Munich Re in Performance Guarantee Deal with China’s Yingli Green Energy

December 12, 2012

Munich Re said it is “reinsuring performance guarantees that Chinese photovoltaic manufacturer Yingli Green Energy gives to its customers for multi-crystalline modules. The insurance solution covers the long-term technology performance risk of Yingli’s photovoltaic modules under an agreement with Yingli Green Energy’s Cayman Islands-based holding company.”

In executing the agreement Munich Re’s coverage protects the manufacturer as it “enables it to manage the long-term, technical guarantee risk on its balance sheet,” the bulletin explained. “In the event of an unexpectedly large performance loss below guaranteed performance specification, Munich Re indemnifies Yingli for its performance warranty obligations.”

The announcement noted that “Yingli grants customers worldwide a performance guarantee of up to 25 years. The agreement covers Yingli against the risk of its multi-crystalline modules failing to achieve, during the first ten years, a power output of at least 91.2 percent, and in the following fifteen years a power output of no less than 80.7 percent of the nominal power output specified on the module’s original product label.”

Munich Re also said that it “offers customers of Yingli the complementing Option Cover insurance. This innovative solution covers the risk borne by operators that solar module output falls below the guaranteed level, but the manufacturer can no longer be held liable under its warranties due to insolvency. Without such insurance, banks may provide necessary funding at less favorable terms.

“Thus, the performance guarantee cover together with the Option Cover constitutes a major milestone in the implementation of photovoltaic projects, offering critical financial protection. Prior to the agreement being signed, Munich Re had conducted an in-depth review of Yingli’s product quality control and manufacturing processes. In implementing this insurance solution, Munich Re has involved one of its specialty primary insurers.”

Liansheng Miao, Chairman and CEO of Yingli Green Energy, commented: “Our state-of-the-art manufacturing lines and choice of suppliers have conveyed trust and reliability to banks, investors and rating agencies. Our partnership with Munich Re serves as another powerful edge for differentiation in a competitive market environment.”

Thomas Blunck, member of Munich Re’s Board of Management, added: “We are delighted to have concluded this contract to support Yingli in their forward-looking global growth plan. With our expertise, we can assume very special renewable energy risks and help provide greater investment security. We see considerable growth potential in risk transfer solutions for renewable energy.”

Source: Munich Re

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