When homeowners begin researching their solar power purchase, they’re quickly introduced to the many warranty and guarantee options available. Determining the appropriate protection is the next important step once they narrow down the equipment and the installer they want to use.
One such offer they’ll discover is a Production Guarantee. What is a production guarantee, and how is it different than Solar Insure’s 30-year Monitoring and Warranty? We’ll explore the details of a Production Guarantee and why all parties want to read the fine print before deciding which to go with.
Table of Contents
What is a production guarantee?
Production Guarantees are offered and executed by the installer and are a promise that your system will produce a minimum output of power guaranteed. If the system fails to reach the contracted amount of power, the installer will pay you the difference to make up for the production loss, roughly about $0.10/kWh-$0.20/kWh. Payouts are usually based on annual production. So, for example, if your guarantee was for 11,000 kilowatt-hours (kWh), but your system only produced 9,000, you would get a payout for the difference. However, some stipulations come with this type of contract and could nullify your agreement.
Ultimately, a production guarantee only makes sense for a system’s first 1-2 years. However, on average, production guarantees range anywhere from 5 to 25 years. The production guarantee does not cover equipment or any gaps in a manufacturer’s warranty. After the first year, what is guaranteed to be covered gets cut in half and decreases as your production output changes. Production guarantees also require you to prove cleaning and maintenance have been performed on the panels to be paid out when production decreases.
What are the gaps when considering a production guarantee?
While production guarantees are widely used, there are some gaps in many of these guarantees that can trigger out-of-pocket expenses, unexpected cancellations, and other fine print details that may possibly be avoided by going with a more desirable longer coverage approach. Here are some of the gaps to watch out for in a production guarantee.
1. Performance guarantees do not cover manufacturer warranty gaps
Production guarantees come with their own exclusions and limited warranties. Production guarantees most often do not cover equipment failures. Coverage gaps exist when repairs are required and the manufacturer warranty is used.
Many manufacturer warranty plans on the market don’t cover labor, leaving homeowners to pay for additional expenses that exceed the equipment’s manufacturer’s warranty. Inverters are one of the most common failures, and if you require a manufacturer warranty for replacement, you might have to pay the cost of travel time and labor.
2. Maintenance requirements
Many production guarantees require the annual washing of solar panels.
3. Levels of support
For at least the first year of a production guarantee, the homeowner is guaranteed they will benefit from their solar system output. After the first year, protections decrease for the homeowners, and the minimum output of power changes.
However, what happens if supply chain issues and your inverter needs replacing? What happens if your manufacturer or installer goes out of business? From the homeowner’s perspective, a solar power production guarantee gives protection. Still, when it comes to market volatility, a homeowner can be left holding the bag without any support by not leveraging longer monitoring and warranty protection that delivers support even if the installer or manufacturer goes under.
Top support issues of a production guarantee:
- Insolvency of the installation company means the contract is null.
- Production guarantees do not cover equipment failures caused by a manufacturer going out of business or failing to support the product (read the fine print).
- Some production guarantees include repairs; some do not include repairs. You may be financially compensated for issues, but that doesn’t always mean repairs will be made to correct the issues; you must read over the details of your contract to know what repairs, if any, will be made or if the financial compensation is meant for you to pay for those repairs yourself.
The differences between Solar Insure and Production Guarantees mostly involve levels of support; how long does support last, what are the gaps in support, whether customer support will get you the answers you need, and what unexpected contract details may cancel the production guarantee itself.
Production guarantees, on average, have shorter coverage terms, only make sense for about 1-2 years, contain more fine print, and include ongoing charges like monthly fees. With Solar Insure, you’re protected for the actual functioning of your panel system for 30 years, and rather than monthly bills, it requires zero out-of-pocket expenses and no monthly payments after installation.
4. Financial value
Production guarantees end when you stop paying monthly fees; some companies will cancel your guarantee if you’re 5 days late on a payment. With 30-Year Monitoring and Warranty from Solar Insure, you’re covered from day one for a full 30 years because monitoring and coverage come with your installation from our Certified Installers. Solar Insure charges zero monthly fees and has no deductibles.
On the other hand, production guarantees have other financial implications, including:
- Monthly payments (possibly not a fixed rate).
- A late payment could render the contract void.
- Issues that arise from production failure are not always fixed (depending on the contract).
- Extra repair work could require change order forms with out-of-pocket expenses.
- Out-of-pocket expenses if repairs are outside the scope of the production guarantee contract.
- Manufacturer and contractor default or bankruptcy can leave you with a bill.
Performance guarantees & fine print
Production guarantees vary from installer to installer. The key is to read the fine print and know the details of the contract before ever signing. There’s no standard production guarantee, as each system will produce varying power, and every installer has different parameters for delivering their guarantee.
- Read the fine print – some production guarantees require that panels must be washed 2-4 times per year, or else the performance guarantee is obsolete.
- Degradation clause – kWh degrades and reduces by 5% in the first year and .5% yearly after that.
Production payouts for underperforming systems may only be quarterly or annually and do not fully compensate for the utility costs.
The forecast for production guarantees
With more innovative solar protection products on the market, homeowners can choose longer coverage without gaps or out-of-pocket expenses. The future of production guarantees looks like a shorter offering of about 1-2 years of coverage. The riskiest part of the production guarantee is that if the installer closes or the manufacturer defaults, coverage is completely gone, making your solar system become what’s called an “orphaned system.”
Longer, more well-rounded protection with Solar Insure
A 30-Year Monitoring and Warranty is unique support that provides monitoring and a warranty that covers the repair and replacement of defective components and includes materials and workmanship from the start of your warranty.
Different from the production guarantee, the 30-year Monitoring and Warranty does not have a specific power output. Only if your system requires repairs, that necessary component(s) covered, parts, labor, travel transportation, and roof penetrations, are covered and included in your installation.
The Solar Insure difference
Every moment we choose to invest in a solar system, we rely upon our network of fully vetted installers. We also rely on our top-tier, approved vendors to deliver the best equipment for every panel, inverter, bolt, and solar mount. We make sure to maintain our own network of reputable solar businesses so homeowners can rely on their solar installations.
Solar Insure focuses on making renewable energy investments more secure. We help ensure all businesses involved with installing solar share a vested interest in providing top-quality equipment and installation services. We support your solar array system’s longevity. If hiccups arise, for example, if your manufacturer closes shop/the installer closes its’ doors, Solar Insure provides quick and helpful support to keep your system running. Our goal is for homeowners to enjoy the environmental and economic benefits of going solar.
Protect your solar beyond a production guarantee. Get 30 years of monitoring and a warranty with Solar Insure.
Learn more if you’re a homeowner >
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