Solar panel warranties vs. system performance guarantees: apples and oranges

Since commercial solar panels are a significant and long-term investment, your organization’s stakeholders will want to know that their investment will be protected. This typically happens through some kind of solar panel warranty or solar production guarantee (also called a performance guarantee)—or a combination of these. Solar warranties and guarantees mitigate the risk of faulty equipment, breakage and/or underperformance that might occur. Problems with solar panels are statistically rare, particularly when you choose solar equipment from proven manufacturers. But the presence of documented assurances can give you a greater understanding of the long-term financial impact of solar ownership, and help gain stakeholders’ buy-in for your proposed solar project.

As you’re researching commercial solar options, you’ll likely encounter a wide variety of warranties and guarantees with different types of coverage and term lengths, plus lots of fine print that might make it unclear what’s covered and what’s not. In addition, depending on the manufacturer, warranty definitions can vary greatly. For example, did you know that there’s a difference between solar panel product warranties and power warranties? And did you know that solar panel power warranties are different from performance guarantees? And that performance guarantees can be difficult to get and usually come with strings attached pertaining to operations and maintenance? The options can get confusing, but it’s important to understand the differences when you’re deciding between solar companies.

Different types of commercial solar warranties and guarantees

Let’s distinguish between the different types of assurances that might come with your organization’s solar system.

  • Solar panel product warranty: Covers any defects in materials or workmanship. If a panel suddenly stops working after a few months because of a flaw in a solder joint, for example, your product warranty will most likely cover it. (See “The key components of a commercial solar panel warranty” for more.)
  • Solar panel power warranty: Over time, the power output of all solar panels diminishes or “degrades.” Knowing this degradation rate (which is stated in the warranty document) will give you a clear sense of the minimum amount of power you’ll be guaranteed for the first 5, 10 and 25 years of your panels’ life. Then, if a panel’s output is lower than promised, the manufacturer will replace, repair or reimburse you for the panel—depending on the warranty terms.
    • Combined power and product warranty: Many solar manufacturers offer power and product warranties that provide coverage for different amounts of time. Other manufacturers offer both warranties for the same timeframe. Note that for many solar manufacturers, only their product warranty covers failure due to product defects or workmanship—and their power warranty doesn’t mention defects at all. So be sure to do a side-by-side solar panel warranty comparison, paying close attention to how the power and product sections are worded.For example, you might think a panel’s power warranty covers any situation where its performance or output is compromised. But be sure to take a closer look. Most panel manufacturers focus solely on their power warranty, because it often appears to guarantee a working panel for an even greater length of time than their product warranty. However, many of these power warranties are not supported by their accompanying product warranties. Case in point, if a panel is not producing the amount of power expected, but the reason is because of a product flaw, the manufacturer may refuse to cover the problem under its power warranty. If the product warranty doesn’t cover it either, or it has run out, you’re out of luck.
    • Manufacturer’s warranties vs. installer’s warranties: You may get multiple manufacturers’ warranties if your system is made up of components from different manufacturers. For example, if your panels come from one manufacturer, your inverters from another manufacturer, and your mounting hardware and cables from yet another, there will be different warranties and terms associated with each piece. On top of that, you may get a separate warranty from your installer, which would cover issues specifically pertaining to errors or damage during installation.
  • Solar performance guarantee (PeGu): Though a solar panel power warranty is sometimes referred to as a “performance warranty,” it is not the same thing as a performance guarantee (sometimes called “PeGu” for short). The difference is the element of time. A panel power warranty is about the watts a single solar panel should be able to produce; it’s still about the equipment. In contrast, a performance guarantee is about how many kilowatt-hours a commercial solar system actually produces over time (usually a year). Throughout the year, the system’s performance is continually monitored and evaluated against the guaranteed output, and the guarantor pays the system owner for any shortfall.Manufacturers are understandably reluctant to offer performance guarantees since they often don’t install, operate and maintain solar systems themselves. If they have no control over how the system is installed, how often it’s inspected and cleaned, or the qualifications and training of those who make repairs, they can’t assume responsibility for that system’s performance over time. So you’ll usually only be able to get a performance guarantee if the manufacturer (or manufacturer-approved vendor) is also the installer AND is contracted for ongoing operations and maintenance (O&M).

Comparing solar panel product warranties, power warranties and performance guarantees:

Solar panel product warranty Solar panel power warranty Solar system performance guarantee
  • Panel-level assurance
  • Provided by panel manufacturer
  • Covers panel hardware construction and functionality
  • Other components (such as inverters or mounting hardware), if from different manufacturers, may be covered under their own warranties
  • Panel-level assurance
  • Provided by panel manufacturer
  • Covers expected panel production
  • Difficult to prove on a panel-by-panel level after installation
  • Can be a challenge to redeem if not backed by product warranty
  • System-level assurance
  • Might be available from installer
  • Ongoing O&M from approved provider required
  • Measured by electronic monitoring and utility bills
  • Usually reconciled annually
  • May cost extra


As you can see, there are good reasons why a lot of confusion exists around commercial solar panel power and product warranties and performance guarantees. But now that you know the differences between the various kinds of assurances and what to expect, you’ll be able to more effectively compare and contrast your options. As always, it’s a good idea to work with a solar energy consultant with expertise in this area. They can help you understand the complexities of any warranties or guarantees under consideration. Plus, they can assist you in comparing and contrasting how different warranty terms could impact your organization financially, both in the short and long term.

Related links:

The key components of a commercial solar panel warranty

Solar Technologies Solar Warranty FAQs

How Home Solar Companies Work

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