Deposits for solar installations should be protected in case the installer’s business goes into administration, warns renewable energy adviser Gareth Lay of Bruton Knowles.
Installer failure has become a growing problem in recent months for a range of reasons and Mr Lay is dealing with the consequences of this on behalf of several farmers and landowners.
“Carefully check the status and security of deposits where orders have been placed but not yet installed,” he advised. “The timing, amount and method of payment of the deposit should be checked when confirming the order. And you don’t simply have to sign on the dotted line – ask for variations if the terms are not right.”
Warning signs included high levels of deposit and payments being requested well in advance of installation starting, for example, a month before work begins. While installers needed to buy materials ahead of installation, deposits ranged anywhere between 10 and 50% of scheme costs when 20 to 25% would typically be sufficient, said Mr Lay.
“Deposits should be placed into a secure client account specifically set up to hold client deposits with the installer. This needs to be a separate account from those linked to the company’s own credit and banking facilities.
“Only when the goods are purchased on behalf of the farmer or landowner should the deposit be transferred from the installer’s client account into the company’s dedicated bank account. In some cases this may only be when delivery of the panels is taken.”
A further insurance was for those embarking on schemes to take delivery of panels direct to the farm in advance of installation starting and to insist that ownership of the panels is transferred to the scheme owner as soon as the panels are delivered.
For schemes larger than 100kW it may also be advisable to pay deposits into an Escrow account, said Mr Lay. These are held by a solicitor with terms agreed as to how and when deposits are drawn. “This may incur extra costs but provides strong assurances as to how the deposit is controlled and protected – both parties have to approve release of funds from such accounts.”
Panel pricing also currently a big issue – the threat of EU anti-dumping action against China has increased price volatility so it would be wise for anyone signing agreements now to seek price guarantees from their supplier, advised Mr Lay.
Risks concerning deposit protection generally only applied to commercial schemes, said Mr Lay. Domestic schemes are protected under Renewable Energy Consumer Code (RECC) guidance, which requires installers to place deposits not exceeding 25% in an approved protected payment scheme insurance account.