Regulatory standards save money
Business Week‘s September 14 issue reports:
Sun-soaked New Orleans should be a great place for solar power. Yet according to TÜV Rheinland PTL, a testing lab, up to 30 percent of photovoltaic panels installed in such steamy areas of the U.S. are likely to fail in less time than the 25 years manufacturers typically specify in their warranties. Homeowners will be covered, of course, but it will still be a hassle. Even in hot, dry areas failure rates could hit 12 percent.
The same producers’ panels probably won’t fail as quickly in Europe, where vendors agreed to performance and quality standards back in 1999. In the U.S., only the state of Florida has followed suit. As a result, “manufacturers make two grades of panels: one for the U.S. and another for Europe,” says Mani Tamizhmani, TÜV’s president. Panels do have to pass federal tests for safety in the U.S. but “consumers here don’t yet know to ask for quality certifications,” he says.
In other words, contrary to all that we’ve been told by the economic pundits for decades, it is the ABSENCE of regulations and regulatory performance standards that costs consumers money. This is a great case for the contribution of performance standards to overall economic efficiency.
Markets work very efficiently, indeed, but not in the ways we would like to see them work: In the absence of any quality standards and the presence of growing demand for a product, especially if there is any shortage of supply, it is efficient for a manufacturer or supplier to provide the lowest cost product possible, even if the quality is inferior to what could be produced. Buyer beware!!
Especially when the public sector is massively subsidizing demand for a product or service — in this case demand for photovoltaic panels — there is a need to assure value for money. In the absence of any quality standards, the government is asking to be taken for a ride by those quickest to market with the lowest cost (and potnetially lowest quality) products and services possible.
We saw this was true with Blackwater and Wackenhut security services in Iraq and Afghanistan … and now we are seeing the same thing with PV panel providers to homeowners and businesses in the United States itself.