Solar panel code of practice
Making the solar energy sector more resilient
The solar photovoltaic (PV) industry typically provides warranties of 25 years on their solar panels. But this 25-year warranty poses a huge financial risk to PV manufacturers, many of which are struggling to break even. Who actually pays if the panels fail to produce what they promised five, ten or twenty-five years down the line? Will the producer still be in business?
A new Solar Panel Code of Practice (SPCoP) is an initiative by Swiss Re and PV research institutions that aims to address these concerns. It sets out international guidelines on how to manage risks and offer sustainable options for solar panel warranty insurance. This will allow buyers of PV installations to make more informed purchasing decisions and give greater certainty to an industry faced with long payback periods.
The SPCoP goes well beyond existing industry quality standards. It helps all relevant parties – producers, buyers, investors, banks and insurers – to better assess the long-term quality and reliability of solar panels in the context of insurance. In addition, it provides all stakeholders with a best practice risk management benchmark to mitigate any losses.
The need to implement more rigorous standards such as those laid out in the SPCoP will become even more important in the future. The Paris agreement on climate change, the growing need to combat air pollution and the rising energy needs of a growing world population are all factors that call for the systematic and large-scale introduction of renewable energy sources – and solar power is a key source among them.
Solar energy plants can be installed anywhere, at any time and at an adjustable scale. This explains why the market for solar power is expected to grow by as much as 8-15% per year until 2020. For the insurance industry, this represents both an opportunity and a challenge. The new Code of Practice provides the technical guidance on how to turn this opportunity into viable risk management and insurance solutions, which will help drive investments in a sector that is central to the creation of a sustainable energy system.