How to be TIER 1?
Why TIER 1 is not quality
The task of selecting high-quality solar modules among thousands of models on the PV market is difficult even for professionals. The principle of the best price/quality ratio may not be as effective as in the case of other, less technologically advanced products. Each of the market participants – both manufacturers and buyers – comes to the market with their proposals, requirements and vision of the best deal for themselves.
In this article, we will try to clarify their queries, as well as the advantages and disadvantages of Bloomberg’s manufacturer ranking system, and what opportunities this system provides for solar module manufacturers and buyers.
The market and its participants
What solar module manufacturers want
– to establish the output of products with minimum production costs;
– to sell the maximum amount of goods;
– to sell them with the maximum profit.
What they need to do that
– to organize production at their own expense or take money from the bank;
– to achieve a minimum cost of production;
– to disseminate information about the advantages of their products among customers;
– to convince customers that the high cost of the product means high quality.
What customers want
– to get products of the highest quality;
– to get them for the minimum price;
– to get the highest guarantee from the manufacturer.
What they need to do that
– to determine the quality criteria;
– to study information about manufacturers;
– to get reliable information about the quality and advantages of a particular company’s product.
As we can see, the aspirations, opportunities, and requirements of manufacturers and buyers are far from being alike. The first is looking for opportunities to convince customers of the superiority of their products over those of other companies, while the others want to be convinced of the reliability and quality of these products.
The situation is complicated by the fact that buyers have no reason to trust the manufacturer’s information about its product, and manufacturers do not seek to provide buyers with reliable information about it. The solution to such cases is to use an evaluation provided by an independent third party.
What is TIER 1?
In the PV market, this third party is Bloomberg New Energy Finance (BNEF), which has developed a tiered system for ranking solar module manufacturers. The reason why the system is called tiered, i.e. multi-level, remains unclear since BNEF itself (according to its statement) compiles and publishes only the list of companies classified by it as TIER 1. Thus, any references to TIER 2 and TIER 3 lists, which
can often be found in both print and online publications, can be considered as the means of the so-called “ghost marketing”. 
The descriptions of TIER 2 and TIER 3 levels and the criteria according to which companies can be assigned to one or another level are not related to BNEF. However, they are used by other companies to form rankings. Thus, levels 1, 2 and 3 are used for ranking by Pike Research (now part of Navigant Research). These ratings are most often confused with those of Bloomberg. 
What criteria does the agency use to decide whether or not to include a company on the list?
– more than 5 years of presence in the PV market
– possession of its production facilities, which cover the entire process of solar modules manufacturing (vertically oriented production).
– use of the company’s modules in at least 6 major projects over the past 2 years (each with a capacity of at least 1.5 MW), and the financing of each project must be carried out by different banks without recourse.
– all production processes at the company’s enterprises should have a high degree of automation (this excludes the human factor and reduces the percentage of defects).
– allocation of significant amounts of investment in PV research and implementation of innovative solutions in production.
As we can see, most of the requirements are imposed on such parameters of producers, the analysis of which allows us to get an idea of their financial stability. First and foremost, such information is of interest to banks, which use it to evaluate PV module manufacturers when issuing loans to them.
At the same time, BNEF uses the history of their large-scale projects already approved by banks to rank applicant companies, believing that if banks regularly allocate funding to them, these companies can be classified as TIER 1. Thus, a vicious circle is formed – banks rely on Bloomberg’s assessment, while Bloomberg in its assessment relies on the existing precedents of banks’ financing projects in the PV industry.
TIER 1 and Quality
In general, the dubiousness of using categorization according to the above criteria to justify the quality of solar modules is quite obvious. Thus, according to BNEF, a company’s inclusion in the TIER 1 list confirms the quality of its production processes, which is ensured by a high level of process automation. However, quite often, both the companies on the list and those not on the list use equipment from the same manufacturers, of the same level. Let’s ask ourselves the question: why are the products of some companies considered high quality and others aren’t if both are produced with identical equipment? Is it absurd? – Absolutely, yes.
A comparison of rankings from different companies also provides convincing results. Thus, the list of companies that Bloomberg assigned to TIER 1 in 2021 and the list of manufacturers whose modules underwent comprehensive testing by world-renowned technical experts from PVEL and DNV-GL in the same year differ not only in the composition of the companies included but also in their spots in the rating. This once again confirms the assertion that the selection according to Bloomberg criteria testifies only to the stable financial position of the companies themselves, but does not give grounds for recognizing all their products as a quality benchmark.
The most striking discrepancy between the company’s position in the TIER 1 ranking and the quality of its products was evident during the solar energy boom (2010-2017). At that time, many sellers in the pursuit of quick profits purchased a large number of cheap solar modules from large Chinese manufacturers with a good reputation, without much interest in their origin and quality. The use of
reliable certificates and guarantees from manufacturers, as well as ratings (TIER 1 among others), allowed them to gain the trust of installers and buyers and sell these panels in Australia, Europe and the United States as high-quality products.
Most of these panels were produced by small manufacturers from the interior of China, who, having no direct access to international markets, sold their products through larger companies.
The poor quality of these panels led to mass failures, company closures, loss of warranties, and caused serious distrust of the TIER 1 rating as an indicator of product quality. [4, 5]
Now that we have gained an understanding of the objectives, methods, and uses of the BNEF rating, let’s try to answer the following questions:
– What opportunities and benefits do TIER 1 club membership provide to manufacturers?
– How can the information about a company’s name on this list help buyers?
TIER 1 and Manufacturers
Large companies that entered the PV market before the Bloomberg ranking system came into existence and easily met its requirements can take full advantage of the marketing bonuses that membership in the TIER 1 club provides.
Can they get loans from banks citing their Bloomberg-validated reputation?
– Yes. That’s what the system was designed for.
Can they widely disseminate advertising information about their company?
– Yes. A spot on the TIER 1 list, thanks to the widespread of the term itself, has become a great advertisement.
Can they convince customers that the increased cost of their modules is due to high quality?
– Yes. Thanks to numerous marketing campaigns, many have mistakenly come to regard the term TIER 1 as synonymous with reliability and quality, for which you should pay more.
At the same time, it is practically impossible for startups and companies operating in the PV market for less than 5 years to meet the requirements and get into the list. First of all, this is due to the already mentioned “vicious circle” that startups are unable to break. They cannot get bank financing for their projects, because they are not TIER 1 companies. And they cannot become TIER 1 because they have not implemented a sufficient number of projects approved by banks. At the same time, their products can be not only as reliable and of high quality as the well-known brands, but sometimes even superior to them.
TIER 1 and Customers
Based on the needs of buyers listed at the beginning of this article, the only thing the TIER 1 list can help them with is to give a general idea of the solar module manufacturers that meet the criteria and requirements of the BNEF rating. The only indirect evidence of the quality of their products is the logical reasoning that the company that gets a place on the TIER 1 list pays more attention to quality control, has a high level of automation, and can confidently fulfil its warranty obligations.
The analysis performed and the presented logical reasoning allows us to state that the company’s ranking in the TIER 1 list of Bloomberg NEF should be considered as an achievement, which certainly positively characterizes the company, but is not a sufficient condition to guarantee the high quality of its products. It is still better to judge the quality of products and decide on the selection of specific models based on certificates of technical engineers such as Black & Veatch, ATA Renewables, PVEL and DNV GL or TUV.