Shell fails to honor solar warranties

COLOMBO, Sri Lanka, Jan. 5 (UPI) -- The World Bank and green energy companies have accused oil giant Shell of not honoring warranties on solar power systems sold to the developing world, the Guardian reports.

At issue is the "widespread" breakdown of Shell solar equipment in Sri Lanka and other locations. Shell has since turned over the rural electrification business under which the Shell systems were sold, but critics say Shell is abandoning a responsibility to impoverished areas.

The World Bank, which provides financing packages to the developing world, said it was concerned about a situation in which about 700 solar systems appear to have failed and local suppliers risked going out of business, the article states.

The Shell solar system is equal to 30 percent of the annual income of the company's poor customers in Sri Lanka, explained Damian Miller, a former Shell manager who now heads his own solar business, Orb Energy.

"They could only afford a system because they could get a loan from micro-finance institutions or other banks. But now there are reports of thousands of Shell's [branded] solar panels failing in the field and Shell seemingly is not replacing them," Miller told the Guardian.

"Shell exited solar on a global basis, seemingly without due consideration to how after-sales service and warranty replacements would be provided, thereby damaging the very local solar industries it had earlier helped to create," he added.

Shell contends that it is being unfairly targeted and is doing all it can to sort out the issue, the article says. The company notes that in October 2007 it sold Shell Solar Lanka Ltd. to Environ Energy Global PTE Ltd., along with all liabilities.

"Specifically in order to protect customer interests, the terms of the transaction explicitly covered the management of all past, present and future liabilities, including warranty issues," said a Shell spokesman in The Hague, reports the Guardian.

"Environ Energy Global understands that resolution of this issue rests with Environ, but [its] own management team in Sri Lanka continues to approach Shell," the spokesman said. "We have asked Environ Energy Global to clarify responsibilities with [its] own management team in Sri Lanka."

The Anglo-Dutch oil group says the bulk of its former solar module manufacturing operation has also been switched to a new owner, Solar World.

Further complicating the situation, the Guardian says, is that Environ claims Solar World will not replace any modules without the appropriate warranty documents, which Environ says were destroyed by Shell prior to the switchover to Solar World. Shell told the Guardian this was not true.

Anil Cabraal, an energy specialist at the World Bank's Washington headquarters, has written to Shell asking for action. "I would like Shell to honor these commitments. We are not talking about millions of dollars here but hundreds of thousands," he told the Guardian.