Thoughts on Solar
For Solar, Not All Performance Guarantees Are the Same
September 07, 2012; Featured in Thoughts on Solar
There are no guarantees in this life but increasingly they are being sought after for solar project developments.
In fact, performance guarantees seem to be on the mind of everyone involved in solar project development. At Intersolar North America in San Francisco this summer, I must have heard a dozen conversations about how important performance guarantees are. I can understand why. Market uncertainty caused by solar manufacturer market consolidation and government actions continues to kick up dust storms and threaten the solar energy industry’s bright future.
Those figurative clouds have morphed into real concerns about whether there is a way to guarantee adequate sunshine and peril-free, perfectly performing equipment and people 365 days a year and throughout a solar project’s lifespan. As odd as the idea of guaranteeing the sun’s work performance may sound, the issue of performance guarantees, what is needed and what can be honestly be delivered is real.
Performance Guarantee Definition
The biggest issue is that all the different parties involved in a solar project have different ideas of what performance guarantees are and what is needed.
- Investors and banks are looking for guarantees that their investments produce a specific return during a certain period of time.
- Project developers meanwhile are looking for installation, design and operation guarantees.
- Owners are looking for assured levels of energy production.
The diversity of opinion on this topic varies as widely as the roles of project participants, the projects and the performance guarantees available. The one thing that is clear is that there is no comprehensive policy available that will eliminate all project risk and none currently available that guarantees the sun. The good news is that the sun shines every day and its reliability is far less variable than any other element in the mix. Instead, focus on the risks of siting a solar PV project to optimize energy output and to mitigate other potential hazards to a project’s reliability.
During the course of the next few weeks, my colleagues at Assurant Solar and I will be talking more about the performance guarantee issue in the renewable energy industry.
In the meantime, what are you looking for in performance guarantees? What insurance protection don’t you have yet that you need?
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