I. Overview of the Six-Stage Procurement Process
The procurement process for photovoltaic (PV) components is generally categorized into six interconnected stages: defining the Bill of Materials (BOM) → sourcing and verifying suppliers → price inquiry and comparison → negotiating documentation and terms → secure payment and financing → transportation, customs clearance, and delivery. These six steps form an integrated whole; a gap at any stage—such as an ambiguous BOM, unverified suppliers, or documentation errors—can lead to downstream delays and increased costs.
Core principles include: starting with a precisely defined BOM (specifying the specifications, quantities, and certification requirements for each component);
comparing prices based on “landed cost per watt” rather than list prices (unit prices in two quotes might be similar, but the ranking could flip once freight, tariffs, and clearance costs are added); using Letters of Credit or milestone-based payments instead of large upfront deposits; and verifying HS codes, invoices, and certifications before clearance to ensure the customs process goes smoothly.
For power engineering enterprises, procurement activities are typically centralized on an integrated supply chain platform and governed by strict budget management—no procurement or payment occurs without an approved budget.
II.
Defining Requirements and Supplier Verification
The second and third stages of the PV component procurement process involve defining requirements and verifying suppliers.
Defining the BOM entails clearly specifying the technical specifications, quantities, quality requirements, and delivery dates for every item—such as PV modules (specifications, power output, certifications), inverters (topology, efficiency), mounting structures, power distribution cabinets, and cables. The more precise the BOM, the more comparable the price quotes will be.
Supplier verification involves requesting product certifications and test reports (e.g., IEC 61215/IEC 61730, UL 1741, RoHS), company documentation (business license, factory audit reports, ISO certifications), and track records (independent completion of at least three similar projects within the past three years). When purchasing through traders, the actual factory information must be verified; only suppliers with certifications that pass verification (confirmable via the issuing body’s database) proceed to the price comparison stage.
Procurement methods are selected based on value and the level of competition: tendering (open or invited), competitive procurement, inquiry-based procurement (for well-defined requirements, abundant resources, and stable prices where the estimated value is under RMB 1 million), single-source procurement, or framework agreements.
During screening, the certification number, model number, and factory details for each supplier are cross-checked for alignment, and certificate validity is verified against the relevant databases.
III.
Price Inquiry, Tendering, and Bid Evaluation
The intermediate stage of the PV component procurement process involves price inquiries, tendering, and bid evaluation.
Inquiry-based procurement: Requests for quotation (RFQs) are sent to at least three suppliers, and prices are compared based on standardized specifications and Incoterms (e.g., CIF/FOB).
Tendering: Tendering is mandatory for core equipment—such as PV modules, inverters, and power distribution cabinets—where the value of a single procurement exceeds RMB 500,000. Open tender announcements must be published at least five working days in advance; bid bonds must not exceed 2% of the estimated value; and the bid evaluation committee must consist of an odd number of members (at least five), with external experts comprising at least one-third of the group.
Evaluation steps include a formal review (checking names, seals, formatting, and single-quote compliance), qualification review (business license and track record), responsiveness review (warranty measures), and price comparison. A comprehensive scoring method is used, with price accounting for 30%–50% of the score, technical quality for 30%–40%, and performance capability and service for 10%–20%.
The bid evaluation committee recommends one to three winning candidates and issues an evaluation report; the winning result is publicly announced for three working days, and if no objections are raised, the Letter of Award is issued.
Evaluations are strictly based on the criteria established in the tender documents; committee members may not add to or further refine these criteria.
IV. Contract, Payment, and Performance
The fifth stage of the PV component procurement process involves contract management, payment, and performance execution.
Contract Signing: The winning bidder generally signs the contract within seven working days of receiving the notification of award. Terms must align with the tender documents and the bid proposal, with a focus on reviewing quality standards, delivery/service timelines, payment methods, and liability for breach of contract. Performance Bond: Typically set at 5%–10% of the total contract value (payable via bank guarantee or cash), the bond is refunded without interest upon successful completion of the contract.
Payment Security: Funds are protected through instruments such as letters of credit (payment against shipping documents), escrow accounts, or milestone-based payments; large advance payments to unverified suppliers are avoided, and financing arrangements are integrated where necessary to safeguard liquidity.
Performance Supervision: Production and shipment progress are tracked, and delivery schedules and quantities are verified; if acceptance fails, the supplier is required to rectify issues, replace goods, or provide compensation within a specified timeframe.
Handling Breaches: Failure to perform as agreed results in the deduction of part or all of the performance bond, and late deliveries incur daily pro-rata deductions. For core materials like PV modules, industry-standard practices include upon-arrival inspections (e.g., 100% EL micro-crack testing for modules and full-load trial runs for inverters); non-compliant items lead to deductions from the quality retention bond and supplier blacklisting.
Price fluctuation risks can be hedged using long-term agreements combined with floating price mechanisms (e.g., stipulating a base price, an allowable fluctuation range of ±8%, and a cost-sharing arrangement for fluctuations exceeding that range).
V.
Arrival Acceptance and After-Sales Service
The final stage of the PV component procurement process covers arrival acceptance and after-sales management.
Three-Tier Arrival Acceptance: Verification of the “three-way match” (ensuring consistency among model specifications, documentation, and the physical goods against certified/tested samples); inspection for transit damage (with the supplier compensating for any recorded damage); and re-testing of key parameters (e.g., module EL and flash testing, inverter functionality and firmware versions, and insulation and wet leakage current).
Invoicing and payment are initiated only after successful acceptance.
Quality Requirements: 100% Electroluminescence (EL) micro-crack inspection upon module arrival; 2-hour full-load test run for inverters; acceptance standards (e.g., module degradation rate metrics) specified in the contract; deduction of quality retention money for non-compliance; blacklisting for repeated failures.
Documentation Management: Retention of certificates of conformity, factory inspection reports, third-party test reports, and shipping documents; establishment of batch traceability (scan codes to check raw material batches, production teams, and inspection records).
After-sales Warranty: 25-year power output warranty for modules and 5–10 year warranty for inverters; clear definition of the warrantor, start date, degradation curve, liability exemptions, and claims process;
free repair or replacement for non-human-induced manufacturing defects during the warranty period. Industry Experience: Approximately 12% of PV projects experience excessive module power degradation and subsequent claims due to inadequate arrival inspections;
incorporating acceptance criteria into contracts and mandating inspection before use serve as the final risk-control barrier in the procurement process.
Conclusion
What is the procurement process for PV components?
It is a six-stage closed loop: “Define BOM → Verify Suppliers → Price Inquiry & Comparison → Negotiate Terms → Secure Payment → Transport & Customs Clearance.” Key practices include comparing landed costs rather than list prices; using tenders or competitive inquiries for large-scale purchases (involving an evaluation committee of 5+ members and a price weighting of 30%–50%); including 5%–10% performance bonds and quality retention clauses (deducting funds for failed acceptance) in contracts; paying only after arrival and acceptance; and conducting 100% EL inspection upon arrival while maintaining batch traceability.
By interlocking these six steps and prioritizing inspection before use, PV component procurement can be executed quickly and reliably, minimizing potential pitfalls.
