Why Now Is The Time To Buy Solar Panels With 25 Year Product Warranties

Solar panel prices have recently risen… except those with 25 year product warranties. 

The pandemic’s economic slowdown was severe. But it’s hard to keep humanity’s lust for stuff down, and the economy is bouncing back.  The rebound caught many off guard, causing shortages and price rises across an array of industries.  Solar is no exception. 

But solar panel price rises have been uneven.  The wholesale prices of reliable, lower-cost panels with 12 to 15 year product warranties have roughly doubled from their lows of two years ago, but the cost of higher quality solar panels with 25 year product warranties — nearly all of which go on residential roofs — have held steady.

The premium for 25 year product warranty panels can now be under $1,000 for a 10 kilowatt solar system.  The difference is so small I recommend paying it.

What I don’t recommend is putting off purchasing solar in the hope prices will fall because:

1. Using panels with a 25 year product warranty is a good idea anyway.
2. A 10 kilowatt solar power system can provide $1,000 in savings and credit on electricity bills in under six months.  This means you stand to lose a lot more than you can gain by waiting for solar prices to fall.

Why Most Solar Panel Prices Are Up

Rapid economic recovery has factories around the world scrambling for workers and materials.  Competition for these resources has driven up prices.  

Many industries had a major downturn in 2020 and their output has still not recovered.  Here’s what happened with world motor vehicle production over the past six years:

In 2019 vehicle production fell 4% from the year before, and in 2020 it fell another 15%.  Because it’s hard to turn this decline around quickly, there’s now a long wait for new cars, and prices for second-hand ones are through the roof.  (If anyone wants to pay $9,000 for a 2004 Hyundai Getz in Adelaide, let me know in the comments.)

But this didn’t happen to solar.  Instead of decreasing, last year solar system installations soared:

World solar PV installation declined in 2019.  Installations only fell 1% from 2018 levels, but this was worse than it looks because, on average, solar installations increase 20% per year.  I know that 20% figure looks it has been rounded up to seem more impressive, but that’s how rapidly solar capacity has been growing. 

In 2020, solar installation boomed with a 28% increase from 2019 levels.  In 2021, installs will be up another 29%, according to one estimate. 

So, the solar industry was going gangbusters all last year and is now having trouble meeting demand.  This is why the price of many — but not all — solar panels have risen. 

Little Overall Effect On Australia

If talk of shortages and price rises have you thinking we’re heading for an inflationary disaster, relax.  Over two years, Australian inflation averaged under 1.4% but has ticked up since then and, over two quarters has averaged 3.4%.  If you think 3.4% is dangerously high, I’m guessing you are younger than me.  The graph below shows the sort of inflation Australians old enough to have paid thousands of dollars to have wisdom teeth ripped out of their heads¹ are used to:

So let me know when inflation goes over 10%, and I’ll consider worrying.  Anyone trying to convince you we’re heading for hyperinflation is probably peddling their favourite cryptocurrency as an inflation hedge. Which it isn’t.

Shortages Won’t Last Long

The shortages and price hikes we’re seeing around the world won’t last long.  It already looks as though prices are heading down for many commodities.  A strong point of market economies is they are very good at solving supply problems².

History shows solar panel price rises don’t last long.  The most prolonged increase was three years: 2004 -2006 when average prices rose 12%.

I suspect budget panels will soon fall in price and appear cheap before mid-2022.

Prices Higher For Solar Farm Panels

It looks like demand from solar farms has pushed up prices of panels with 12-15 year product warranties.  There’s no matching boom in residential installations, so prices of residential-only panels with longer warranties have not increased. 

This could change.  There could be a surge in rooftop solar installations in the US or other rich countries.  It’s also possible solar farms will decide to use them for big projects — but I doubt that will happen.

What Is A Product Warranty?

After yammering on about product warranties for so long, I should explain what they are.  Solar panels come with two warranty types:

• The Performance Warranty:  This promises a minimum capacity of a solar panel after 25-30 years.  The lowest performance warranty is 80% of the original capacity.  The best I know of is for SunPower Maxeon panels, which promise they’ll have at least 92% of their original capacity after 25 years.
• The Product Warranty:  This covers defects in production and materials.  Five years ago it was 10 years for nearly all solar panels, but now it’s 12-15 years for most, while an increasing number of manufacturers now offer 25 years.

Performance warranties are usually horribly written, but manufacturers can’t use small print to wriggle out of their obligations under Australian Consumer Guarantees.  While I’m no lawyer, my understanding is manufacturers will have to support panels for their 25 or 30 year performance warranties, as I explain here.  

While manufacturers may have to provide warranty support for the entire performance warranty period, you are still better off with a long product warranty.  The best protection against panels failing is not a warranty, but owning panels that never require a warranty claim in the first place. 

Only highly reliable solar panels are likely to be given a 25 year product warranty, so if you buy them, you’re likely to be fine even if the manufacturer goes bankrupt and warranty support disappears. 

Little Extra Cost For 25 Year Product Warranty

If you want to get some of the best panels available, you can get LG NeON R or SunPower Maxeon³.  These are top quality solar panels with a 25 year product warranty — but they’re not cheap. 

If you’d rather not buy the absolute top end panels, but still want a 25 year product warranty, you’re in luck. Right now you only need to pay a premium of around 8 cents per watt.

For a 370 watt panel, that’s around $30.  For a 6.6 kilowatt system, it’s about $500, and for a 10 kilowatt solar system, it’s $800.  You’d have to be pretty hard up for it not to be worthwhile. 

Solar Panels With 25 Year Product Warranties 

Below is a chart from our Solar 101 guide.  It shows all the panels we’d be happy to have on our own roofs.  

If a brand isn’t on the graphic, it doesn’t mean it’s bad.  But it does mean we’re not certain it’s good, so be cautious and do your research if you’re considering a panel not shown.    

I’ve marked all the solar panel manufacturers or, in some cases, specific panels currently offering 25 or 30 year product warranties in yellow.  This represents the “golden glow” a long warranty gives them and doesn’t have anything at all to do with me being crap at graphics:

The chart is arranged so lower-cost panels are towards the left side while more expensive ones are on the right.  As you can see, there are two manufacturers on the left offering 25 year product warranties, so you may think they are the cheapest long product warranty panels available. But at the moment, some manufacturers towards the right are offering excellent prices on their lower cost 25 year product warranty panels.  

Higher Energy Output Over Time

Panels with 25 year product warranties are likely to provide slightly higher average energy output over time than typical ones.  Because of their durability, they’re likely to lose less capacity over time.  Expect a few percent more output over 25 years compared to cheaper solar panels.

Other Components Less Affected By Price Increases

Panels are not the only solar hardware suffering from price increases.  

Inverters:  While some solar inverter brands have increased their price, most have held steady.

Cabling and Racking:  Metals prices are up across the board, increasing the cost of copper cabling and the aluminium rails used to mount rooftop solar panels. 

Here’s a graph of copper prices over the past 5 years:

It’s an evil graph because it doesn’t start at zero.  It’s also in US dollars, but this is not — intrinsically — evil.  But it is up to date and shows copper prices have increased over 60% since 2019, which has pushed up the cost of cabling.

Here’s a graph of aluminium prices over the past five years:

This graph also doesn’t start at zero, but at least it’s in Australian dollars.  It has the drawback of not showing the recent modest fall in aluminium prices.  Rather than being $3,880 per tonne, today it’s $3,580.  That’s around an 8% fall, and if it was included the graph, it would no longer look like aluminium prices are about to punch through the roof.  But even with the recent decrease, aluminium is still up 40% from 2019.

History has shown metal prices can halve in in months, but I don’t think you’re likely to save by waiting for copper and aluminium prices to fall before buying a solar power system.

25+ Year Product Warranties Are The Future

All the solar panels we recommend are likely to last for 25 years or more on your roof.  But if you get a panel with a 25 year product warranty, the odds of them lasting that long are even better.  They’re also more likely to last well beyond 25 years, and I expect many will still work after 40+ years.  

While 10 year product warranties used to be standard for all but the most high-end panels, recently there has been an impressive increase in the length of product warranties.   In time, product warranties of 25 years will become standard.  By then, high-end solar panels may be competing with 30, 40, or 50 year product warranties, and the hard part will be living long enough to take advantage of them.

Original Source: https://www.solarquotes.com.au/blog/panels-25-year-warranties/