Actual cash value of a PV system

Replacement value, actual cash value, income value

Why actual cash value is often not enough

Module prices have fallen sharply since 2010. The replacement value of a system from 2011 is a fraction of its original price today, and its actual cash value correspondingly low. Its economic value, by contrast, is often far higher because of the high tariff. If such a system is destroyed and not replaced in a way that preserves the tariff, the difference is lost. Since Germany's Solar Package I, modules on buildings can be replaced regardless of a defect without losing the tariff entitlement for the original capacity (Clearingstelle EEG|KWKG, in German). The replacement must be reported to the grid operator.

What we check after damage

• Extent of damage using thermography, electroluminescence and IV curves, including modules without visible damage
• Cause (hail, storm, overvoltage, installation error) and distinction from prior damage
• Replacement value, actual cash value and cost of tariff-preserving restoration
• Loss of income until restoration

More on damage assessments on the page PV assessment.

How the deduction for age is determined

There is no fixed table for the actual cash value. The assessor takes the replacement cost of a technically equivalent system on the day of loss and deducts what age, wear and condition have consumed. The yardstick is the service life of each component.

Modules age slowly. The US research laboratory NREL analysed almost 2,000 measured degradation rates and found a median loss of 0.5 % per year (NREL). Inverters usually last 10 to 15 years. A 14-year-old inverter is therefore almost fully consumed, the modules next to it are not.

The 20-year tax life from the German Federal Ministry of Finance depreciation table (overview by Lexware, German) does not help here. It governs depreciation and says nothing about condition.

Replacement-value insurance and reinstatement

Many PV insurance policies pay replacement value. The part above the actual cash value, however, is often only paid once the system has actually been reinstated. Section 93 of the German Insurance Contract Act expressly allows such a reinstatement clause (§ 93 VVG, German). If a system is not rebuilt after a hailstorm, or rebuilt too late, only the actual cash value is paid.

In our report we therefore state replacement value, actual cash value and reinstatement cost separately, plus the loss of yield until recommissioning. That loss depends on the tariff and the length of the outage.

Hidden damage after hail

After a hailstorm many modules look intact. Micro-cracks in the cells only show up under electroluminescence. At first they cost hardly any output, but they grow with every temperature cycle and lead to hotspots and yield loss years later. For the actual cash value, what counts is therefore not only what is broken today but also the condition of the modules that are still running.

What the insurer wants to see

A claim notification with date, photos of the damage, the commissioning report, invoices, maintenance records and yield data before and after the event. Without yield data the loss of yield can only be estimated, which rarely works in the operator's favour.

Who commissions the assessment

The insurer usually sends its own loss adjuster. As operator you may additionally appoint an independent expert. Some policy terms provide for an expert procedure in disputes about the amount, in which each side appoints one assessor. An independent report before settlement often saves months in such cases.

Frequently asked questions