Solar Panel Bankruptcy Insurance – New Financial Instrument by Munich Re for Small Solar Companies / Developers

Solar Insolvency Protection is a new financial product that is going to be introduced by Munich Re the giant German reinsurer. Note Munich Re has been at the forefront of introducing insurance products for solar energy. It was one of the first companies to provide an insurance against the 25 year solar warranty which is generally given by solar companies for their solar modules.It has introduced it for LDK Solar Panels before moving onto other companies as well.

Now the threat of insolvencies has increased, Munich Re has got a new financial instrument for these bankruptcy times. Note a number of solar companies have gone bankrupt , Evergreen Solar , Solyndra and Solon among the famous ones. With prices low and margins  non existent , many other small solar companies are expected to go under in the next year or so. Despite a surge in German solar demand in December, things are still pretty bad with solar panel prices near 80c/watt and most companies bathed in red ink. Some of the biggest solar companies like LDK are effectively insolvent as well without the Chinese government support.

Munich Re has played the renewable energy game quite well. It has also invested its long term money into green energy projects which give good returns with very little risk as the returns are implicitly backed by the governments.Munich Re is also a member of the Desterec project which aims to build gigawatts of solar farms in the Sahara.

LDK and Sunpower would have been bankrupt

LDK Solar is one of the most insolvent companies in the world right now with billions of dollars in debt,a battered balance sheet,continuing losses and dodgy accounting.However LDK has acquired a German company Sunways and continues to build new solar power plants as the Chinese state owned banks continue to fund it with cheap money without any consideration about losing their investments.LDK has become the poster boy of the Solarworld complaint against Chinese solar panel producers as it continues to run and thrive despite being insolvent.The Chinese government is hurting itself and its other solar companies like Trina,Yingli which are more competitive by continuing to support and increase the global glut of cheap solar panels.These solar panels are being clearly sold at below cost as most of the companies would be bankrupt without these absurd loans which make no free market sense

Sunpower another of the biggest solar companies in the world too is surviving due to its big parent Total.Note the CEO of Total was candid enough to say that Sunpower would be facing Chapter 11 without its support.Total just increased stake in Sunpower as the company continues to make losses.Sunpower has a high cost structure which in these times means you are dead

Munich Re New

Munich Re said it is offering to insure solar park operators against the risk of their suppliers going bankrupt, saying such cover will make it easier to obtain bank loans to finance major projects.Munich Re said it developed the new insurance product jointly with Deutsche Bank, and sold it for the first time to the operator of a solar park project in southern Italy, jointly financed by Deutsche Bank and Rabobank.