It is no secret that the last couple years have been rough for PV manufacturers globally. Panel makers have had to contend with compressed profit margins and an oversaturated market, both of which have driven many firms to shutter operations and enter into bankruptcy protection. Facing the difficult task of betting on which companies will be around in the future to honor product warranties, PV project developers, owners, and financiers approached the insurance industry to see if it could devise a solution for their concerns. The response came in the form of OEM (original equipment manufacturer) warranty insurance.
NREL recently completed a round of discussions with professionals from the insurance, finance, and PV industries on these new OEM warranty policies (as well as other topics in PV risk management). This blog provides an advance overview of our findings, which will be published in a forthcoming report on solar PV risks and mitigation solutions.
OEM warranty insurance is a new and still niche product, but there are indications that demand is growing. According to our research, in 2011 only a few panel makers had publicly announced that they had purchased manufacturer coverage. As of this writing, NREL has identified more than 20 manufacturers with an OEM warranty policy, at least five of which could be considered “Tier 1” suppliers. At least three insurance carriers offer warranty coverage, with Munich Re providing perhaps the most capacity (in terms of dollars) in the market right now. Several brokers and broker-type entities are also active in this space. These entities generally craft policy terms and arrange for the sale between the carrier and policyholder.
Categories: Electricity, Energy, Finance
Prometheus Institute 