Thoughts on Solar

 

Solar Module Warranties

October 16, 2012; Featured in Thoughts on Solar

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I am thrilled to be adding my voice to the discussion on solar photovoltaic (PV) project development as the newest member of the Assurant solar team. For my first post, I thought I’d weigh in on the issue of solar module warranties. It is a topic that continues to preoccupy solar developers, owners, investors and lenders alike.

Typically, solar developers only needed to ask themselves two things about solar modules. First, what’s the price? Second, what’s the energy output? Now they also need to know what happens when PV modules obtained from an overseas supplier degrade more quickly than expected. What happens when they don’t meet performance expectations? What type of warranty is available and what happens if the manufacturer isn’t around to respond to a claim?

When a piece of equipment fails we turn to the project documents to try to find the answers and see who is responsible. Typically, project documents include agreements for the design, materials, construction and operations and provide varying degrees of warranties or guarantees.

There are significant differences in express warranties provided by manufacturers of modules and other components.
Manufacturer warranties may also exclude defects caused by failing to properly maintain the product, limit their liability for  damages and include disclaimers for implied warranties.

In many cases, parties pass –through the manufacturer warranties to the owner or off taker. A manufacturer’s warranty should be reviewed to see if it includes a jurisdiction requiring privity of contract. This means the party seeking to enforce the warranty must have purchased the product direct from the manufacturer.

Most manufacturers will give themselves discretion to determine whether their product is defective. This could translate into a headache if there is a discrepancy between what you believe is a manufacturing flaw and what they determine is normal.

Some warranties are governed by the laws of the country where the product was manufactured. If the manufacturer is located overseas and does not respond or denies a claim, there could be a problem enforcing the warranty in theU.S.

In addition, there may be a concern about the financial strength of the manufacturer. This is an important issue  due to  the rapidly expanding supplier base. If a manufacturer is no longer in business when a claim arises, is the warranty worthless?

Developers are well advised if they evaluate all warranties and guarantees early in the project development life cycle. All of the above issues should be taken into consideration. What do you think is important in a warranty?

 
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