On June 29th, 2015 Advanced Energy (“AE”) publicly announced its intention to pursue strategic alternative solutions for the Inverter business.  A lot of questions are now being asked by owners, developers, and service providers about the implications of this announcement.  A sizable portion of the market has been affected.  Of the over 190MWs of operating solar plants for which RadianGEN provides asset management services, over 14% of the portfolio has AE equipment.

Here are some more detailed facts about the recent disclosure that RadianGEN has been able to gather:

  1. Despite exiting the solar industry, AE has stated it will continue to support warranty and service obligations.
  2. Publicly, AE has retained its technical service organization and field services team for warranty claims and intends to keep a reasonable level of trained staff on board to service its warranties.
  3. AE will not be offering extended warranties (10 years) on its existing unsold inventory.

The solar industry is a young and dynamic space where market entrances and exits are a relatively common occurrence.  While exits have generally been under more dire circumstances (e.g. Astropower, Evergreen, Satcon, etc.), the AE announcement is just one more example.  This reality complicates the operations of assets with expected lifespans measured in decades.

With this in mind, here are some questions that solar project owners may want to consider:

  1. Have you confirmed your relationships with manufacturers and service providers to ensure the right technicians and support will be available for you when issues arise?

Using AE as an example, any service work must completed by an AE certified technician to maintain a valid warranty.  Previously, AE had offered a field service technician training program at its factory where one could become certified on the technology. Effective the day AE announced its exit from the industry, AE stopped offering the certification program along with any remote or other training services.  Radian recommends that owners confirm their relationships with qualified staff for servicing AE inverters.

  1. How reliant is your portfolio on any given manufacturer?

Owners should understand their overall exposure to any given equipment supplier and the terms of associated warranties. It is also helpful to catalog O&M activity and understand the preventative and corrective maintenance history of critical equipment.  Well organized operational data allows operators to better understand where issues are likely to emerge in a portfolio and establish plans for preventative, predictive or corrective maintenance.

  1. What is your contingency plan?

We have seen several situations in the past where manufacturers have exited the industry and warranty fulfillment has become more difficult or non-existent.  Most of these situations involved manufacturers that went bankrupt.  Contingency plans involve: 1) updated spare parts strategy; 2) close coordination with trained staff that can perform the work that is usually done under warranty; and 3) purchasing backup warranties from other suppliers.

  1. Does the project have a robust spare parts strategy?

Having a good spare parts strategy becomes increasingly important when warranties lapse and more generally as equipment ages.  Aging increases the probability of failure, but can also impact the availability of critical parts as models evolve or are discontinued.  By the time existing warranties actually expire, it is likely that some specific spare parts will become more challenging to find and purchase. RadianGEN advises our clients with significant exposure to any single manufacturer to consider investing in a small percentage of replacement parts, as these are likely to become more valuable over the remaining life of the equipment.  We have seen the cost of modules and inverter parts greatly exceed original pricing as the equipment has become scarcer.

If you would like to discuss potential risks, solutions or action plans regarding your projects, please contact us today at info@radiangen.com.  We would be happy to review your portfolio and provide suggestions based on our experience.