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Sean Swentek: Rapid shutdown devices were brought into our industry to prevent safety issues, is my understanding. So how is it that they are causing a worse situation to occur when they are installed on a site?

David Penalva: These small components can fail catastrophically and cause fires. That is ultimately the worst-case scenario. A lot of companies out there don’t really have processes, procedures in place, and standardization around QA/QC. That is a big gap in the industry. Because there is no industry database, it is very difficult to do something about it. We need to raise our standards for quality, safety, and reliability, and that takes data. Without data, there is no way to act. We are trying to be the feedback loop to the industry so other authorities can actually do something.

Sean Swentek: Welcome to The Future Current. I’m your host, Sean Swentek. I’ve got a special guest live in the studio with me today, David Penalva, CEO and founder of both SolarGrade and HelioVolta, two incredible companies in our industry doing amazing work. David Penalva, thanks for joining me today.

David Penalva: Thank you for having me.

Sean Swentek: I’m really excited to hear everything you have to share. I know you’ve got a new report out, but just from the beginning, I think it’s helpful for people to understand: what does SolarGrade do, and what does HelioVolta do?

David Penalva: Great question. HelioVolta is an engineering services company that specializes in third-party quality assurance, quality control, and field inspections. SolarGrade is a fieldwork management software application that helps companies with data collection in the field, automated reporting, and data analytics. HelioVolta uses SolarGrade for our daily work, so we publish our reports based on the data that HelioVolta has collected over the years.

Sean Swentek: Very cool. My company, Omnidian, uses your services sometimes, and we have field technicians who provide O&M-type services. Talk to me a little bit about what you provide that’s different from day-to-day O&M activities.

David Penalva: Our perspective comes from a unique combination of engineering and fieldwork. Our team members are all engineers with engineering backgrounds who deeply understand system design standards and code, paired with hands-on field experience. That is a very unique way of looking at systems, and it is one of our key differentiators.

Sean Swentek: Awesome. You’re pretty famous in the industry for your SolarGrade PV health reports that you put out, and your recent report was focused on RSDs. Can you provide some top-level numbers from past reports that might be top of mind? Every time I hear some of these numbers, I’m amazed at what you guys uncover in the field.

David Penalva: It is interesting. We were part of a conference this morning where attendees were talking about some of the insights we highlighted years ago. This asset distribution has been largely unknown for many years until we opened it up to the industry and revealed the high frequency of issues. Connectors and wire management are the two big-ticket items. In fact, eighty percent of the projects we inspect have connector and wire management issues.

Sean Swentek: Eighty percent?

David Penalva: Yes, eighty percent. Along those lines, over the last few years, we have been noticing a spike in problems associated with RSDs, which is why we ended up writing a paper about it.

Sean Swentek: If I’m a big institutional investor putting capital into big commercial projects, I may not even understand, down to the level of connectors and issues like that, what the actual risk is. What is the danger behind these issues?

David Penalva: These small components can fail catastrophically and cause fires. That is ultimately the worst-case scenario.

Sean Swentek: So it’s something as simple as a little connector that is not done right. That is scary. I’m going to jump into some questions that I prepared for today. David Penalva, you spent years inspecting solar systems that looked fine on paper but were failing in the field. What is the most dangerous thing hiding in plain sight in a solar portfolio?

David Penalva: If we look specifically at field issues, I would point back to the EPC situation. There is a widespread lack of standards or details around how wire management is executed and how connectors are procured under the latest code cycles. Mismatched connectors are a major issue, exacerbated by supply chain constraints. When you add the requirement for MLPEs on top of that, you suddenly have three or four different components that must match connectors perfectly. It quickly becomes a nightmare to get everything right from the get-go.

Sean Swentek: That immediately makes me think of things like QA/QC, the golden rule, and similar concepts. Can you talk to me about the importance of that and your view on it?

David Penalva: That is critical. One of the first things I tell everyone is that you cannot improve what you are not tracking. QA/QC is all about getting to know your numbers and understanding where you are falling short so you can improve. A lot of companies don’t have standard operating procedures or standardization around QA/QC in place, which is a major gap in the industry. Very few companies actually have robust programs for this.

Sean Swentek: If a developer is considering QA/QC for a site, why not just use the EPC that built the system? Why should they hire an independent firm like yours?

David Penalva: There is an inherent conflict of interest when you have EPCs policing themselves. Historically, this is how contracts have traditionally worked—the EPC assures they have an internal QA/QC team. However, there are always internal conflicts between maintaining quality versus meeting the schedule or the budget. We see much better results when you externalize that function to an independent third party. An independent reviewer gives you a neutral perspective on your assets and provides data points benchmarked against the rest of the industry, letting you know if your projects are performing better or worse. That data is critical and avoids the “fox guarding the henhouse” scenario.

Sean Swentek: What is the difference between a system that passes a standard inspection and one that is truly safe for the long run?

David Penalva: Standard inspections today are typically performed by the local Authority Having Jurisdiction (AHJ), and they are very limited in scope. They usually check the AC side of the system and focus only on major, high-level code items without getting into the nuts and bolts. Our scope is much more detailed. We sample every single component on-site. Often, construction defects are crew-specific. For example, a crew working during week three on one side of the array might not have been following the correct process, leading to incorrect installations. Having a robust sampling methodology to assess quality across the entire site is key.

Sean Swentek: A hundred percent. Let’s get into RSDs. Your latest report was focused on rapid shutdown devices. Your data showed that solar systems with RSDs are sixty-six percent more likely to have critical safety issues. That is crazy to me. How did you find that out, and what was behind that data?

David Penalva: First, you have to understand how we classify risks from a severity perspective. We look at critical and major issues. A critical risk represents an imminent threat to the safety of personnel or property.

Sean Swentek: Meaning something you have to act on right away.

David Penalva: Exactly. A major risk is an issue that requires an immediate truck roll; you cannot wait until the next scheduled preventive maintenance cycle. When we analyze the data under this framework, it becomes clear that adding more module-level power electronics (MLPEs) to these systems introduces many more points of potential failure. Wire management and connectors are already significant challenges in the industry. By introducing RSDs, you are essentially doubling or tripling the number of connectors on a single site, which is insane.

Sean Swentek: For people looking at our industry from the outside, this probably seems crazy because rapid shutdown devices were brought in to prevent safety issues. How is it that they are causing a worse safety situation to occur when they are installed on a site? What is behind that?

David Penalva: The intention behind MLPEs and rapid shutdowns was genuinely good. We need to protect first responders and firefighters. What we are doing is surfacing the data and the issues we observe in the field to provide a feedback loop to the code-making panels and other authorities so they can address it. We titled our paper Unintended Consequences because nobody wanted these devices to fail. We need to ask ourselves why they are failing. In the paper, we highlight a few clues: there are defective products making their way into the market, and there are insufficient testing standards for these devices. When you look at the big picture globally, the US is the only country that requires rapid shutdown devices at the module level.

Sean Swentek: For people who may not be as familiar, because you mentioned firefighter safety and first responders, why did RSDs become a requirement in the market in the first place?

David Penalva: The requirement started with the 2014 National Electrical Code (NEC) adding rules to reduce voltage. The concern from the firefighters’ perspective is that the DC voltage in solar arrays is too high. If they have to fight a building fire that is completely unrelated to the solar system, the system remains energized as long as the sun is shining. To protect them, the code required lowering the voltage within the array boundaries to a specific safety level, which has evolved with subsequent code cycles. Currently, the voltage must be reduced to 80 volts or less within 30 seconds of initiation. While the goal was to protect first responders, we have not seen historical data showing firefighters getting shocked by solar systems. Yet because the industry was growing so fast, there was a fear that it could happen. Now, our data shows we are seeing more rooftop fires caused by these safety devices failing, which exposes firefighters to unnecessary risks from the solar systems themselves.

Sean Swentek: Unintended consequences indeed. Can you walk me through what a rooftop RSD failure actually looks like? What physically happens on the roof when that happens?

David Penalva: There are different potential root causes of failure. Without getting too deep into the engineering specifics, these devices fail thermally. They get warm, then hot, and eventually fail catastrophically into thermal runaway. When this happens, if you have other cables running adjacent to the failed device, it can create a path for current to flow, resulting in continuous DC arcing. This arcing cannot be stopped until the arc extinguishes on its own or burns through the roof structure. We categorize these failures into three stages in our report. The first stage is a malfunction, characterized by abnormal temperatures on the device itself. The second stage is physical deformation or melting, indicating a localized thermal event within the solar module it is attached to. The third stage is a full catastrophic structural fire on the roof.

Sean Swentek: If I’m a system owner, especially a corporation with a commercial building where employees and customers are present, I would be getting pretty concerned hearing this. What steps should I be taking to protect myself and our system?

David Penalva: That is a tricky question, and it is what we call “the owner’s dilemma.” Your options are limited. You could remove them, but that would put you out of code compliance, which is a big no-no. A second option, if you have a bad experience with one manufacturer, is to swap all of them out for a different brand, but that is incredibly expensive in terms of labor and component costs. A third option is to retrofit the system to comply with UL 3741, which is a section of the code that allows you to achieve rapid shutdown compliance without MLPEs by using specific mechanical and electrical configurations. However, this requires changes to the array layout and inverter placements, which isn’t always feasible. The fourth route, which is unfortunately what many owners end up doing, is simply taking no action until a failure occurs.

Sean Swentek: At that point, you have to make sure you have a really robust monitoring system in place and an O&M provider who can identify anomalies early before they become catastrophic. Since 2021, you have identified 21 unique cases of rooftop fires linked to RSDs. Why isn’t that number getting more attention in our industry?

David Penalva: That is a significant number of thermal events. We wanted to resurface that data because, as an independent third party, we have a unique perspective. We work with many large companies and see these issues across their portfolios, but because these events are covered under NDAs, the owners don’t talk to each other. We felt an obligation to get this data out without compromising our confidentiality agreements. Without an industry-wide database, it is very difficult to do anything about it. The broader consequence of these thermal events is the public perception that solar is unsafe. If the general public begins to believe that installing solar is equivalent to introducing a fire hazard, no one will want to adopt the technology. That backfires on all of us. We know this is a highly safe, reliable technology, but we must raise our standards for quality, safety, and reliability. That requires data. We are trying to serve as that feedback loop to the code panels and authorities so they can take action.

Sean Swentek: That is incredibly helpful, and our clients—including IPPs, developers, and investors—find this information critical. This report has been out for a little while now. Has there been a response from the RSD manufacturers or other stakeholders? Have they offered any solutions or feedback?

David Penalva: The general feedback we have heard so far is that manufacturers are putting the pressure back on the installers, claiming that installation errors are the root cause. While there is truth to the fact that installation quality needs to improve, it does not justify a component combusting on its own. The industry needs to do better. We need better QA/QC, and with the Inflation Reduction Act, we are seeing a major shift toward caring for these assets long-term. We have to get better as an industry, but at the same time, we cannot tolerate faulty products that create these massive safety issues.

Sean Swentek: I totally agree. What is the most common construction mistake you see that causes other problems beyond just RSDs, which might threaten a system over its operating life?

David Penalva: The most common construction problem we see is simply not having a plan. We generally see two types of companies. There are residential and small commercial companies trying to enter the C&I game that literally have no QA/QC processes in place. They think they can put a system together in a couple of weeks and be good to go, treating it like the Wild West. Then there are companies working with the larger utility-scale players where there is still a massive gap in QA/QC. There is always intense pressure to get these projects completed on time, and meeting construction deadlines often pushes quality down the priority list.

Sean Swentek: Where does responsibility actually sit when a solar asset underperforms or fails? Is it the developer, the EPC, or the owner? How do they get to the bottom of that?

David Penalva: I place that responsibility on the owners. If the owner doesn’t raise the bar, no one else is going to do it for them. If you want to own a high-performing asset, you have to bring your A-game; otherwise, you will be taken advantage of.

Sean Swentek: That is fair. If you are going to own assets, make sure you are owning them properly. What role should field inspection data play in how the industry writes its standards and codes?

David Penalva: I always say you can only improve what you can measure. The reason I founded HelioVolta and SolarGrade was with safety, quality, and reliability in mind. About nine years ago, after spending around twenty years in the industry, I got involved in investigating major thermal events for a very large company, which turned into a nasty legal battle. That was when I realized the reputation of solar was at stake. I spent a lot of time in the field working directly with technicians. It is very hard work, and you have to go out there to truly understand it. A lot of people in the solar industry have never actually been to a operating site or seen what construction and O&M look like. When you get to the field, you realize two main problems. First, we don’t give field technicians the tools to record and transfer data to decision-makers. Second, we lack standardized guidelines. For example, if you and I go to a site and find the same problem, we will likely classify it with different risk severities based on our personal backgrounds because the industry doesn’t have a standard. That is why we published and socialized our internal risk-severity methodology. Many problems go unnoticed simply because technicians don’t know how to transfer that information to the asset owner. If you are an asset owner and I tell you there is a high risk of a thermal event, you will want it fixed immediately, but that information often fails to bridge the gap. You have to have the data, you have to be able to convey it, and you need the right tools. That is why we created SolarGrade.

Sean Swentek: What is your response if another industry player accuses you of fear-mongering or inflating the risks?

David Penalva: I’m an engineer, so I rely entirely on a scientific, fact-based approach. We have a fully public methodology that covers compliance with code, manufacturing specifications, risk severity, and frequency. It is a highly scientific way of classifying risk, and you can’t argue with science.

Sean Swentek: If you could change one thing about how commercial solar projects are built in the US today, what would it be?

David Penalva: Mandating independent, third-party QA/QC. It is the most effective solution.

Sean Swentek: I hundred percent agree with that. Last few questions for you, David Penalva. When you and James Nagel first started connecting the dots between NEC Section 690.12 and these field failures, what was the moment you realized this was bigger than just a few isolated incidents?

David Penalva: We have been doing root-cause analysis on thermal events for a while. Once you start seeing a clear trend where you are repeatedly investigating RSD fires, it becomes obvious that something systemic is going on. Then we looked to see if this was just one manufacturer having issues or multiple brands. Unfortunately, it has been a little bit of everything across different companies with varying failure rates. It is a deep, industry-wide problem.

Sean Swentek: Given that most thermal events are buried under NDAs and there is no national database, how confident are you that the number of 21 thermal events isn’t actually higher? What would it take to find out?

David Penalva: That number is definitely a very small sample of the industry; I guarantee you there are many more. Tracking this is complicated. Fire departments usually go through a general process to associate a fire with a solar system, but they don’t do component-level root-cause investigations. While fires associated with solar systems are tracked generally, the specific component causes are not. Furthermore, because RSD requirements were introduced in the 2017 NEC cycle, normalizing that data is highly complex.

Sean Swentek: So NEC Section 690.12 was written with genuinely good intentions. As someone who is calling for it to be reconsidered, how do you approach that conversation with NFPA code-making panels without making it feel like an attack on the people who championed it?

David Penalva: I always say I am component-agnostic. I don’t have any financial interest in any of the components out there; I just root for anything that works reliably and safely for many years. I want to bring this to the attention of the code-making panel to provide that missing feedback loop. We should reconsider how we are doing this. Sometimes it is wise to take a step back to take the next step forward. If that means going back to no MLPEs until we figure out a better way, or implementing better testing standards for these devices, then so be it. I want them to understand that the consequences for the industry are real. If really large companies decide to shut down their solar sustainability programs because of safety fears, that would be terrible for the industry.

Sean Swentek: Hugely. You put out reports pretty regularly, and you just released this RSD report. Is your mind already thinking about the next report and what data you might be chasing down? Are you already thinking about which angle you’ll go next?

David Penalva: We are already working on it. As data nerds, we have so much data and are always looking for the best story to tell. In our 2024 report, we highlighted the need for better standards and discussed our risk severity methodology. For our 2025 report, we are looking at contractors and EPCs, how they rank against each other, and how the industry views quality. We are definitely taking a different, exciting angle for the next one.

Sean Swentek: I’m looking forward to it. I love your reports every time they come out. This show is called The Future Current. If you could put on your prognosticator’s cap, what is a bold prediction you can make about where our industry will be in the next five to ten years?

David Penalva: I am all about solar and storage. Whether we like it or not, storage is the only solution right now that will help us bridge the gap with the ongoing electrification revolution driven by data centers, AI, and electric vehicles. Solar paired with battery energy storage systems (BESS) is the easiest way to tackle that problem.

Sean Swentek: We are at the SolarPlaza Asset Management event, and the CEO of SolarPlaza opened the show talking about the Netherlands, where they are based. They cannot add any more solar at this point without adding battery storage (BESS) because otherwise, they experience negative pricing due to grid issues. Storage is the key solution to getting more solar on the grid.

David Penalva: Totally. A hundred percent.

Sean Swentek: We talked about these great reports. If someone listening or watching wants to read them, where should they go to find them, and where can they learn more about SolarGrade and HelioVolta?

David Penalva: They can go to solargrade.io and heliovolta.com to download the reports. They are publicly available for anyone who is interested.

Sean Swentek: David Penalva, CEO of HelioVolta and SolarGrade, thank you so much for joining me today and shining a light on these important industry issues.

David Penalva: It’s been a pleasure. I really appreciate it.

Sean Swentek: And to my listeners, thanks for tuning in to this episode of The Future Current. I’ll see you on the next one.