What is bankability? Manufacturer reliability overview

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If you're considering installing solar panels, you know it's a long-term investment. Solar panels are built to last, and many manufacturers offer warranties extending 25 years. So how do you ensure that your llpanels' manufacturer will uphold this warranty? One indicator is your manufacturing company's bankability.

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If a solar panel manufacturer is bankable, the market has confidence in its reliability as a company. Practically, this means that financial institutions are willing to finance a project with a manufacturer's panels at a reasonable interest rate because they think it's a worthy investment. Manufacturers that are bankable are more likely to be in business long-term and not file for bankruptcy in the near future.

When you're deciding which panels to purchase, there are two major components to consider concerning bankability: equipment quality and warranty coverage. First, you want to ensure you're getting quality panels that will produce solar energy efficiently and with little maintenance. Second, if something goes wrong with your panels, you want to know that your warranty will cover any necessary repairs or replacements. Because bankability takes into account the quality of the product and the financial stability of the manufacturing company, it's helpful to get an idea of how bankable the manufacturer is before you decide which panels to install.

Bankability isn't straightforward. We've outlined a few different metrics below that can help you determine the bankability of your panel manufacturer. It's important to note that none of these metrics are perfect, and they can vary over the lifetime of your warranty.

Altman Z-Score

An Altman Z-Score is calculated using eight different variables that you can find on a publicly-traded company's annual 10-K report about their financial performance. This publicly available report is free, and you can access it through the U.S. Securities and Exchange Commission's EDGAR database. The score tells you the company's likelihood of bankruptcy over the next two years based on five ratios that use these eight variables. The ratios include:

  • A = working capital / total assets

  • B = retained earnings / total assets

  • C = earnings before interest and taxes (EBIT) / total assets

  • D = market value of equity / total liabilities

  • E = total sales / total assets

Using these five ratios, you calculate the score based on the following equation:

Altman Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Generally, for a manufacturing company, a score above 2.99 indicates that the company has a low probability of filing for bankruptcy over the next two years. Companies with scores of 1.80 and below have a very high risk of failing over the next two years. While this metric can help you determine the immediate financial security of your manufacturer, it isn't easy to ascertain how well your company will be performing 20 years from now based on its Altman Z-Score.

BNEF ranking

Bloomberg New Energy Finance (BNEF) has been publishing reports on the bankability of various solar panel manufacturers since 2012. Each quarter, BNEF releases a list of panel manufacturers that it considers tier 1, meaning they are very bankable. Based on their methodology from October 2020, BNEF recognizes manufacturers as tier 1 if they "have provided own-brand, own-manufacture products to at least six different projects, which have been financed non-recourse by six different commercial (i.e., not development, not export-import) banks, in the past two years." By non-recourse, BNEF means that the borrower is not personally liable for the loan; the lender of the loan cannot pursue anything beyond the collateral (the property itself).

Any manufacturers who don't meet the tier 1 criteria are considered either tier 2 or tier 3, but BNEF doesn't release lists of these manufacturers. While the BNEF ranking can provide an idea about the bankability of your manufacturer, the criteria are quite strict and can exclude some high-quality companies. For example, a new company may produce extremely durable panels with new technology but will be listed as tier 3 because it's new to the industry. For this reason, BNEF states that its list shouldn't be used to measure the quality of the panels themselves. Another consideration is that the tier 1 list excludes reputable companies that outsource their production. While many manufacturers will market themselves as tier 1 if they qualify, you'll need to pay for a Bloomberg subscription if you want to access the full tier 1 list.

Independent testing data

One way to examine the quality of a solar panel manufacturer is through independent testing data. While all solar panel modules undergo rigorous testing before going to market, some independent testing labs will perform additional technical due diligence to assess the quality of panels and the bankability of manufacturing companies. One such lab is PV Evolution Labs (PVEL), which, in partnership with DNV GL, releases a quarterly PV Module Reliability Scorecard that ranks solar panels and manufacturers.

Manufacturers elect to participate in this program, and it includes many BNEF tier 1 companies. The scorecard ranks these manufacturers and their solar panels based on their quality and durability to provide consumers, installers, and investors with reliable, third-party performance data. If you want to see if a manufacturer you're considering is ranked, you can download the scorecard for free.


Finally, one easy way to understand a manufacturer's bankability is by looking at its reviews. Manufacturers with positive reviews are more likely to produce quality equipment and be in business for longer. On EnergySage, you can compare reviews of product manufacturers on our site. It can be beneficial to look for reviews in your area to see how the products fare in similar environmental conditions. You can check out our take on some of the top solar panel companies and manufacturers to gain more insight.

Ultimately, if you're concerned about a manufacturer's bankability, you still have options beyond the warranties offered by the manufacturer and your installer. Some manufacturers are warranty-insuring, meaning third-party backers will uphold their warranties even if the manufacturer declares bankruptcy. If your manufacturer doesn't fall into this category, you can usually purchase an insurance policy to cover your installation. However, it's important to note that these policies are often expensive and can cost as much as or more than the necessary repairs and replacements.

On the EnergySage Marketplace, you can receive quotes from qualified and pre-vetted installers who are choosing products from reputable manufacturers with quality products. If you have any questions about the solar equipment that is provided in your quote, you can schedule an appointment with your dedicated Energy Advisor or leave a note in your profile so that installers can reach out to you with more information about their product selection.

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