Over and over and over again: serial defect clause

The serial defect clause is a warranty frequently requested by customers.

It belongs to a classic “tryptic” of warranties allocating risk on the turbine suppliers:

• General warranty, for defect in design, manufacturing, installation, etc.
• Power curve warranty
• Serial defect warranty

Generally speaking, a serial defect is a component defective on a significant number of turbines. If there is a certain percentage of defective components, the warranty force the turbine seller to replace it on all the turbines.

As you will imagine, the tricky part is the specific definition of the clause.

Among the key point to be defined these are specially important:

1. The definition of defect / defective.
2. The time-frame for the defect to appear. How many years?
3. The reason for the defect. Is the root cause the same? You can have for instance many blade failures caused by different problems.
4. The percentage of failures needed to declare a serial defect. Is it 10%, 20%, more?
5. The population of turbines used to calculate the percentage of failure. Only the wind turbine in the wind farm, all the turbines of the same model owned by the customer, all existing turbines of the same model?
6. Who should confirm the existence of the defect. A reasonable compromise for this point can be an independent third party.

The reason behind this clause is that such serial defects happened in the past – not only in the infancy of the wind industry, but also in more recent years when components have been replaced on massive numbers of turbines, even of Tier 1 manufacturers.

Without this clause the buyer can be left in a very uncomfortable situation where maybe he is aware of the (latent) problem but only if the components that fail during the Warranty or Service period are replaced.