Solar installers can demand supply chain transparency from manufacturers
A growing trend across all industries is consumers demanding greater transparency on the origin of the products they’re purchasing. Manufacturers claiming they’re producing cruelty-free or organic products can be subject to third-party audits to determine if that’s true.
The solar industry is now also experiencing a push for supply chain traceability as allegations of forced labor in the production of polysilicon, a raw material necessary in making the wafers used in solar panels, surfaced in Xinjiang, China, where nearly half of the world’s polysilicon is produced.
There are options for U.S. solar installers to encourage supply chain traceability for the products they’re purchasing, but it remains the responsibility of the manufacturer to implement the protocol.
What is supply chain traceability?
Supply chain traceability is the process of tracking the condition of how a product is made with specific conditional requirements in mind. Those could be how sustainably something is produced, the quality of materials used in the product or ensuring no forced labor was used during production. Ultimately, supply chain traceability aims to create greater transparency and accountability in manufacturing, all the way down to where raw materials are sourced.
“When we talk about the way the world is procuring things nowadays, and across many industries, there’s this whole area that some people refer to as ‘ethical sourcing,’” said Paul Wormser, VP of technology at Clean Energy Associates. “This really means, can I source something that meets my code of conduct standards, my ethical standards, my supply chain standards? So, that may have human rights and labor issues associated with it, but it may have other issues associated with it too.”
Tracing something like the production of a solar panel would start at the module factory to check the solar cell. Then the solar cell would be traced to the wafer. From the wafer, the audit continues to move backward to the ingot and then on to the polysilicon factory where the ingot is fabricated.
“This continues upstream until you get to the basic raw materials that are used, and you can imagine that if you’re a module manufacturer, you might make modules in more than one place, you might get solar cells from more than one place,” Wormser said.
For U.S. solar specifically, the Solar Energy Industries Association (SEIA), Clean Energy Associates (CEA) and Senergy Technical Services published a 41-page document in April titled “Solar Supply Chain Traceability Protocol 1.0” that meticulously lays out the steps manufacturers should take to establish supply chain traceability. The method relies on third-party auditors to provide unbiased reports on the process.
“The protocol is designed to provide trust and transparency in the supply chain,” said John Smirnow, general counsel and VP of market strategy at SEIA. “It’s tracing or establishing provenance of the documents where goods come from. You add visibility into the solar supply chain, making sure it’s credible.”
A solar installer’s role in supply chain traceability
There is no direct action for solar installers to take in the actual process of supply chain traceability. Whether it’s a small dealership in the residential market purchasing hardware from a distributor, or a national installer in the utility market dealing directly with manufacturers, the onus is still on manufacturers to implement supply chain traceability.
What installers can do is address traceability with those distributors or manufacturers they’re purchasing products from. Installers can include obligations in purchasing contracts that have provisions for a specific issue in production, like sustainability or forced labor.
The other option is requiring an audit of the supply chain. That would entail hiring a third-party auditing service like CEA to enter those manufacturing facilities and ensure a product is meeting required standards. In most cases, the party requesting the audit must pay for the service.
“What do they care about? Forced labor in Xinjiang. Do you know where the silicon’s coming from? If not, what are you doing about it? Distributors should push that up the supply chain. It depends on how far removed they are from the import or supply channel, but signal that customers want to see certain things done,” Smirnow said.
Installers can trigger those processes through their product distributors. Distributors often work with third-party entities to ensure their supply chains are operating legally and deal directly with manufacturers. The United States prohibits the import of any material produced by forced labor, so if a shipment contains product that was produced under those or other illegal conditions, it will sit in a shipping port and remain undelivered.
Solar distributors like Soligent can track what products are kept at shipping ports due to legal status and avoid those manufacturers. They’re also able to directly address these issues with the manufacturers.
“Distributors like us are asking these questions and we most certainly ask these questions of our manufacturers,” said Jonathan Doochin, CEO of Soligent, in an email. “We then check in with third parties to see who we believe is breaking the law and we steer clear of those products.”
It isn’t feasible for an individual solar installer to track the origin of every piece of hardware they use. The consumer in most cases is removed from transactions between manufacturer and distributor. But installers are driving the production of these solar components and have a role to play in supply chain traceability.
“Anybody who’s in the solar industry who is buying something, anybody in the solar industry who is selling something, they should understand that the protocol exists,” Wormser said. “They should understand that it’s a framework they can follow in order to be prepared to address the whole topic of, ‘Where did the materials come from that are in the product I just bought or the product I’m buying?’”