Production Guarantees That Pay Pennies

A production guarantee promises that if your system makes less electricity than estimated, the company will pay you for the shortfall. That sounds like strong protection against an inflated estimate. But the details usually limit it so much that it pays little even when the system underperforms. A guarantee is only worth what its fine print says.

Why salespeople lead with it

“Guaranteed” is a powerful word. It makes an aggressive production estimate feel safe, and it suggests the company is confident. But a guarantee that pays pennies costs the company very little, even if the estimate was optimistic. It can make an inflated estimate look trustworthy. See inflated production estimates.

The common limits

• Partial coverage. The guarantee kicks in only below a threshold, such as 90% or 95% of the estimate. The first 5% to 10% of shortfall is yours.
• Low payout rate. Shortfalls are paid at a fixed rate per kWh, which may be below what you actually pay the utility.
• Long look-back periods. Production is measured over two or three years, so a bad year can be offset by a good one, and you wait to be paid.
• Exclusions. Weather, new shading from trees or buildings, grid outages, monitoring or internet failures, and anything you did to the system.
• Claims process. You may have to request payment, provide data, and do it within a deadline.
• Company survival. A guarantee from an installer that later goes bankrupt pays nothing. See installer bankruptcy risk.

A worked example

The illustrative numbers below show how the limits stack up. Your proposal estimates 10,400 kWh a year. The guarantee covers 90% of that and pays 10¢ per kWh of shortfall. Your utility charges about 18.3¢/kWh, the U.S. average as of July 2026 (EIA).

The system actually produces 8,800 kWh, about 15% below the estimate.

	Amount
Shortfall vs estimate	1,600 kWh
Value of that shortfall at your utility rate	about $293
Guaranteed level (90% of 10,400)	9,360 kWh
Shortfall the guarantee covers	560 kWh
Payment at 10¢/kWh	$56

You lose about $293 of expected savings and get $56 back, and only if you file the claim and none of the exclusions apply. Over a 25-year plan built on the inflated estimate, the gap adds up.

How it shows up in a contract

• “Performance guarantee” or “production guarantee” in the marketing, with a separate addendum holding the real terms.
• Phrases like “90% of estimated annual production,” “measured over a 36-month period,” or “compensated at $0.XX per kWh.”
• Requirements to keep monitoring connected to Wi-Fi, or lose coverage.
• Guarantees issued by the installer only, not a manufacturer or insurer.

Questions to ask

• “What percentage of estimated production is guaranteed?”
• “What rate do you pay per kWh of shortfall, and how does that compare to my utility rate?”
• “Over what period is production measured, and how do I file a claim?”
• “What’s excluded? Weather? Shading? Monitoring outages?”
• “Who pays the guarantee if your company closes?”

What to do instead

The best protection is an honest estimate. Check it with our production checker, which uses the national lab’s PVWatts model, and compare all your quotes’ estimates in the quote comparison tool. After installation, track output monthly; our guide on whether your solar system is working shows how. Also read why your electric bill is still high with solar.

If a company refuses to honor a written guarantee, file complaints with your state attorney general and the FTC at reportfraud.ftc.gov. If the system was financed, you can also contact the CFPB.