Standard Electronic Surety Bonds

Surety Bonds for Solar and Wind

Advance Payment Bond - All States
Coverage:
Provides utility, project owner or EPC contractor with financial protection in the event modules are not delivered per supply contract terms, resulting in the advance payment being subject to refund.

Underwriting considerations:

Financial strength and track record of panel manufacturer.

Terms and conditions of supply contract.

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Supply Chain Performance and Payment Bond
Coverage:
Provides counter parties in the supply chain to with financial protection and cure in the event of a default under a supply contract,

Underwriting considerations:

Financial strength and track record of entity being bonded.

Terms and conditions of supply contract.

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Engineering, Procurement, Construction Payment Bond
Coverage:
Provides guarantee of payment to EPC contractor pending financing being in place to assume progress payment obligations.

Facilitates for long lead items to be secured.

The EPC bond will provide default protection, with the following understanding:

The bond backs a contract, so the underlying contract terms and conditions identifies what is covered by the bond, and the default provisions.

In the event there is a default by project owner (principal), and the cure has not been resolved, then the surety will cure the default by:

Taking over responsibility for the long lead items ordered but not delivered.
Pay the outstanding invoices for work performed.

To be most effective:

The underlying contract should be clear and precise as to what is covered under the bond, both in terms of long lead items and scope of work subject to invoices.

Invoices for work should clearly identify the work being performed as part of the itemized scope in the contract that is covered by the bond

Purchase orders for long lead items should clearly identify and tie to items identified in the contract.

Disputed items on an invoice need to be resolved prior to making a claim under the bond, or have supporting documentation that counters any defenses.
Notification to the surety should be concurrent with notices to project owner, with default cure requirement and timelines.

Simple underwriting requirements

Underwriting considerations:

Status of project

Status of financing being negotiated

Long lead items must be commercially available and marketable, and on approved list of manufacturers.

Notification to surety of nonpayment of monthly invoices must be timely, and within 30 days of nonpayment.

Term and premium earn:

Fully earned for first year, Pro-rata after first renewal

EPC Contractor Payment Bond
Coverage:
Provides facility owner with financial protection to guarantee payment to all subcontractors, vendors and suppliers, also to include payment of any other obligations that arise under the contract that are the obligation of the Principal.

Underwriting considerations:

Financial Strength and track record of EPC contractor.

EPC Contract terms and conditions

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

EPC Contractor Payment Bond with Design and Performance
Coverage:
Provides facility owner with financial protection to guarantee payment to all subcontractors, vendors and suppliers, also to include payment of any other obligations that arise under the contract that are the obligation of the Principal.

Clarifies coverage includes design and performance aspects of the contract

Underwriting considerations:

Financial Strength and track record of EPC contractor.

EPC Contract general terms and conditions

EPC Contract specific terms and conditions regarding design and performance aspects.

Insurance on design risk

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

EPC Contractor Performance Bond
Coverage:
Provides facility owner with financial protection to guarantee performance of contract through completion, and for the surety to facilitate curing a default..

Underwriting considerations:

Financial Strength and track record of EPC contractor.

EPC Contract general terms and conditions

EPC Contract specific terms and conditions regarding design and performance aspects.

EPC Contractor not responsible or liable for design risk

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

EPC Contractor Performance Bond with Design and Performance
Coverage:
Provides facility owner with financial protection to guarantee performance of contract through completion, including the design and performance components, and for the surety to facilitate curing a default.

Underwriting considerations:

Financial Strength and track record of EPC contractor.

EPC Contract general terms and conditions

EPC Contract specific terms and conditions regarding design and performance aspects.

EPC Contractor not responsible or liable for design risk

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

EPC Payment Bond with Solar Module Sublimit - All States
Coverage:
When EPC is already providing a 100% payment bond to a guarantee a prime contract that includes the purchase of modules, the module provider can be specifically named as an obligee for the modules being supplied to the project.

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Interconnection Payment Bond
Coverage:

During study phase - provides utility with withdrawal fee of 50% of network update estimate if project is withdrawn.

During construction - provides utility with full coverage of cost of construction estimates.

Underwriting considerations:

Study phase – Amount of estimated network upgrades

Construction phase – Commitment of funds to pay construction costs, and bonded contractor.

Risk mitigated by bonded contractor and funds in place during construction.

Term and premium earn:

Fully earned for first year, Pro-rata after first renewal

On Bill Finance - Utility Payment Bond
Coverage:
Provides the utility with protection against a ratepayer defaulting on their utility bill that includes On Bill loan repayment for installation of a solar system or other energy efficiency updates.

Underwriting considerations

Financial strength of utility ratepayer, and payment history with utility.

Program Outline: On Bill Surety Program

Term and premium earn:

Term dependent on On Bill Loan payback timeline
Fully earned for first year, Pro-rata after first renewal.

Power Purchase Agreement - Surety Payment Bond
Coverage
Provides for the cost differential incurred by the obligee between the cost of power that was contracted to be delivered, and the cost on the spot market that had to be paid.

Underwriting considerations:

Ability to monitor and measure system performance
Data analytics for valuation of solar facility

Anticipates delivery shortfalls will be limited and quickly resolved.

PPA terms and conditions

Quality of panels, invertors and equipment

Risk mitigated by insurance, data analytics, quality O&M services and risk transfer where possible.

Term and premium earn:

Up to twenty year annually renewable, premium fully earned first year.

Solar Facility Decommissioning Bond
Coverage
Provides for the removal of all panels and equipment at the end of the lease term.

Underwriting considerations:

Financial strength and track record of project owner.
Terms and conditions of decommission plan
Ability to monitor project performance.

Term and premium earn:

Up to thirty year annually renewable, premium fully earned first year.

Solar Facility Operations And Maintenance Performance Bond With Performance Guarantee
Coverage:
Provides facility owner with financial protection to guarantee performance of O&M contract, including the performance guarantee components, and for the surety to facilitate curing a default.

Clarifies coverage includes design and performance aspects of the contract

Underwriting considerations:

Financial Strength and track record of O&M contractor.

O&M Contract general terms and conditions

Term and premium earn:

Fully earned first year, pro-rata after first year

Solar Facility Operations And Maintenance Payment Bond
Coverage:
Provides facility owner with financial protection to guarantee payment to all subcontractors, vendors and suppliers, also to include payment of any other obligations that arise under the contract that are the obligation of the Principal.

Underwriting considerations:

Financial Strength and track record of O&M contractor.
O&M Contract general terms and conditions

Term and premium earn:

Fully earned first year, pro-rata after first year

Solar Facility Operations And Maintenance Performance Bond
Coverage:
Provides facility owner with financial protection to guarantee performance of contract, and for the surety to facilitate curing a default.

Underwriting considerations:

Financial Strength and track record of O&M contractor.

O&M Contract general terms and conditions

Term and premium earn:

Fully earned first year, pro-rata after first year

Solar Module Payment Bond
Coverage:
Provides panel manufacturer with financial protection in the event payment is not received for panels delivered.

Underwriting considerations:

Financial strength and track record of utility, project owner, or EPC.

Terms and conditions of supply contract.

Term and premium earn:

Fully earned first year, pro-rata after first year

Solar Module Supply Bond
Coverage:
Provides utility, project owner or EPC contractor with financial protection in the event panels are not delivered per supply contract terms.

Underwriting considerations:

Financial strength and track record of panel manufacturer.

Terms and conditions of supply contract.

Term and premium earn:

Fully earned first year, pro-rata after first year

Solar Module Warranty Bond
Coverage:
Provides utility, project owner or EPC contractor with financial protection in the event panels are defective per supply contract terms.

Underwriting considerations:

Financial strength and track record of panel manufacturer.
Terms and conditions of supply contract.

Term and premium earn:

Fully earned first year, pro-rata after first year

Wind Facility Decommissioning Bond
Coverage
Provides for the removal of all equipment at the end of the lease term.

Underwriting considerations:

Financial strength and track record of project owner.
Terms and conditions of decommission plan
Ability to monitor project performance.

Term and premium earn:

Up to thirty year annually renewable, premium fully earned first year.

Financial strength and track record of panel manufacturer.

Terms and conditions of supply contract.

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Surety Bonds for Standard Construction

General Contractor Payment Bond - All States
General Contractor Performance Bond - All States
Subcontractor Payment Bond - All States
Subcontractor Performance Bond - All States

Surety Bonds for Construction

General Contractor Payment Bond
Coverage:
Provides facility owner with financial protection to guarantee payment to all subcontractors, vendors and suppliers, also to include payment of any other obligations that arise under the contract that are the obligation of the Principal.

Underwriting considerations:

Financial Strength and track record of EPC contractor.

Contract terms and conditions

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms

General Contractor Performance Bond
Coverage:
Provides facility owner with financial protection to guarantee performance of contract through completion, and for the surety to facilitate curing a default..

Underwriting considerations:

Financial Strength and track record of contractor.

Contract general terms and conditions

Contract specific terms and conditions regarding design and performance aspects.

Contractor not responsible or liable for design risk

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Subcontractor Payment Bond

Coverage:
Provides facility owner with financial protection to guarantee payment to all subcontractors, vendors and suppliers, also to include payment of any other obligations that arise under the contract that are the obligation of the Principal.

Underwriting considerations:

Financial Strength and track record of EPC contractor.

Subcontract terms and conditions

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Subcontractor Performance Bond
Coverage:
Provides facility owner with financial protection to guarantee performance of contract through completion, and for the surety to facilitate curing a default..

Underwriting considerations:

Financial Strength and track record of subcontractor.

Subcontract general terms and conditions

Subcontract specific terms and conditions regarding design and performance aspects.

Subcontractor not responsible or liable for design risk

Term and premium earn:

Fully earned for one or two year period depending on surety program, with surcharge for longer terms.

Standardized Electronic Surety Bonds

2019 06-02 XBRL-CET Standard Electronic Surety Bond

2019 06-02 XBRL-CET Standard Electronic Surety Bond - Bond Text Only

2019 06-02 XBRL-CET Standard Electronic Surety Bond - Data Elements Only - Excel

2019 06-02 XBRL-CET Standard Electronic Bond Form - Data Element Information

Electronic Surety Bonds

Frequently Asked Questions

What is the legal difference between a manually prepared paper bond and an electronic bond?

Nothing, they both have the same legal standing.

How is the process for securing an electronic surety bond different than a paper bond?

There is no difference, the surety broker develops the underwriting submission and the surety company authorizes the extension of surety credit based on its underwriting.

The efficiency for exchanging underwriting data does not change the process.

What is the efficiency difference between a manually prepared paper bond and an electronic bond?

The processing and administrative time for the manually prepared paper bond is extensive and costly for all stakeholders.

The various paper forms require individual handling as the data elements can vary and data needs to individually inserted throughout the form, along with the expense of generating and executing the power of attorney, notary and shipping documents.

For those receiving the bond the expense of validating the bond, verifying it is correctly executed and then manually extracting and rekeying the data into their respective systems compounds the high cost of paper bonds.

The electronic bond can be executed online and administered cost effectively.

How does the XBRL-CET standard electronic bond improve efficiency over the paper bond?

The established “Data Set” of data elements utilize the XBRL taxonomy to assure “apples to apples” reliability of the data to enable data exchange throughout the ecosystem of stakeholders.

This data interoperability will enable system designers and programmers to develop data analytical tools with digital administrative processes unique to their respective needs.

How can just the one XBRL-CET standard electronic bond form cover all the different obligations, contracts and circumstances?

The XBRL-CET Standard Electronic Surety Bond backs a contract or obligation, it does not define the obligations of the surety under the contract, the contract defines the obligations and cure options for a default.

The XBRL-CET Standard Electronic Surety Bond includes all the data elements for incorporating the underlying contract and/or obligations by reference, so the bond itself does not have to repeat terms and conditions, which also eliminates any conflicts in coverage interpretation.

The XBRL-CET Standard Electronic Surety Bond utilizes standardized text for surety bond terms and conditions, including how claims are handled, referencing the data elements instead of requiring form filling. This allows stakeholders to focus on data elements for the information needed, confident in the terms and conditions of "boiler plate text" without the need for additional review.

The XBRL-CET Standard Electronic Surety Bond also includes data elements for monitoring and measuring contract compliance along with data elements for communication between stakeholders to make the surety product more reliable and predicable.

Surety Bonds for Solar and Wind

Advance Payment Bond - All States

Supply Chain Performance and Payment Bond - All States

Engineering Procurement Construction Payment Bond - All States
EPC Contractor Payment Bond - All States
EPC Contractor Payment Bond with Design and Performance - All States
EPC Contractor Performance Bond- All States
EPC Contractor Performance Bond with Design and Performance- All States
EPC Payment Bond with Solar Module Sublimit - All States
Interconnection Payment Bond - All States
On Bill Finance - Energy Efficiency Upgrades - Utility Payment Bond - All States
On Bill Finance - Solar Projects - Utility Payment Bond - All States
Power Purchase Agreement Surety Payment Bond - All States
Solar Facility Decommissioning Bond - All States
Solar Facility Operations And Maintenance Performance Bond

With Performance Guarantee - All States
Solar Facility Operations And Maintenance Payment Bond - All States
Solar Facility Operations And Maintenance Performance Bond - All States
Solar Module Payment Bond - All States
Solar Module Supply Bond - All States
Solar Module Warranty Bond - All States

Wind Facility Decommissioning Bond - All States