STORY INLINE POST
Solar has become a reliable, economical, environmentally friendly solution globally. In 2021, solar energy accounted for 3.6 percent of the world’s electrical generation, its capacity increased 22 percent from the previous year, reaching 190GW, and the tendency is expected to rise in the coming years¹. One of the main drivers of this growth are distributed generation projects (on-site industrial, commercial and residential solar projects) that are responsible for 47 percent of the increasing capacity. This tendency of larger volumes of smaller solar projects creates a much higher demand for solar professionals and that is one the main challenges of this industry; the professionalism of its installers and the commitment of companies to high quality installations.
Quality and professionalism are fundamental in the solar distributed generation market as a power generation plant is usually placed on top of a rooftop or warehouse, factory, commercial building, or a home. Solar risk of fire is very low according to international data;⁴ however, lack of quality standards, non-rigorous inspections, and bad practices have led to accidents in the past.
Some of the reported examples in rooftop solar include large organizations, such as Amazon and Walmart. In 2020, Amazon’s solar installation in Frezno California caught fire and the company experienced other fires in the following year at other facilities, totaling 12.7 percent of their solar installations, related to arc flashes due to errors in installations⁵. This is a similar case to what happened to Walmart, seven of their solar installations in the US also caught fire 2012 to 2018⁶ because of poor installation practices. These accidents could have been prevented and avoided by a solar company with better equipment and qualified installers.
Quality standards and quality controls are usually regulated by governments and external regulators; however, even in countries where higher and more stringent standards apply, accidents happen. Stronger certification processes and external validation of installations is crucial, but there also has to be an effort to ensure quality that has to come from the end customer and the solar company developing the project.
Pricing and execution times have been identified as important factors in customer RFPs when they are trying to find a solar provider. During these processes, the bidding companies make a stretch to secure the deal both in costs and execution times; however, at times, this extra effort means reducing quality or installing without well-trained personnel. A solar project is meant to last 15-30 years. The impact of a small CAPEX increase and a few more months until completion in the Levelized Cost of Energy (LCOE) of a 30-year solar project is minimum. If both these factors are focused on increasing security and guaranteeing quality, especially in electrical components, risks of losing the solar infrastructure or even the facilities infrastructure is minimized.
Speaking of Mexico, with an annual 60 percent growth rate, distributed generation leads the way for solar in this county as well. However, this market is very vulnerable to solar accidents as there is a lack of standardization of utility requirements, proper qualification and quality standards, and a widely different quality control by external companies. Currently, there is a new regulatory proposal aimed at professionalizing the sector, which is a necessity and a good initiative. Requiring high quality components, standardizing equipment certifications, requiring certified installers, and standardizing requirements helps the industry. In Mexico and in the world, these revisions are necessary.
The issues with Mexico’s regulatory proposal is ambiguity and the number of topics that were covered. As well as professionalization, many other factors were included that either require other types of impact analysis, or require separate regulations, such as storage. Also, there is a need for this regulation to provide more in-depth clarity of requirements and processes, as this lack of clarity creates uncertainty for investors, equipment manufacturers, solar developers, and end customers. The inclusion of comments from these actors and an open collaboration with associations can be valuable to create improvements to the proposal and achieve sustained DG solar growth in a safe manner. The last opportunity to address this proposal is the transition period: a time frame for a smooth regulatory transition to avoid paralyzing the DG solar sector is key, especially considering the country’s new sustainability goal of 30 percent for 2030.
It is important to understand that solar energy is not only a good economic choice; global markets are demanding more renewable energy as they set their CO2 emission goals and companies are doing the same, requiring their providers to also comply. If we go down the value chain, the underlying conclusion is that countries should have the proper incentives according to their energy mix to comply with these global needs to allow their economy to evolve with the global economy as a whole.
It seems that there might be a fight between professionalization and rapid growth in the solar DG market, but it does not have to be as polarized as it seems it could happen in Mexico with the current proposal. Professionalization and quality are very important to ensure the sector’s safety and continuity. The right balance between proper regulatory requirements and cooperation of the industry stakeholders, including end customers, could mean a slightly slower but well-sustained growth in the DG market as a whole, without stopping it, helping entities meet their CO2 reduction goals, and creating a good practice base that will ensure this technology works well into the future.
¹ https://www.iea.org/reports/solar-pv, 10/02/2022