I lived it: Litigator provides his perspective on solar warranty claims

This article explores practical steps a solar array owner or operator can take now to better position itself to make warranty-related claims five, 10 or even 25 years into the future. These tips are based on my experience over the past year, during which I’ve handled two solar disputes — one that culminated in a two-week trial and another that required a two-week final arbitration hearing. One dispute concerned the modules themselves; the other involved the solar tracking system. Despite the different technologies involved, there was a lot of overlap in the defendants’ litigation strategies, and the same practical lessons can be drawn from both.

The warranties associated with solar modules are unusually long — 25 years is standard, and more manufacturers are starting to offer 30-year warranties. Twenty-five years is an eternity when it comes to technological developments, and it’s almost inevitable that a certain number of solar arrays won’t perform as warranted for the expected lifespan.

Given the significant stretch of time ahead, there are steps system owners should take now to better position themselves for potential disputes in the future. The first is simple: Read the warranty exclusions. When manufacturers face warranty claims, they have two practical options: 1) honor the warranty; or 2) blame everything other than the warranted product for the problem. The latter approach was the playbook used by both manufacturers in the disputes referenced. The common refrain we heard repeatedly was along the lines of “it was your operation or maintenance of the product that was at fault,” and “it was unexpected weather,” and “it was all of the other components of the system.”

Beyond reading (and negotiating) warranty exclusions carefully, to better position oneself for future warranty claims, system owners also need to organize their essential documentation. This means not only the contract, but also all exhibits to the contract, plus any proposals, purchase orders or documents referenced in the contract even if not specifically made an exhibit. Double check that the documents just described include the warranty itself. Beyond contractual documents, design and construction documents are the next most likely to be needed — so make sure these are well organized and easily accessible.

One step beyond being organized, system owners should also review the O&M plan. Experienced operators might have a great plan in place already, but if it doesn’t consider the specific requirements from the module manufacturer, that gap between what one typically does and what that manufacturer recommends might well be a legitimate basis for a denied warranty claim. And beyond simply having an O&M plan or manual in place, it’s important to document that the plan is actually being implemented — make sure, for example, that if a manufacturer recommends yearly re-torquing of bolts on the slew drive, not only is re-torquing done, but it’s also documented as being completed on schedule and according to the manufacturer’s specifications.

Good documentation is essential beyond its ability to help system owners understand their rights and the warranty procedures or allow them to defeat manufacturer arguments based on warranty exclusions — it also helps mitigate the effects of inevitable employee turnover and the passage of time. Memories fade, and key operations and maintenance personnel may move on or retire. These claims may happen decades in the future, and having good records is far easier than locating long-lost employees who haven’t retained this important information.

All operational data should be saved in appropriate files for later use. Because one doesn’t know how they’ll need it or what bit of evidence will be needed to prove or disprove a claim, system owners should save data in a format where it can still be put to good use, as it could make or break a future claim.

Other considerations:

Plan to pursue warranty claims as quickly as possible. Obviously, this will need to be done while still following any mandated warranty procedures and not spoliating any evidence, but a manufacturer that unnecessarily delays and asks for more and more information to “better assess this claim” is unlikely to do an about-face and honor the warranty claim many months into the process. They either value their customer and want more business in the future (and will therefore meaningfully assess and honor valid warranty claims) or they don’t.
What are the warranties on all the key systems? Do the modules, tracking system and inverters all have different length warranties? If they don’t all have the same warranty duration, has this been appropriately priced into O&M budgets?
Who actually holds the warranty? Did the EPC contractor purchase everything? Has the warranty been appropriately assigned, or will the EPC contractor stand in the shoes of the manufacturer? Injecting more parties into the process is going to make things worse — particularly if the remedies available to the owner are not perfectly back-to-back.

If readers take away anything from reading this article, please remember just how long a 25-year warranty will last. This author, currently father to three kids under eight, will not only be an empty nester but also possibly a grandfather by the time today’s new warranties expire. So, all system owners should take some time now to prepare, or they might have to forego a legitimate warranty claim instead of replacing malfunctioning or otherwise underperforming equipment.

Todd Heffner is a seasoned litigator focused on serving clients in the construction industry, particularly in high-stakes federal court litigation and arbitration. Todd devotes his practice to litigating high-stakes construction claims and advising clients during the course of construction. He has worked on a range of projects, including chemical plants, power plants, airports, military bases, water treatment plants, environmental projects, hospitals, rail projects, high rises, and a variety of other commercial and industrial projects. Todd is particularly experienced with renewable energy projects, having litigated four solar and two wind disputes. Additionally, he avoided litigation on a battery storage project by advising on a construction dispute.