7 vital ways to protect your solar energy business

Has your business recently diversified into the renewables sector? Or maybe you are considering getting into the solar energy sector.

Either way, Harrison Drury’s energy law specialist has seven key bits of advice that you can’t ignore.

Despite recent and further planned cuts in renewable energy subsidies, there continues to be a marked increase in the number of large-scale solar panel installations across the country.

This is down in some part to continual improvements in solar panel technology, which has in turn increased the output generated by the panels, and reduced the time it takes for the investment to begin generating returns. This has led to the emergence of a number of companies looking to diversify their existing operations to develop, commission and install these types of solar energy projects.

Harrison Drury has assisted a number of clients operating in the solar energy sector to ensure their terms and conditions of business are adequate for the new renewables venture, and to fully protect them both in terms of the suppliers they deal with and the clients they provide services to.

Here are seven ways that solar energy companies can improve their terms and conditions of business to protect them:

1. Understand your rights with suppliers

Understand what redress you have against both suppliers and consultants that you may engage with to deliver the whole project. By understanding what rights you have against these other parties, you will also understand what rights and warranties you can pass on to your customers and ensure your terms and conditions reflect this.

2. Ensure warranties protect you as well as the customer

While solar technology has become far more reliable in recent years, as with any kind of technical system, problems can, and will, emerge. It’s vital to ensure that any particular warranty you pass on to a customer for the materials used is able to be fully passed to the original manufacturer. It is also crucial to ensure that the procedure to be followed to instigate such a warranty is practical enough to allow all parties involved to benefit from the same.

For example, it is no good having a warranty whereby defects must be notified within 24 hours if it is impractical for the customer to notify you and then for you in turn to subsequently notify the manufacturer within such timescale. This is especially the case if you consider the implications of any contractual notice provisions, which could delay the deemed receipt of any notices.

3. Take out comprehensive cover

It is imperative to identify any gaps between what defaults you are willing to rectify, and therefore take the risk on, and what your suppliers and consultants are liable for. By identifying these ‘gaps’, you are then able to fully and adequately cover your business by arranging a comprehensive insurance policy.

4. Be clear about your model for generating Feed-in-Tariff income

It will often depend on the size and nature of individual solar installation projects, but you need to have a clear business model and strategy for how you benefit from Feed-in Tariff payments. Are these going solely to the customer? Or are you taking a lease of the project once installed and receiving the income? With the planned cuts to the Feed-in-Tariff for domestic solar customers, and the pending removal of the Climate Change Levy exemption for commercial schemes, you should take clear professional advice on this.

5. Manage expectations of performance

As part of the sales and marketing process, you will often provide an assessment of how any solar panel installations should perform, but quite often these are based on certain assumptions, and may use formulas which other parties have developed. You should therefore have a clear disclaimer against guaranteeing any levels of performance from the system in your terms and conditions.

6. Be clear about responsibilities on delivery of materials to site

The customer should always take full risk in all and any materials delivered to the installation site, and should not under any circumstances tamper with or attempt to install them. They should also provide a secure, weather-proof storage area for them until they are ready to be installed.

7. Avoid confusion over hidden consultant costs

In ensuring that the installation complies with planning and building regulations, it will be necessary to employ a range of consultants, such as planning experts, local authority inspectors and so on. These need to be clearly recorded and costed into the job as it is extremely important to be clear about how these costs are paid. Will they be priced into the quotation for the work? Or will the customer pay them direct? This is another important element of your terms and conditions.

The above is by no means an exhaustive list of what terms and conditions solar energy providers need to have. There are many other factors you will need to consider, particularly in such a niche and fast-growing industry where the potential for things to go wrong is significant. Always seek professional legal and financial advice at an early stage to ensure your business is protected.

As a business in the solar energy industry, what have you implemented to improve your terms and conditions? And how successful has this been?

For more information on improving your business terms and conditions for solar energy installations, or any other legal matter relating to renewable energy, please contact us on 01772 258321.