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30 CoNNECTICUT GREEN GUIDE • WinTer 2014 www.CTGreenGuide.com leGal Solar Guarantee Businesses would be wise to get promises on solar production By Paul R. Michaud Y ou are a business owner in Connecticut and have decided to have a solar photovoltaic system installed on the roof of your business. The solar company has promised you that over the course of a year the PV system will produce enough energy to satisfy 50 percent of the electric needs of your business, and thus will save your business thousands of dollars in elec- tricity costs. The solar company hands you a solar power purchase agreement. You review the PPA, but how do you know the PV system will deliver the energy as promised? An often missing provision in many PPAs is the performance guarantee. A performance guarantee is a legal provision or separate contract that is used to give the business owner confidence that the PV system will perform as promised by the solar company over the life of the PPA. Without a performance guarantee, the business owner often has little recourse against the solar company if the PV system performs poorly or less than promised. A performance guarantee warrants the PV system will produce the amount of energy for the building owner that the solar company promised over the life of the PV system. Using our business owner example, he or she should negotiate with the solar company for the inclusion of a performance guarantee provid- ing that at each successive one-year anniversary, if the actual energy generated by the PV system is less than the amount of energy promised by the solar company, then the solar company must send the business owner a check equal to the difference between the promised energy and the actual energy multiplied by the guar- anteed price for the energy as agreed by the parties in the contract. On the other hand, if at the end of each successive one-year anniversary the actual energy produced by the solar system is greater than what was promised by the solar company, this surplus will be carried over and will be used to offset any deficiency in energy produced by the PV system in the following year. Performance guarantees, like other warranties, often come with exclusions that will nullify the performance guarantee. For example, the solar company may try to nullify the performance guarantee if someone other than the solar company or its approved service provider installs, removes, re-installs, or repairs the PV system; the PV system is destroyed or damaged by someone other than the solar company; there is a voltage sup- ply surge; or theft of the PV system. These exclusions should be reviewed carefully by an attorney and kept to a minimum as they limit the business owner's right to the performance guarantee under the solar PPA. Paul R. michaud is an attorney with law firm murtha Cullina. he represents clients in the areas of renewable energy and microgrid project development. he is the founder and execu- tive director of the Renewable Energy & Efficiency Business Association (REEBA). The Experts