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Performance Surety Bonds for Solar Contractors

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Solar contractor performance surety bonds are often required by state, municipal or federal conservation or environmental entities otherwise known as the “Obligee” for utility, commercial or residential use. The entities regulating solar equipment installation and the removal or decommissioning of the equipment at the end of its lifespan and the restoration of the surface of the land often require a financial guarantee in which a surety bond may meet this requirement.

Obligee and Bond Conditions:

The Obligee is the entity that requires a form of financial guarantee for a solar installation project. The bond ensures compliance of municipal, federal and state laws. Failure to comply or perform in the manor prescribed by the Obligee may result in a claim filed against the financial guarantee. In the instance of a surety bond, when the Obligee files a claim against the surety bond, the contractor (named as the principal on the bond form) will be responsible for repayment of the claimed amount that the surety paid out. This may be a fraction of the bond amount or up to the entire bond amount.

The surety bond or financial guarantee must be in place from the time of the initial permit up to completion of the utility, commercial or residential solar project and most likely will not have the option to be canceled. The premium will renew on the bond on an annual basis for the life of the project. If the project transfers to new ownership, a new bond or financial guarantee most likely will be required to fulfill the bond conditions. Failure to maintain a bond in most cases will result in a claim by the Obligee.

The surety bond also ensures the removal of the solar equipment and the land and surface restored to its natural space. The process of the decommissioning of solar equipment must pass through an inspection process to ensure the surface restoration meets the standard requirements set by the Obligee. After the Obligee releases the bond, the premium for the bond will no longer be required.

Surety Bond Requirements:

A surety bond may be required by the Obligee and may or may not be a contract requirement. A solar system surety bond may be required for multiple years (sometimes up to 20 years or longer) and ensures the removal of the equipment and the restoration of the land.

The bond amount varies by each Obligee. In some cases the bond may only be $5,000 but other Obligees may require up to a $250,000 or more surety bond. Because the bond amounts vary the applicant will need to contact the requiring Obligee to find out the particular requirements for the surety bond that is needed.

Depending on the wording in the surety bond and contract form (if applicable), the bond amount required, an underwriter may request personal and business financial statements, resumes of experience in the industry, and in some instances will require a deposit known as collateral which is a financial guarantee in the event the contractor were to default on the bond and cause claim actions. The funds held in collateral will be paid out first to resolve the claim issue. If the claim exceeds the collateral, the surety will pay up to the entire bond amount and the principal is required to reimburse the surety for this occurrence.

The surety bond or financial security may be referred to as a efficiency guarantee, performance bond or performance guarantee, financial guarantee bond, warranty bond or other such terms. Regardless of what the bond is called, SuretyGroup.com works with various sureties to get you the lowest rates possible.

How Much Will This Bond Cost?

The premium that you pay for an Solar Contractor Performance Surety Bond is dependent on credit and the requirements for your project. For bond amounts over $50,000, personal and business financial statements will be required.

Did You Know?

According to data from 2016, California generates the most solar power in America, followed by North Carolina, Arizona, Nevada, New Jersey, and Utah. The Solar Foundation, “National Solar Jobs Census”

Related Links:

Solar Power Authority
Solar Power World

More Surety Bond Questions?

Check out our FAQ page or What’s a Surety Bond? page. Should you need or choose to buy a surety bond, buy from us. SuretyGroup.com has been underwriting surety bonds throughout the U.S. for more than 35 years. When you work with us, you enjoy the unique benefit of dealing with a team of highly experienced surety agents with in-house underwriting authority. This allows you to receive competitive, low rates, quick approvals, and immediate bond delivery. In most cases, your bond will be delivered within 24 hours after you apply for it.


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