Revolutionizing Solar Procurement: The Rise of Online Marketplaces

The solar industry is experiencing a shift in procurement practices, with e-procurement platforms revolutionizing the sourcing of solar components. While other sectors have embraced online marketplaces for B2B purchases, the solar industry has lagged behind.

Traditionally, solar installers and contractors had to deal with individual suppliers to acquire solar panels, inverters, batteries, and other system components. However, the emergence of central trading hubs for e-procurement is changing this landscape.

These online marketplaces offer a streamlined process for sourcing goods, allowing buyers to bid on components, negotiate terms, and ensure timely delivery. This shift towards e-procurement is not only enhancing efficiency but also driving down costs, opening up new possibilities for solar installers and EPC contractors.

The surge in solar installations has created a high demand for solar components, but supply-chain disruptions are causing challenges in procurement. Global solar installations rose by 64% from 2022 to 2023, adding approximately 413 GW of solar power last year. This growth has led to an increase in inventory, with module manufacturing capacity reaching 839 GW and prices hitting record lows.

However, despite the abundant supply, obtaining necessary components has become more difficult due to supply-chain issues, tariffs, and regulatory changes. These factors are adding complexity to the process of acquiring solar components, requiring industry players to navigate through challenges while seeking opportunities for sustainable growth.

Global procurement problems - how we got here

The solar industry's journey into global procurement challenges has been a complex one. Supply-chain disruptions first hit the market in 2021, but a significant shift occurred between 2022 and 2023, with solar manufacturing capacity surging from 358 GW to 640 GW.

While China still dominates with 80 to 90 percent of photovoltaic manufacturing, countries like India, Europe, and the U.S. are ramping up their solar production. In the U.S., the Inflation Reduction Act aims to boost domestic manufacturing of renewable energy products such as solar modules, inverters, and batteries.

Despite these efforts, untangling the supply chain logjam remains a formidable task, particularly given the heavy reliance on overseas goods. Finding solutions will require ongoing efforts and strategic initiatives to ensure a resilient and sustainable solar supply chain.

The availability of solar components faces additional hurdles due to tariffs on imported crystalline photovoltaic cells (CSPV). Section 201 tariffs, originally enacted during the Trump administration, have been prolonged until 2025, limiting access to affordable imports. Despite higher prices, the Solar Energy Industries Association (SEIA) expects the U.S. to remain heavily reliant on imported solar modules, accounting for up to 90% of total imports.

Furthermore, the Uyghur Forced Labor Prevention Act, enacted in 2021, extends the ban on importing goods produced using forced labor. This legislation assumes that products originating from China's Xinjiang Uyghur Autonomous Region, including solar components, are manufactured through forced labor. As a result, the supply of solar modules has been directly impacted by these labor concerns.

Solar industry players are grappling with economic and regulatory hurdles that are impacting the availability of essential components like solar modules, aluminum frames, glass, and inverters. This scarcity is leading to increased costs, delays, and operational challenges for solar installers, including higher labor and inventory costs, as well as cash flow issues.

To combat these challenges, the concept of a solar trading exchange has emerged as a potential solution. By bringing together multiple suppliers onto one platform, solar trading exchanges offer buyers the opportunity to submit competitive bids for components, negotiate prices, and streamline shipping processes. This approach aims to ensure a reliable and efficient supply chain for solar materials, alleviating the burden on installers and fostering a more resilient solar industry.