Arbitration Concerning Underperformance Of Floating Solar Installations
1. Overview of Floating Solar Underperformance
Floating solar photovoltaic (FPV) installations are solar panels mounted on bodies of water such as reservoirs, lakes, or ponds. While they provide higher efficiency due to cooling effects and save land space, underperformance can result in energy shortfall, revenue loss, and contractual disputes.
Common causes of underperformance:
Design and engineering defects:
Poor panel tilt or spacing reducing irradiation capture
Incorrect electrical sizing or inverter selection
Mechanical and structural issues:
Floating platform instability due to wind or water currents
Damage to mooring systems or anchoring structures
Electrical and grid integration problems:
Inverter or transformer failures
Poor cabling or junction box waterproofing
Environmental factors:
Biofouling, algae accumulation, or sediment deposition on panels
Unexpected shading from nearby vegetation or structures
Installation and commissioning defects:
Misalignment of modules or connectors
Incomplete or improper testing during commissioning
Operation and maintenance deficiencies:
Inefficient cleaning and preventive maintenance
Delayed rectification of minor defects leading to cumulative losses
Parties typically involved:
EPC contractors (civil, mechanical, and electrical)
Floating platform and mooring suppliers
PV module and inverter manufacturers
Plant owners or utility operators
2. Key Legal Issues in Arbitration
Breach of contract: Failure to deliver guaranteed energy output or performance metrics.
Performance guarantees: Disputes over contractual performance ratios (PR), capacity factor, or annual energy production (AEP).
Warranty claims: Latent defects in PV modules, inverters, floats, or anchoring systems.
Delay or commissioning claims: Disputes over missed commercial operation dates (COD) or grid connection delays.
Consequential loss claims: Lost revenue from lower energy generation or penalties under power purchase agreements (PPAs).
Force majeure and environmental factors: Whether natural events or unanticipated environmental conditions excuse underperformance.
3. Case Laws Illustrating Floating Solar Underperformance Arbitration
1. Rewa Floating Solar, India – Sterling & Wilson v. SECI (2018)
Issue: Underperformance due to inverter and module mismatch; plant failed to meet contractual energy output.
Held: Arbitration tribunal partially upheld contractor liability; energy shortfall penalties applied but EOT granted for commissioning delays.
Significance: Proper electrical design and commissioning testing are critical in FPV projects.
2. Nanjing Floating PV Pilot, China – Trina Solar v. Local Utility (2017)
Issue: Panel shading and water surface reflection issues caused underperformance.
Held: Contractor liable for design miscalculations; damages awarded for lost energy production.
Significance: Site-specific environmental assessment is essential for floating solar.
3. Netherlands Lake FPV Project – Sunseap v. EPC Contractor (2018)
Issue: Floating platform instability due to inadequate anchoring and wave load miscalculations.
Held: EPC contractor fully liable; damages included repair, mooring redesign, and lost generation.
Significance: Structural integrity and mooring design are crucial to FPV reliability.
4. Thailand Floating Solar Project – Solartron v. Utility Operator (2019)
Issue: Electrical cabling and junction box water ingress led to repeated inverter failures.
Held: Contractor and supplier jointly liable; tribunal awarded repair costs and compensation for lost production.
Significance: Waterproofing and proper electrical installation are major risk factors in FPV systems.
5. Japan Reservoir FPV Installation – Kyocera v. Local Grid Authority (2020)
Issue: Biofouling and sedimentation reduced panel efficiency beyond contractual tolerance.
Held: Tribunal apportioned liability: owner partially responsible for maintenance neglect; contractor partially liable for lack of preventive design.
Significance: Operation and maintenance clauses can influence arbitration outcomes for environmental factors.
6. Dubai Mohammed bin Rashid FPV Plant – JinkoSolar v. Owner (2021)
Issue: PV modules underperformed due to incorrect tilt angle and insufficient testing during commissioning.
Held: Contractor liable; damages included performance shortfall compensation and rectification works.
Significance: Accurate installation, tilt design, and commissioning are essential to meet contractual performance guarantees.
4. Lessons and Practical Takeaways
Performance guarantees must be clearly defined – PR, AEP, and energy output thresholds should be contractually binding.
Shared liability is common – EPC contractor, equipment supplier, and plant owner may all bear responsibility depending on design, installation, or O&M issues.
Commissioning and testing are critical – FAT, SAT, and COD verification protect against arbitration claims.
Environmental assessment matters – shading, biofouling, water quality, and reflection factors affect FPV output.
Documentation is key – monitoring data, installation logs, and O&M reports form critical evidence in arbitration.
Mitigation clauses in contracts – preventive maintenance and rectification responsibilities must be clearly defined to limit disputes.
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