Solar Panel Tiering – Does It Really Matter?
Not all solar panels are created equal. While poor quality panels may be the cheapest, they may not be the best solution.
Solar matters. Installers, retailers and manufacturers have seen a huge increase in business activity over the last few years, as funding programs and rebates position clean energy as a popular move for many Australians.
However, not all solar panel systems were created equal. We spoke to Hamish McMinn, BDM for Classic Clean Energy Finance about the tiering system Classic uses to asses solar assets, and why it matters when customers try to secure clean energy finance.
Why Quality Matters
"When we fund a solar PV system, we need to have confidence that the system will perform as expected for at least the term of the finance contract, and ideally longer. This is why we have an internal tiering system for panels, based on the manufacturer’s reputation, financial backing, warranties offered and a number of other factors" Hamish explains.
"For example, high quality panels which have been extensively tested in the market, and whose warranty is backed by a solid manufacturer with presence in Australia (such as stocked by many reputable suppliers), we may classify as ‘Tier 1’ assets. Panels which may be highly rated in terms of technical performance, but perhaps have less proven history in the Australian market or with a less backed warranty might be classified as ‘Tier 2’ assets. Untested panels, from overseas manufacturers with restrictive warranties will be classified as ‘Tier 3’ and we will not fund them."
"We only finance panels that our assessors deem as Tier 1 or 2, as lower quality solar panels can fail before the customers finance term is up, and thus it can be hard to hold overseas manufacturers accountable to fulfil their warranty requirements should the solar company go belly up."
Clear tiers, clear fees
"The market continues to be in a price war, with the majority of customers still price sensitive and heavily promoting 5kw systems for less than $5000," Hamish says. "Tier 1 panels sit right alongside cheaper OEM imports, with the latter allowing solar retailers to offer entry-level priced systems, driving the overall market price down. A lot of businesses are, if not loss leading, at least selling extremely high volumes at low prices, putting pressure on margins of businesses selling quality assets."
Whilst quality Tier 1 and Tier 2 panels are almost always more expensive than lower quality imports, at Classic we see them as being a more reliable asset and therefore offer up to 7 year finance terms. Giving customers 7 year money allows the savings generated by the solar system, in many cases, to cover the monthly finance repayments, effectively allowing the customer to be cash flow positive from year 1 (depending on the systems power output and the customers consumption behaviour).
We partner with solar companies to enable them to offer their customers a finance option. This allows solar companies to be able to offer more Australian’s the ability to switch to clean energy whilst removing the barrier of the upfront cost.
In simple terms, the customer can pay off their solar system similar to how they pay for electricity now – via monthly or quarterly payments. The application process is fast and simple, allowing solar sales representatives to close the deal while still in the home with the customer.
As we do not charge merchant fees, there is no cost to the solar company for referring customers to us. This ensures that the system price does not need to be inflated to cover hidden fees and charges. The terms of the contract including the interest rate and any fees are always made clear to the customer, so there are no unpleasant surprises or unexpected charges.”
"We hold an Australian Credit Licence, giving solar retailers, installers and customers peace of mind that we act efficiently, honestly and fairly; and meet all responsible lending requirements. In addition we are regulated by the ACCC and APRA to ensure out lending practices are prudent and the consumers rights are protected.
From the quality of the panel to how the system is presented to the customer, the reputation of the solar company is on the line with each sale. The Classic Clean Energy Finance team is dedicated to always succeeding with integrity and partnering with solar companies to create better alternatives with smart finance solutions.
Interested in partnering with Classic to offer your customers a clear and transparent payment plan?