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Does a Roof's Warranty Remain Effective Under Solar Panels?
Editor's Note: The growing interest in alternative fuel sources may be a boon for property owners seeking new ways to generate profits and savings. A landowner might install solar panels on a warehouse roof and operate them to produce free energy, selling any excess electricity to the local electric company. But other money-making arrangements can also be made. For example, a landowner might lease roof space (or a parking lot or adjacent unused empty lot) to a solar power producer who would install its own solar panels, manage their production of energy, and reap any profits therefrom. A third arrangement is a sort of hybrid of the two, called a Power Purchase Agreement (PPA). Under a PPA, the landlord leases roof space to another party, which installs and runs the operation but then sells some of the electricity that is generated back to the landlord, at an agreed-upon rate that is lower than what the local utility company would charge. All of these options may look like win-win situations, but, as the author of the following article explains, care should be taken when a roof is the proposed site of a solar-panel installation, whether managed by a property owner or by a lessee.
As commercial and residential property owners respond to the demands for clean energy motivated by carbon emissions concerns and the budgetary prerogatives of energy cost and governmental enactments creating financial incentives, solar installations are becoming more common both nationally and on a state-specific basis. For instance, as of 2018, despite its relatively small land area, New Jersey ranked sixth among the states in total installed solar capacity, and has seen a dramatic increase in solar coverage over the last 10 years. See, http://bit.ly/2WFGPNo.
Solar panels and related infrastructure are often constructed as rooftop-mounted facilities, and the advantages of solar power installation should be weighed against the preservation of the structural integrity and the useful life of the rooftop structures themselves. In particular, property owners should ensure that the warranty covering the roof itself remains effective in the context of the additional roof penetrations, weight, and wind loads the installation and continued presence of solar panels create. Legal practitioners should be mindful of the concerns of warranty coverage or preservation in the draft of solar power purchase agreements (PPA) and engineering, procurement and construction (EPC) agreements.
Two Stages Where Problems May Occur
At the outset, it is important to distinguish two essential types of conditions or issues with respect to solar roof installations with different implications for warranty and liability issues: 1) the fundamental warrantability or insurability of the roof following the installation work; and 2) whether and to what extent a warranty will cover the condition of the roof based on events subsequent to installation.
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