Munich Re has launched a new product to complement its performance guarantee cover for photovoltaic manufacturers.
The product covers the risk born by operators that solar module output may fall below the level guaranteed by a manufacturer that can no longer be held liable under its warranties due to insolvency.
The insurer worked with Deutsche Bank to develop the product, which was recently used for the first time for a solar park project in southern Italy. The product is available globally, including the United States. The coverage caters to large solar parks with an output of more than 20 megawatts.
Munich Re has insured photovoltaic module manufacturers’ performance guarantees since 2009, but until now, there has been no coverage for manufacturer’s insolvency. Without insurance like this, banks may consider refusing to provide capital.
If module output falls below the guaranteed levels and the manufacturer cannot be held liable due to insolvency, Munich Re will indemnify the insured to provide the financing to compensate for the reduce output.
“Our aim in developing and marketing the optional cover was to further facilitate solar park investment by assuming the risk of the module manufacturer’s insolvency, as coverage of such risks makes it easier to calculate stable, secured cash flows for solar parks,” said Thomas Blunck, a Munich Re board member. “Thus, major projects in particular have better access to financing.”
To be eligible for the coverage, Munich Re must already insure the module manufacturer’s performance guarantees. The product will initially be marketed through banks.