Top 50 Bankable Module Brands Based on PV Tech Research 0

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Installing a solar PV system at home or in your commercial business is indeed a long-term investment. You have to put immense time and money into installing one. Many solar manufacturers are offering high-quality and built to last solar panels with a full warranty extending up to 25 years. But how will you assure that the solar manufacturer you will choose can uphold its warranty? 

As a solar PV consumer, contractor and investor, you should consider a few factors in choosing the right solar panel supplier. The other factor that you should look into aside from the equipment quality is the bankability of each solar manufacturer.

For today’s article, we are going to break down the details about PV Module Bankability including all the top bankable solar brands based on the PV Tech Research report.

What is PV Module Bankability?

PV module bankability or investment-risk scores are obtained by combining the manufacturing and financial health scores of manufacturers. It is done thru nonlinear/power regression analysis. The data used is dominated by quantitative inputs (six years back and two years forward in the case of forecasted variables), with qualitative data kept to a minimum. At every stage of analysis, the solar manufacturer candidates are being compared based on how the module makers have been perceived in the market from a bankability/investment perspective.

In the simplest term, when we say that a solar PV module manufacturer is bankable, it means that the manufacturing company is profitable, it has high reliability as a company, thus it is worth it to invest in. Practically, once the solar PV manufacturer met the criteria and standards, financial institutions will support it by financing a project with a manufacturer’s panels at a favourable interest rate. In the solar industry, bankable manufacturing companies are more likely to be in the business for the long run and less likely to file for bankruptcy in the near future. 

However, bankability is not that straightforward, and it’s important to look for an accurate list of panel manufacturers’ bankability.

PV-Tech Bankability Research Methodology Overview

The PV ModuleTech Organization conducts solar PV manufacturer bankability reports by quarter and yearly to provide the list of leading bankable module brands worldwide. The research methodology covers a comprehensive guide to understanding, ranking and benchmarking the bankability status of top global PV module makers in different solar market segments (commercial, industrial and utility). Whereas the yearly ranking report tackles crucial manufacturing and financial metrics for top solar PV module suppliers. The said bankability report is beneficial for all global PV site investors, developers, EPCs and property-owners, where module supplier selection is critical to maximizing site performance, reliability and long-term returns.

PV-Tech Bankability report covers:

  • Top solar PV module manufacturers across the globe, are analyzed and evaluated using the provided technology and financial strength metrics by PV-Tech researchers. After careful evaluation, all data are converted into quarterly Bankability Ratings, which are ranked from AAA-Rated (highest) to C-Rated (lowest, highest-risk).
  • Annual and quarterly ratios of the financial analysis, metrics and overall benchmarked module supplier strengths. The analysis report is segmented across operating metrics such as liquidity, leverage, debt, profitability, valuation, revenue generation, sales portion from module business, and more.
  • Technology analysis by module supplier outlines in-house effective capacities by region/technology, global module supply by end-region, in-house technology roadmap across high-efficiency module types, CAPEX by value-chain segment, R&D spending, and more.
  • Extensive research analysis and commentary by PV manufacturers that discusses the upward/downward trends relating to all manufacturing and financial health/standing parameters, focused specifically on module supply strategy and risk factors involved.

If you wish to get an in-depth understanding of the bankability methodology, you can visit the links below: 

Bankability Methodology:

How PV-Tech Research Ranks PV Module Manufacturers by Bankability?

Before the PV-Tech Research team released the top bankable module brands of the year, they underwent careful evaluation and analysis first. Generally, the overall bankability result is calculated by solar manufacturers manufacturing scores and financial health scores. The formula used is stated below where (B) stands for bankability, (M) for manufacturing and (F) for financial scores:

Whereas k symbolizes the scaling factor that points the bankability scores to a 0-10 band, m and n are power coefficients derived from regression analysis, and i is a variable that is module-supplier and time-period specific. 

The manufacturing health score/ranking is expressed as:

where a, b, and c are factor-dependent weightings, scaled to generate manufacturing health scores for each company by quarter (i) in a 0-10 band; S, C and T are the module supplier shipment, capacity and technology ratios introduced above; p, q and r represent power factors derived from regression analysis.

Manufacturing Factors

Manufacturing factors are composed of supply, capacity and technology. We will discuss here the role of the three factors and their relationship to one another.

Manufacturing Supply Factor (S) Methodology

The manufacturing supply factor (S) determines the market share of manufacturers by branded module shipment volume. Even before, shipment volume has been used to rank solar PV makers, albeit in a very simplified and generic version.

The rankings for module supply are frequently done on a yearly (calendar year) basis. Typically, it was confined to top-10 shipment estimates. The module supply rankings always have restrictions when it comes to branded-module shipments to end-market customers. Sometimes, the shipments are referred to merchant shipment volumes, particularly, removing any OEM supply or subcontract production line leasing on the list.

Manufacturing Capacity (C) Strength Score Methodology

On the other hand, the manufacturing capacity factor (C) ranks solar PV manufacturers by assessing their in-house solar cell and module effective quarterly capacities on different global PV manufacturing zones. It also factors the manufacturing zones at any given time to global module supply end-markets.

In manufacturing capacity factor, the module quality, performance and reliability of each supplier are being tracked back to its cell manufacturing origin. Also, the module trade barriers routinely extend to cell component origin-of-manufacture.

The resulting module capacity (Cap) value by the company (i) by manufacturing zone (p=1…8) is expressed as: 

Manufacturing Technology (T) Strength Score Methodology

Meanwhile, in the manufacturing technology strength score (T) the PV solar module suppliers are being ranked by assessing the investments of solar manufacturers on their capital expenditure (CAPEX), research and development (R&D).

Extensive efforts are taken by PV module suppliers to create a perception with customers of technical differentiation and leadership; often this has the appearance of brand positioning, rather than being supported by any major performance benefits, or matched by investments into CAPEX (in particular for line upgrades) and R&D.

Solar module manufacturers are putting extra effort in forming a perception with customers of their technical differentiation and leadership. Typically, this involves the company’s brand positioning rather than being matched by investments into CAPEX and R&D. 

Each solar company’s manufacturing technology strength factor is being interpreted quarterly and written as

Now that the Supply, Capacity and Technology scores are explained, let’s now further discuss how these three values are combined to form the M factor for each PV manufacturer at each quarter-end.

Manufacturing strength (M) score methodology

The manufacturing strength (M) score is the combination of the three manufacturing variables (S, C and T). The contributions will be treated as independent quantitative factors and will find solutions to the coefficients (a, b and c) and the powers (p, q, and r).

To understand the dependence of the Supply, Capacity and Technology variables, you have to consider the final model accuracy (goodness-of-fit) for each manufacturing variable (S, C and T) terms.

Now that we’re done with manufacturing factors, we will proceed to the other factor contributing to the bankability score of solar PV suppliers.

Financial strength (F) score methodology

Most of the time, the downstream community of the solar PV industry, from project developers, EPc’s to asset owners etc, are lacking an in-depth understanding of solar PV benchmarking. Sometimes, they also tend to focus more on the financial health of their companies rather than the status of their manufacturing output.

Moreover, some solar module manufacturers, particularly those currently publicly-traded on US stock exchanges, are being strictly inspected the most, but largely based on an investor standpoint. For this small companies grouping, their financial health coverages by certain financial analysts often have the highest standard. 

Thus, the financial strength score also matters a lot when it comes to the bankability status of each solar PV company.

Now that the two main variables affecting the bankability score are briefly explained, we will now explain how the manufacturing strength (M) and financial strength (F) values are combined to form an overall bankability/risk investment score for PV module manufacturers (B) based on the PV-tech Research bankability methodology that offers the first fully-researched benchmarking tool for investors, developers, EPCs, and asset owners of global solar PV sites today.

Bankability strength (B) score methodology

Let’s tackle again the formula that underpins the entire PV module bankability study:

The relationship between the manufacturing values and financial values is quite intuitive as the bankability score (B) is directly proportional to the status of each manufacturing (M) and financial (F) health score.

In simpler terms, for PV module suppliers to be bankable, first, they must have manufacturing strength that may be driven by accurate and strong utility-scale shipments track-records, high capacity strength to sustain future shipment levels at the GW-level, and stable investing into their CAPEX and R&D. Aside from that, the PV suppliers must have demonstrated good financial stability and health status over a long period in the industry.

The two main requirements must be met simultaneously. Note that, even if the PV supplier is recognized as a shipment leader, but has poor financial status, it will never be considered as a candidate for the top bankable solar brands in the industry. Consequently, having a strong company’s books but lacking product availability, which is reflected in a low manufacturing health score, will definitely exclude the company from the ‘bankable’ list.

Thus, lacking good performance in either of the two variables (M) and (F) prevents commercial-deployment bankability status for any solar module manufacturers.

By default, the bankability score (B) is derived from the final output of the two terms, as opposed to any weighted summation. Meaning, no matter how strong the scores of manufacturing or finances, the risk-mitigation during investor due-diligence, the bankability status cannot be compensated by only one of the M or F variables, being at the upper end of its respective 0-10 score bands.

Once the conditions are accepted, the challenge is simply to identify the scaling constant (k), and the power factors (m and n), within the above equation. Then the same equation will be used to test different PV module suppliers, going back as far as ten years ago if needed.

The Terms & Definitions of PV Module Supplier Bankability (by Scores, Categories & Rating Grades)

To fully understand the bankability scores for the listed PV module manufacturers, it is crucial to have enough knowledge about the terms and conditions of bankability as well as how it was interpreted and presented. The model and figure below involve putting classification, terminology and description to the numbers generated.

The bankability score ranges from 0 being the lowest to 10 being the highest. The rating grades are subject to fall under three pre-assigned grade categories known as premium, second-tier, and speculative. The PV module suppliers with bankability scores ranging from 5-10 are placed in the upper, premium grades; whereas, the lowest performers with scores between 0 and 2 are under the speculative grades. Lastly, the suppliers in the middle grade with scores ranging from 2-5 are called second-tier.

Each of the three grades label (premium, second-tier, and speculative) has its own rating grades which are represented by letters. (or simply ratings). For premium grade, the rating grades fall between AAA, AA, and A ratings, which is shown in the figure below.

The highest performers in the sector are referred to as triple-A-rated or AAA-rated while the C-rated is the least performer on the bankability list. Solar PV manufacturers under the AAA label are most likely to be setting benchmarks for all other manufacturers, across a wide array of operational metrics. Additionally, they get a modest ASP premium by obtaining a brand-value delta.

Fig.1: PV ModuleTech Bankability Terms (scores, categories and rating grades)
(source: PV-Tech & Solar Media Ltd.,)
Fig.2: PV ModuleTech Bankability Table
(source: PV-Tech & Solar Media Ltd.,)

Criteria for Solar PV Bankability Rankings

PV-Tech conducted a study and eight leading PV module manufacturers were chosen as candidates. The given criteria below were crucial as part of the initial validation test. All of the eight suppliers almost met four out of five criteria given below, whereas some met all the five conditions:

  • Annual module shipment levels >1 GW for the calendar year 2018
  • Listing within Top-10 PV module suppliers by volume, for one or more of the past three calendar years
  • (Specific to Chinese-based module suppliers) >10% annual module shipment volumes to overseas markets (non-China) during the past three years
  • The claim of being in any third-party agency list, such as Tier 1, etc.
  • Brand awareness across decision-making parties overseeing the selection of large-scale utility solar sites builds in excess of 50 MW

PV ModuleTech Bankability Ratings Pyramid

Every quarter of the year PV-Tech PV ModuleTech reveals the list of new top bankable solar module brands. Here are the quarterly reports from 2019 up to the latest 2022.

Year 2019

Based on the quarterly report of PV-Tech PV ModuleTech bankability, the leading bankable solar module brands in Q4 of 2019 are First Solar, Jinko, LONGi and Canadian Solar with AA-rated grades. It was followed by Trina Solar, JA Solar, Risen, Hanwha Q Cells and GCL-SI with A-rated grades. Whereas, the other solar manufacturer candidates, namely Astronergy, Seraphim, Talesun and DMEGC fell under the second tier with B-rated grades.

Fig.3: PV ModuleTech Bankability Rankings: Q4’19 Pyramid
(source: PV-Tech PV ModuleTech Bankability Rankings Report)

Year 2020

Based on the quarterly report of PV-Tech Research in 2020, LONGi is still the top bankable solar brand from Q1 to Q4 with triple A-rating grades under the premium category. Whereas, Jinko Solar, Canadian Solar and First Solar remained under the premium category with AA-rating grades from Q1 to Q4. 

In the first quarter, JA Solar obtained A-rating grades but managed to hit the AA-rating in the preceding quarters in 2020 while Trina Solar made it to the AA-rating grades as well in Q3 and Q4. On the other hand, the other brands under the premium category, namely Risen Energy and Hanwha Q Cells remained at A-rating through the entire year.

Fig.4: PV ModuleTech Bankability Rankings: Q1’20 Pyramid
(source: PV-Tech PV ModuleTech Bankability Rankings Report)
Fig.5: PV ModuleTech Bankability Rankings: Q2’20 Pyramid
(source: PV-Tech & Solar Media Ltd, 2020)
Fig.6: PV ModuleTech Bankability Rankings: Q3’20 Pyramid
(source: PV-Tech & Solar Media Ltd, 2020)
Fig.7: PV ModuleTech Bankability Rankings: Q4’20 Pyramid
(source: PV-Tech & Solar Media Ltd, 2020)

Year 2021

In the year 2021, it’s no surprise that LONGi Solar remained the top bankable solar module brand across the globe. 

Fig.8: PV ModuleTech Bankability Rankings: Q1’21 Pyramid (source: PV-Tech Research 2021)

Year 2022

At the beginning of 2022, only 50 solar module brands managed to obtain a spot on the bankability ratings while only six solar PV manufacturers got A-Grade ratings. 

The top 50 solar companies in the list make up over 98% of the global solar module supply today. Still, many solar suppliers are included in the lowest rating band (C) compared to the upper rating bands. Whereas, most of the (pure-play) OEMs companies and other solar distributors that often claim to be module suppliers with GW-plus capacity fall into the ‘C’ category.

The premium band still includes LONGi Solar with AAA-rating grades, Trina Solar, JA Solar, First Solar, Jinko Solar with AA-rating grades and Canadian Solar with A-rating. The rest of the candidates fell under the second tier and speculative category.

Fig.9: PV ModuleTech Bankability Rankings: Q1’22 Pyramid
(source: PV-ModuleTech Bankability Quarterly Report)

PV ModuleTech Bankability Rankings: Why Only a Few PV Module Suppliers Passed the Bankability Ranking? (from 2019-2022)

Since the PV ModuleTech bankability rating is not solely based on the number of supplies and shipments, many solar manufacturers can’t consistently make it to the top ranking. The bankability status is based on a combination of Manufacturing Strength scores and Financial Strength scores. Each of these variables is being monitored, interpreted and updated quarterly to finalize the new set of top bankable solar brands.

Also, the global shipments for utility deployment of each supplier must be in high-volume, for it to be in the top rating. Additionally, the solar module suppliers should not be in the mix for 100-MW-plus projects. If all shipments are domestic, then the companies are impossible to be selected for supply to overseas projects (at least where investor due-diligence is involved). Lastly, if the solar company is going to be technically bankrupt, it will never be included in the list.

These are some of the reasons why there are only a few solar module suppliers in the premium, AAA-rating grades and most of the suppliers only managed to be on the very bottom. The strict criteria and methodology of PV-Tech Research are indeed helpful in categorizing which solar manufacturers are profitable and performing well in the industry, in terms of manufacturing and financial statuses.

Conclusion: Who Remains on Top?

Based on the latest release of the PV-Tech ModuleTech quarterly report (2022) only six solar PV manufacturers made it to the top. LONGi, still being the top solar brand under the premium category with AAA-rating grades, followed by Trina Solar, JA Solar, First Solar, Jinko Solar with AA-rating grades and Canadian Solar with A-rating grades.

For the next few weeks, the PV-Tech research team will release the next quarterly report of PV ModuleTech Bankability Ratings 2022. Should you wish to request a demo? You can check it here.

References:

https://www.pv-tech.org/editors-blog/pv-tech-research-set-to-reveal-investment-grades-for-global-pv-module-suppl
https://www.pv-tech.org/editors-blog/jinko-longi-first-solar-canadian-solar-retain-aa-status-in-q419-pv-modulete
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