Photovoltaics

A new platform called Solar Exchange aims to take much of the donkey work out of sourcing PV components. Could this approach lead to a leaner, meaner supply chain?

Gary Mull remembers what he used to go through to source PV supplies. And they are not particularly fond memories. “I was involved in a rather large US installation company,” he recounts.

“We were constantly working with suppliers to obtain all the things we needed to drive a multi-million dollar installation business and what we experienced was that sourcing products for inventory was extremely challenging, time consuming and costly.”

Buying solar goods often meant having to board a red-eye to Asia or Europe, sometimes with a translator in tow, and negotiating deals through a fog of jetlag and cultural confusion.

His time with the installer, Westinghouse Solar, left Mull thinking there must be a better way to do business in the solar industry. So he drew on his experience with another company, an IBM-owned strategic supply management systems business called Emptoris, to come up with it.

The result, unveiled last month, is Solar Exchange. Billed as a ‘cloud-based commerce platform which automates the buying and selling of goods for the solar industry,’ the first impression the website offers is of essentially being an online auction site for PV goods.

There is a lot more to it than that, though, says Mull.

Commerce mechanisms

While auctions are the standard commerce mechanism on the site, because they “tend to provide greater value for the seller,” buyers can also choose a ‘buy now’ function to get items at a fixed price, or even issue a request for quotations to see if sellers can meet a given budget.

The site is available in English, Chinese and German and includes a secure online payment service enabled by Escrow.com, which manages large-value transactions for major brands, such as eBay, Cars.com and GoDaddy.

Solar Exchange is free to buyers and costs upwards of USD$250 a month for sellers, depending on variables such as the number of people using the service and the features they need. All users need to prove they are PV professionals before being allowed to use the site.

Within a week of launch, Solar Exchange boasted an inventory of items worth $28m.

A fortnight later Mull confirmed “total membership is a little shy of 200,” with founder members including Hanwha, SolarOne, Astronergy, REC, GCL, ReneSola, LDK, Conergy, ET Solar, Wirsol, Omnik New Energy, Motech, GPPV and others.

Mull hopes the ability to buy materials online will overcome many of the challenges associated with traditional sourcing. “Many organisations might depend on enterprise software like SAP to manage their manufacturing,” he says.

Procurement automation

“Our goal is to have them utilise Solar Exchange as their procurement automation and commerce solution.”

However, he concedes it will not do away with red-eye flights altogether. “I don’t think a solution like Solar Exchange eliminates that on-going supplier management requirement,” he admits.

“Having worked for a manufacturing organisation that sourced products overseas, I can say even having established a supply chain relationship and a supplier contract with a company didn’t eliminate the need to be on the factory floor. Managing quality is an ongoing process.”

However, he adds, a service such as Solar Exchange can help streamline the process of locating component vendors that meet a given set of criteria, or purchasing off-the-shelf products.

Currently the inventory on Solar Exchange largely mirrors the requirements of the market, with a focus on mono- and polycrystalline cells and modules products plus some thin film products and other components such as inverters and batteries.

In time, Mull hopes the inventory will cover the entire solar value chain. “We are completely open to anything and everything,” he says. “Our goal would be to have everything.”

Need for liquidation

The growth of this service will clearly depend on how it is perceived within the industry, of course. “It’s hard to say whether the early uptake is based upon a need for liquidation,” Mull comments. “Based on customers I’ve talked to, that is not the defining factor.”

Nevertheless, Lux Research associate Ed Cahill says it will be interesting to see how online platforms such as Solar Exchange fare over the next few years. “In five years from now they will probably need to find a new strategy,” he believes.

“For now, it’s taking advantage of the market. A lot of people are going out of business so there is a lot of equipment. You are able to source equipment at significantly lower prices than before; I’ve seen 10%. But when the market recovers that used market will be saturated.”

Furthermore, he adds: “$28m sounds like a lot but it gets you the equivalent of a medium-sized plant.”

Mull accepts it is early days for the service and points out that user numbers are growing daily. It certainly will not hurt the industry for Solar Exchange to catch on; to stay competitive, solar power needs every bit of efficiency it can get.