Solar cell guarantees: When recycling gets expensive

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By John McKenzie, William Coatesworth, Neil Cantle | 16 May 2011
<p>While solar energy producers have a bright future ahead, how manufacturers handle guarantees for waste recycling and product reliability may determine who ultimately survives. The uncertainty around these guarantees highlights a critical exposure producers face: potentially large liabilities down the road. This also puts at risk those that finance solar energy manufacturers, including banks, equity investors, and debt investors.</p><p>For solar producers, one big concern involves managing the recycling cost of the material when it reaches the end of its useful life. There are also product guarantees, the promises by producers that panels will perform above a certain level of efficiency over a long time period, generally 20 years or more.</p><p>Solar producers and stakeholders need to carefully consider the potential balance sheet and financial consequences of these risks, and set up a way to protect themselves from liabilities getting out of control.</p></abstract>