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Solar Insurers Turn Kingmakers Over Panel Survival Doubts
When True Green Capital Management LLC chose a solar panel maker for a rooftop installation in New Jersey, the firm’s biggest concern was whether the manufacturer would survive long enough to guarantee the equipment.
The New York-based private equity fund made its Chinese manufacturer buy insurance to back the 25-year warranty on its panels to close the contract. If the supplier went bust, PowerGuard Specialty Insurance Services of California would ensure the panels installed performed as promised.
“Frankly, we see insurance as crucial,” said Bo Wiegand, principal at the fund, who declined to name the supplier of the installation near Carteret, citing a confidentiality agreement. “Many of these companies, even some of the more recognizable name brands, likely won’t be operating in 10 to 15 years. They may get acquired, they may go out of business. We just don’t know.”
In the past year, lenders and investors started demanding extra protection from suppliers after at least 11 U.S., German and French solar equipment-makers failed, including Solyndra, backed by a $535 million U.S. government loan. The solar industry is suffering its biggest shakeout yet, beset with 53 percent production overcapacity and collapsing profit margins.
The industry’s turmoil means Munich Re, the world’s biggest reinsurer, and two Southern California rivals are playing a hand determining which panel-makers survive as First Solar Inc., (FSLR) Suntech Power Holdings Co. (STP) and competitors fight for orders.
http://www.bloomberg.com/news/2012-05-23/solar-insurers-turn-kingmakers-over-panel-survival-doubts.html
The New York-based private equity fund made its Chinese manufacturer buy insurance to back the 25-year warranty on its panels to close the contract. If the supplier went bust, PowerGuard Specialty Insurance Services of California would ensure the panels installed performed as promised.
“Frankly, we see insurance as crucial,” said Bo Wiegand, principal at the fund, who declined to name the supplier of the installation near Carteret, citing a confidentiality agreement. “Many of these companies, even some of the more recognizable name brands, likely won’t be operating in 10 to 15 years. They may get acquired, they may go out of business. We just don’t know.”
In the past year, lenders and investors started demanding extra protection from suppliers after at least 11 U.S., German and French solar equipment-makers failed, including Solyndra, backed by a $535 million U.S. government loan. The solar industry is suffering its biggest shakeout yet, beset with 53 percent production overcapacity and collapsing profit margins.
The industry’s turmoil means Munich Re, the world’s biggest reinsurer, and two Southern California rivals are playing a hand determining which panel-makers survive as First Solar Inc., (FSLR) Suntech Power Holdings Co. (STP) and competitors fight for orders.
http://www.bloomberg.com/news/2012-05-23/solar-insurers-turn-kingmakers-over-panel-survival-doubts.html
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