The Difference Between Tier 1 and Tier 2 Solar Panels

Not all Solar Panels are made the same!

Ten years ago, choosing a solar panel was fairly simple. You had U.S. and European brands, plus a few Chinese ones. While the latter had lower cost, they often came with shorter warranties and a lack of name recognition. But in today’s solar world, as companies have come and gone, mergers have taken place and technology has improved both at home and abroad, it is increasingly difficult to discern what’s a good solar panel over another one.

Different levels

To resolve this issue and so that buyers are fully aware of what they’re getting, the solar panel industry came up with a tiered classification: Tier 1, Tier 2 and Tier 3.

Generally speaking Tier 1 solar panel manufacturers are defined as those that:

• Have been producing solar panels for 5 years or more;

• Make their own panels in-house

• Are either publicly listed on a stock exchange or have a strong and stable balance sheet;

• Have fully automated production and invest heavily in research and development

• Invest significantly in marketing their brand 

• Produce large quantities of panels per year

A Tier 2 manufacturer is often small to medium scale manufacturer established less than five years ago that doesn’t have Research and Development (R&D) activities and usually buys the wafers (the solar cells) from a Tier 1 manufacturer. Not all the processes are automated in a Tier 2 company; some is done by humans, allowing for higher fault risk.

And finally, Tier 3 refers mostly to those companies that function as assemblers and include about 90% of new solar companies. These entities don’t manufacture solar cells and only use human production lines for manual soldering of those they buy from other manufacturers, allowing for a higher potential of problems later.

Some of the Tier 1 solar panel manufacturers include Canadian Solar, Hanwha, LG & Q Cell has a large selection of these solar panels and other brands that meet the highest quality and offer the best warranties. 

Tier 1 ranking scale does not necessarily refer to the efficiency of the actual solar panels. It is organized by Bloomberg New Energy Finance Corporation and is used to rank solar panel manufacturers in terms of their bank-ability or financial stability.

However, the list is still a good indicator or companies that may produce better products and may still be in operation if something malfunctions with the panels. That’s why, typically, tier 1 solar panels are 10-30% more expensive than tier 2 and tier 3 solar panels. 

Longer and better warranties

Part of this premium has to do with longer and better warranties. Tier 1 companies have a better manufacturing process and so it is less likely there will be defects in their products. Their corporate strength and quality manufacturing means that if there 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.

That’s why they will normally include longer warranties with these panels, both in terms of workmanship and performance. The workmanship warranty on solar panels covers any physical defects that stem from manufacturing errors, such as imperfections in the frame or glass, loose junction boxes, faulty connectors, bad cells or damaged cell connections and defective backsheet.

If the panel malfunctions due to a manufacturing defect, that is covered under the workmanship warranty

The performance warranty guarantees your panels will produce near their rated output over the life of ownership. For instance, Tier 1-class producers of solar panels guarantee that during the first year of solar panels exploitation generation losses will be no more than 0.8%, so after 10 years of outputting power capacity of a panel will decrease no more than 8-10%. The performance warranty ensures your system’s output is reliable and consistent. If a panel’s output suddenly drops dramatically, it would be covered for replacement under the performance warranty.

Most solar panels come with a 25-30 year performance warranty. This is the industry standard from Tier 1 manufacturers at the moment.