Derisking PV Module Warranty Risks

At the TaiyangNews Reliable PV Module Design Online Conference, Ronald Sastrawan, Director, Green Tech Solutions at Munich Re, a reinsurance company, briefly discussed PV warranty insurance, the company’s due diligence procedures, and generic case studies. 

Sastrawan described PV module warranty insurance as a specialized form of insurance focused on product reliability, distinguishing it from conventional life, non-life, or natural hazard insurances. For background, he explained the existing PV module product and performance, or ‘power output’, warranty for up to 30 years. He plotted the number of operational years on the X-axis and power output on the Y-axis, starting at 100% with a consecutive allowable annual degradation rate. The graph also included a few red dots, which indicated modules that underperformed in later years compared to the starting point. He explained that suppliers will guarantee they will either repair or replace these underperforming modules. They also have the option to refund an amount equivalent to the depreciated value of the underperformance. Although this 30- or 40-year warranty gives the PV industry a strong chance to calculate the lowest possible levelized cost of electricity (LCOE), it also shifts the risk to the supplier and to the buyers or project owners. 

Munich Re’s PV warranty risk insurance has two components that work hand in hand with the supplier’s warranty. It indemnifies the supplier against excessive warranty claims, while buyers or project owners are indemnified if the supplier goes bankrupt. This protects the supplier’s balance sheet against huge losses and supports the buyer’s motivation to comply with regulators’ or lenders’ requirements. He advised that buyers should request PV warranty-insured modules during the procurement stages.  

This insurance underwriting involves a three-stage due diligence process, as covering GW-scale shipments from multiple global suppliers in different locations with varied technologies and climates is not individually possible. The first step is a general technology assessment that evaluates which cell or module technology best fits each risk type. For this, the insurance company participates in R&D projects and consults with experts and cell and module makers. The sample modules then undergo extended reliability tests against IEC standards, such as IEC 61215 and IEC 61730. These include longer thermal cycle (TC), damp heat (DH), humidity freeze (HF), and, recently, UV60 testing on the front side of the module. Finally, Munich Re inspects cell and module factories annually with a scoring system and corrective actions. This helps identify substandard suppliers and creates broader quality-improvement opportunities. 

Sastrawan emphasized the importance of the newly introduced mandatory cell factory inspection to verify TOPCon cell structures and understand their strategy to combat the potential UVID risk. The insurer also made the UVID test mandatory from the front side of the module for all applicants. He cited module factory audit results with 10% substandard and uninsurable suppliers, although they have all the requisite IEC certifications. This audit includes a list of non-conformities that must be addressed by implementing corrective actions, documentation, and approval from Munich Re before the insurance grant.   

The company’s insurance pricing is based on modeling the degradation rate distribution, data from the publication by Jordan et al., and customers’ data. 

He concluded by citing a few warranty claim case studies without providing specific details. These include a spontaneous glass breakage (not from external forces) claim for about 30,000 modules, and a backsheet cracking case for around 3,00,000 modules on site. Another warranty claim was involved for modules falling from the frame and is under investigation. 

You can watch the presentation here.