Top 5 Solar Contract Pitfalls to Avoid
So you’re smitten by solar and you want to install a PV system for your house. The financing is in place, you’ve identified the vendor and system installer and you’re all set to sign the paperwork.
But wait. In all your eagerness to go solar, there may be loopholes that you’ve overlooked. Clauses and contractual obligations that, if not adhered to, could seriously dent not just system performance but also your entire experience with solar PV systems.
Solar Contract Pitfall 1: Exact Specifications and Details
There is a multitude of components that go into a functional PV system. They range from the commonly identified solar modules/panels and inverters to the less well known components such as mounting structures, charge controllers, bypass diodes, etc.
Each of these vary widely in technical ratings and cost. A well-defined PV system contract will clearly outline the make, specification and number of units of each component. It will also clearly specify quality aspects of the PV system, such as the use of galvanized mounting structures.
On the other hand, a poorly and fraudulently defined contract will omit these key details, and resort to loosely worded clauses so as to (possibly) substitute certified components with their cheap, inferior quality counterparts.
Solar Contract Pitfall 2: Clearly Defined Timelines
Being a modular technology, once the design is finalized and the components procured, a solar PV system can be put together quickly. For instance, a 2 kW rooftop PV system can be installed and commissioned within 4-5 days. However, failure to do so will invite penalties on the contractor, usually at the rate of 10-12% of the system price per week of delay.
Therefore, ensure that your system contract clearly specifies (and honors) the time period for system installation and commissioning, and the quantum of damages you are entitled to in case of breach of timelines. A faulty contract will try to buy the contractor out of any such commitments, with “component unavailability” or “supply side issues” being the most common issues cited. Do not fall for such pretenses!
Solar Contract Pitfall 3: Energy Generation Guarantee
Because solar energy is variable by its very nature, no contractor can predict the exact amount of energy your PV system will generate. However, a good contractor will specify the minimum energy output from a system over a given time period, failing which, you will be entitled to compensation.
Therefore be careful about the energy generation clause of your contract. If there is no guarantee of energy generation, your contractor gets away scot-free while you end up with an underperforming – or worse – a nonperforming system.
Solar Contract Pitfall 4: The Boring but Important Things
A PV system contract will include several clauses and sub-clauses that define the system’s performance, as well as specify the obligations that a contractor must comply with. These include equipment warranties, the requisite statutory clearances and things such as Defect Liability Periods.
A well drawn-up contract will detail each of these important categories. On the other hand, a fraudulent/fly-by-night contractor may attempt to leave out these essential elements in order to “simplify” the process of going solar. Again, do not fall for these tactics!
Solar Contract Pitfall 5: Absolute clarity on money matters
There can be several costs hidden in a contract – such as that of unloading of equipment, fees for statutory clearances, component taxation amounts, accommodation and travel for contractor’s personnel, etc.
Ideally, your system expenses should be inclusive of all these amounts. However, a faulty or dishonestly drawn up contract may try and hide these costs, only to make you pay when system installation actually commences. Before signing a contract, you must make sure that you understand the financial part with absolute certainty.
Keep in mind all of the above points before signing a solar PV system contract to ensure that you get the best out of your investment.
To read more about the pitfalls of solar contracts, click here.