Posted On 1/6/22
Revealing the origins of solar panels can uncover labor and toxicity problems that can occur during manufacturing processes. But this year’s protocol and commitment from the Solar Energy Industries Association (SEIA) showed that clarifying the obscurity of the solar supply chain is less easy than it might sound.
There is currently research showing that forced labor is occurring in part of China, but discovering exactly what is happening is far from straightforward. The U.S. government has delayed some solar PV module shipments from China due to this concern about forced labor. It has also recently passed the Uyghur Forced Labor Prevention Act.
Unfortunately, many solar energy companies do not currently have policies about human rights pertaining to supply chains, according to pv magazine. Shifts in behavior and accountability are needed to put transparency in place for international markets. These types of recommendations go along with SEIA’s overall environmental, social and governance (ESG) training, which supports equal rights for employees.
How Chinese Labor Issues Permeate the Solar Supply Chain
Forced labor is occurring in solar companies in China’s Xinjiang Uyghur Autonomous Region, according to a 2021 report from Sheffield Hallam University (SHU), “In Broad Daylight: Uyghur Forced Labour and Global Solar Supply Chains.”
Low-cost coal power has encouraged manufacturers in Xinjiang to outcompete international companies in solar-grade polysilicon production during the last few years. Factories in the region produce 45% of the world’s solar-grade polysilicon, SHU says. 95% of the world’s solar panels use polysilicon as a building block. 11 companies are engaging in forced labor in China’s solar industry. And this has a ripple effect, resulting in 90 solar companies having their supply chains tainted.
Solar-grade polysilicon from Xinjiang is distributed broadly. Jenny Chase, Head of Solar Analysis at Bloomberg New Energy Finance, says in comments quoted by POLITICO that 95% of solar panels probably contain raw materials from those factories. The World Economic Forum estimates that figure is more like 50%.
The government in the region offers benefits to companies in local industrial parks, including free internet access and office furniture — benefits that create an unfair advantage for Chinese producers.
Xinjiang companies are also pressured to participate in two programs that provide forced labor from the Muslim population, the report says. This is happening despite the United Nations’ opposition to coercive work environments. It is in violation of the International Labour Organization (ILO) Forced Labour Convention of 1930. It also goes against the ILO’s 1957 prohibition on forced labor motivated by political differences, economic development or ethnic discrimination.
It’s hard to resolve this issue. Sending auditors to Xinjiang to verify what is happening would likely result in authorities interfering with audits, Peterson Institute for International Economics says. Government officials could send interpreters to misinform international auditing teams. They could also penalize their citizens for talking with auditors.
International government intervention is necessary, according to a report from the Center for Strategic & International Studies (CSIS), “Combatting Human Rights Abuses in Xinjiang.” The new U.S. ban on imports from the region may make a difference.
The management of First Solar, a United States manufacturer of solar modules, recently said that its panels were not built with forced labor, according to S&P Global. But many companies may not be able to make that claim. First Solar does not use polysilicon, according to SHU.
Solar Energy Growth Hindered by Supply Chain Issues
Solar power is a crucial part of many ESG strategies to curb climate change. And these goals are ambitious. According to Bloomberg, the yearly solar power capacity manufactured in the world needs to increase from 330 gigawatts to at least 1,200 gigawatts by 2035 to meet current climate goals. A 2019 study from LUT University says around 63,400 gigawatts of solar needs to be installed for the world to achieve net zero carbon emissions.
Now is a time when the renewable energy industry should be growing expansively. But labor issues have the potential to reduce public support for solar power at this crucial moment. Previously supportive stakeholders may deny endorsement of solar projects if their polysilicon was produced under adverse conditions.
Raptor Maps Solar Supply Chain Verification Software
Preventing supply chain delays is key to the success of solar construction projects. And in the United States, verifying countries of origin of solar PV panels is key to allowing shipments from abroad to enter the country, not to mention to obtaining Investment Tax Credits (ITC) and to preserving brand reputation. ITC credits are declining at a speed set by the federal government, as this article from Raptor Maps explains.
Raptor Maps’ new software platform, Raptor Solar, helps verify solar supply chains and streamline the ITC filing process. Our serial number scanning mobile application can tell a solar builder, owner or operator where a solar module is located on a digital twin or digital map, when it was installed, which factory it came from and what the flash test results were from that factory.
Having this information empowers companies to handle maintenance proactively. They can place modules correctly to prevent voltage mismatches. The performance results provide insight about how rapidly technicians should install modules.
The digital twin data makes companies better prepared for downstream warranty claims or supply chain issues. This mitigates risk for all of the counterparties.
Solar Industry Commitment
Companies that opt in to SEIA’s Solar Industry Commitment to Environmental & Social Responsibility pledge to adopt best practices for diversity, labor, safety and sustainability. They develop a set of key performance indicators to report to SEIA.
The labor-related aspects of this commitment cover:
Chosen employment
Child labor
Young workers
Humane treatment
Discrimination prevention
Legal wages and benefits
Free association
The viewpoints in the commitment are based on guidelines from the Responsible Business Alliance, formerly known as the Electronic Industry Citizenship Coalition. SEIA also cited the requirements of the United Nations Global Compact.
Traceability of Solar Supply Chains Can Help
Steering clear of buying products made with forced labor can help put pressure on China to change its behavior, the CSIS report says. To find out what conditions existed in manufacturing facilities, SEIA says stakeholders must create maps that trace the routes solar materials take through their lifetimes. They must also ask their suppliers whether they adhere to labor and environmental standards. And if supplier answers are not adequate, they must seek alternate sources of products and materials.
Solar Power World and pv magazine have reported positively on SEIA’s protocol for supply chain accountability. Offering an optional protocol through a professional association is just a first step.
The protocol is not required for solar manufacturers, but some companies are showing interest in committing to labor rights. According to the SHU report, 245 solar companies have signed SEIA’s pledge about preventing forced labor. And SunPower has issued a human rights statement.
However, that’s just the tip of the iceberg. Over 10,000 solar companies in the United States should track labor issues in their supply chains. The public statements SEIA makes about its protocol and commitment provide few details about why it is advantageous for companies to report social and environmental performance indicators to SEIA. However, SEIA does list advantages in its traceability protocol including:
Legality
Reputation (internal and external)
Investment
Competitiveness
Innovation
Savings
Given the amount of organizational change involved in putting social and environmental responsibility in place at thousands of companies, we should set more detailed industry goals of having stronger incentives and more extensive intervention if we want to see solar energy companies step up to the plate and be accountable.
SEIA’s commitment and protocol can help guide the process. But they are just the beginning of the process of changing the industry’s ground rules.
Solar Supply Chain Traceability Protocol
When SEIA published the Solar Supply Chain Traceability Protocol 1.0 in 2021, it provided an in-depth perspective on the organizational changes that are involved in tracking the lifecycle of solar equipment. This is typically a complex process requiring collaboration at multiple levels in each company. The protocol recommends that solar companies use unique identifiers such as barcodes or serial numbers to track solar materials and products as they go through the manufacturing and distribution system.
Solar companies that want to assess their supply chains should create routing maps for all of their materials — not just polysilicon. This might include, for example, tracking the sources of inverters, wires and racking.
The traceability protocol was customized to help companies meet import requirements so that they are unlikely to encounter customs issues. It says Section 307 of the Tariff Act of 1930 prohibits importing products into the United States if they were made with forced labor.
About Raptor Maps
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