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What is a Tier 1 Solar Panel?

What is Tier One? What Does Tier One Mean? Why Do I Need Tier One?

We are going to cover off exactly what a Tier one Solar Panel is and what it actually means. 

Firstly, tier one has nothing to do with quality. The name and system has been put together by Bloomberg. Bloomberg is a financial software and data company that is worth billions of dollars because of it’s deep insights into businesses and organisations financial position. Not the quality of the product they produce.

What does Bloomberg do?

They put solar companies into 3 categories. Simply, tier one, two and three. 

 

Bloomberg takes a very holistic view of the company from a financial perspective and then rates them accordingly. The term they use to rank solar companies on what is known as their bankability. 

 

Bankability when it comes to solar is basically, would a big bank lend this company money? Banks being banks don’t like to share their own internal metrics so in came Bloomberg. They created their own system to help people understand more about these solar companies.

So how does Bloomberg do it?

Taking the words right out of Bloomberg’s explanation of what they do:

“Tier 1 module manufacturers are those which have provided own-brand, own-manufacture products to six different projects, which have been financed non-recourse by six different (nondevelopment) banks, in the past two years.”

So, to put it more simply, Bloomberg tracks large scale solar installations around the world and keeps data on who finances them and how they went. They focus on projects that were financed with non-recourse financing which means that the bank is taking the risk on the panels performing and not the company’s balance sheet they are lending the money to. 

Meaning if things go pear shaped, the bank can only use the solar panels as collateral for the loan and not any cash or other assets the company owns separately. 

When we say large scale, Bloomberg only uses installations of solar panels of over 1.5 megawatts. To put that in perspective, that’s well over 200 standard residential rooftop installations. 

So, when you look at it, a tier one solar panel manufacturer is basically really big and generally pays their bills. That’s pretty much it. 

If you want to read more about the structure we have posted a link to the Bloomberg information sheet on our website. Check out our page in the description below.

What about Tier two and three?

Bloomberg doesn’t even release who is tier two and three so don’t worry about it. 

So does it really matter?

Like a lot of things in solar, it isn’t black and white. 

Tier one means something because if an organisation is big, pays their bills and deals with major banks and lenders, they are probably pretty legit. 

However, there are some amazing solar panel manufacturers that aren’t on the tier one list that make great panels and service them well after you install them.

The problem with Tier One Solar Panels

One major problem with the tiering system is that often a panel will be called tier one and it just isn’t. 

Getting your hands on Bloomberg’s report costs a fortune. It isn’t made for consumers, it is made for big companies wanting financial data. 

When you are buying solar, if you want tier one or you see tier one being advertised make sure you ask on what basis they are making the claim. 

Often businesses will republish lists online but unless you have a Bloomberg original report, who is to say it isn’t fake. Plus, Bloomberg publishes the report quarterly and it changes regularly.

Conclusion

The moral is, ratings agencies are very important and the tier one system does give you good insight into the company behind the solar panels you are getting on your roof. 

 

However, it isn’t the be all and end all. If we have learnt anything from the global financial crisis which coincidentally happened only a few years before the Australian solar boom, sometimes the ratings don’t mean shit.

 

Bloomberg themselves say, and I will quote this from their own Methodology explanation.

”We strongly recommend that module purchasers and banks do not use this list as a measure of quality, but instead consult a technical due diligence firm.”
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