, coupled with performance warranties seem like it could address the issue, though they would probably add to the cost of solar, as well.  By the way, the panel failure rates seem to be in the 5% to 20% range.  A review by Meteocontrol in Germany also found that 80% of solar installations monitored in Europe were under performing, though the article did not specify precisely what this meant.

One thing that really interested me about the article was some information about the growth of solar power generating capacity.  The Times linked to a pretty interesting informational page at the Solar Energy Industries Association (SEIA) that shows United States photovoltaic installations in 2012 totaled over 3 GW!  Ten years earlier, photovoltaic installations totalled 0.02 GW.  That’s pretty astounding growth.  While the SEIA clearly has an agenda, I still thought their web page was interesting and informative, with very good graphics and charts.  You can take a look at it here:

For someone like me who doesn’t really spend much time analyzing solar, there is some good rule of thumb numbers for the cost of ph0tovoltaic installations:

Installed Price

One can also do a little math and figure out that SEIA estimates a typical installation in Massachusetts will require 4 kW capacity.  So if we look about $5/Watt x 4,000 Watts we get an installed price (admittedly very rough) of about $20,000.  Now of course, tax breaks and other incentives might lower this cost,  but it’s still pretty steep.

The payback on such a system is going to be dependent upon local utility rules.  If “net metering” is permitted, energy generated in excess of what is needed to operate your house can be sold back to the grid.  If net metering is not permitted, battery or some other storage strategy must be deployed to capture the full potential of the system.

If we assume that 35% of our energy use is at night or early morning (for my house, that percentage might be higher) and if our monthly electric bill is $125/month, then a non-net metered installation without energy storage will deliver the following simple payback without tax breaks or other incentives:

$20,000 / ($125/month * 12 months/year * 65%) = 20.5 years.

That’s a long time.  You are effectively operating in the red for 20 years.  So if these panels do not last well past 20 years, the net present value of the installation will be unimpressive (see earlier post on net present value calculations if you want a refresher.)

But this also drives home why the solar industry should be anxious about premature panel failure.  Without a guaranteed useful life that is comfortably longer than the simple payback of a system, photovoltaics cannot be considered a solid investment.