In the most recent ESG rating review, global rating agency Morgan Stanley Capital International (MSCI) gave GoodWe, one of the world's top providers of smart energy solutions, an ESG rating of "BBB." In committing to ESG issues and sustainability, the company has improved from when it previously received an average ESG rating of "BB" by MSCI. 

ESG commitments 

GoodWe has concentrated on offering PV inverters and energy storage solutions since its inception in 2010, which has contributed to its sector leadership. The company continued to invest in R&D (about 8% of sales revenue) during the pandemic because it was committed to its sustainability goals, and as a result it has produced a large number of high-quality, reasonably priced energy storage inverters that cover single-phase, three-phase, high voltage, and low voltage applications. 

By offering its consumers high-quality goods and services and drastically lowering energy costs and carbon emissions, the company has been able to contribute to its environmental sustainability goals. Additionally, the business is implementing green building principles at its many facilities by using solar carports and adaptable building-integrated photovoltaics (BIPV) materials that are combined with its solar-storage-charging system. 

In 2022, the business received a Silver Award from EcoVadis in honour of its ongoing dedication to enhancing sustainability across all of its international business operations. Daniel Huang, the CEO and founder of GoodWe, commented on the company earning BBB rating and said, “We are really delighted to receive this triple B assessment from MSCI, which justifies our confidence and motivates us to further improve our ESG-related practices and continue to focus on sustainable development strategies. Going forward, we will maintain our commitment to harnessing smart tech to drive the global energy transition.”      

Industry ESG Challenges

Despite being one of the world's top producers of solar inverters and energy storage systems, GoodWe still has to deal with numerous ESG difficulties. The company's solar-storage-charging system includes building-integrated photovoltaics (BIPV), which are less cost-effective and more expensive than conventional PV modules. While BIPVs do not release greenhouse gases (GHGs), they do require more labour to install than standard panels, which increases overall installation resource costs.

Also, there is the inadequacy of BIPV for older-build structures. Retrofitting it into older homes can be a huge issue because the building needs to angle towards the sun for effective solar energy capture. Flat rooftops are ineligible for this. Second, solar panel installation is incompatible with the materials used to build older homes. It's crucial to use materials like metal, tiles, and asphalt shingles when installing solar panels. For that reason, installing solar panels on old buildings will cost more because the materials are more expensive. 

Only when there is sunlight available can solar inverters and panels function properly. Without the sun, solar panels cannot produce electricity, especially in cloudy or rainy conditions. Since batteries are significantly more expensive than the entire system, it might not be a good idea to only use solar panels and inverters. So, as they are powered by solar energy, the concept- of energy-efficient roofs could turn out to be more costly, in certain situations, in the process.   

The ‘E’ in ESG 

High levels of air pollution that dirty the panels and lower efficiency when not cleaned on a regular basis, as well as insolation, which refers to the number of solar resources in a specific location, are other environmental elements that affect BIPV efficiency. Together with latitude, shading, particularly from trees and buildings, can obstruct the sun's beams and impair the system's performance. 

The ‘S’ and ‘G’ factors in ESG 

The social and governance issues include a lack of BIPV knowledge and training resources, which prevents many organisations and businesses from implementing the technology because designers and end users are not well-versed in it. Another issue is supply chain reliability, because it is difficult to create appropriate distribution channels for the items and put them on the market. 

Lack of willingness on the part of businesses, the solar and construction industries, to experiment with new technologies ultimately causes stakeholders and employees to mistrust and doubt the product. There is no clear distinction between the industries that BIPV belongs to, which is another governance issue. It thus causes confusion with regulatory standards. 

BIPV also lacks a comprehensive set of standards and guidelines to establish a middle ground between the PV and building industries. The BIPV industry will have a platform for growth once this middle ground has been established through the establishment of defined standards and expectations for the production and construction process. For the next step to be taken, approval from the building and solar industry codes is necessary. 

The Outlook

According to research, the global market for solar energy was valued at USD 52.5 billion in 2018 and is anticipated to increase at a compound annual growth rate (CAGR) of 20.5% from 2019 to 2026, reaching USD 223.3 billion. 

Energy prices have risen sharply, while demand for electricity has risen rapidly as a result of the Russia-Ukraine conflict. Renewable energy has become a necessary option to sustain demand supply. In fact, according to a report by the International Energy Agency (IEA), the global energy crisis is causing a sharp acceleration in the installation of renewable energy, with total capacity growth worldwide expected to almost double in the next five years, overtaking coal as the primary source of electricity generation along the way and keeping alive the possibility of keeping global warming to 1.5 °C. 

More Work To Be Done

However, according to another IEA report, to reach net zero by 2050, average annual generation growth of 25% is required between 2022 and 2030. This translates to a more than threefold increase in annual capacity deployment until 2030, necessitating much more ambitious policy goals and additional work from both public and private stakeholders, particularly in the areas of grid integration and the reduction of policy, regulation, and financing challenges. 

Critical elements like correct installation, system rollout, and industry and local government participation are required in order to achieve net-zero targets and successfully implement ESG within the energy storage sector.  

Companies like GoodWe, with significant experience, stand well placed to meet the challenge.

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