Munich Re, industrial insurance broker Marsh and photovoltaic producer Signet Solar have jointly launched a new insurance solution to cover the possible risk of performance deterioration in photovoltaic modules.
Most manufacturers of solar modules guarantee the minimum performance of their modules for 20 to 25 years. Under accounting law, they are obliged to set up reserves for the expected volume of claims under the performance warranties. The result is that the capital tied up in the reserves is no longer available for investment.
However, Munich Re’s experience and calculations show that reserves mostly cover only some of the liabilities that arise in the event of a loss – serial losses often affect several production years. A single serial loss could therefore be sufficient to threaten a module manufacturer’s existence and market position.
The Munich Re Group is therefore taking a new approach: a so far unique insurance solution coordinated by experts in the Special Enterprise Risks Department covers the performance warranty of Signet Solar modules for 25 years. The warranty guarantees that the modules will perform to at least 90% capacity in the first ten years and to at least 80% in the remaining 15 years.
Thomas Blunck, member of Munich Re’s Board of Management: “Measures to counter climate change – and in particular the specific expansion of new energy production technologies – also open up major business opportunities for insurers. Munich Re has devised special risk-transfer products especially for complex risks connected with renewable energies, including the performance guarantee cover, for which we were able to win Signet Solar as our first client.”
The insurance solution provides the module manufacturer with fast liquidity in the event of any loss and stabilises its sales and yield planning. Other suppliers of solar modules should follow as policyholders, but before any cover is granted, they will – like Signet Solar – have to submit to several months of careful checking of their quality standards and production processes.
Particularly in these turbulent times, the new insurance solution offers solar power plant operators greater flexibility and facilitates the financing of photovoltaic installations: a decisive competitive advantage in a dynamically growing market.
