Solar O&M contract in Germany: what should the service provider check before signing?

What type of contract is a solar O&M contract under the BGB, and why does it matter?

An O&M contract is not a separate contract type under the German Civil Code (Bürgerliches Gesetzbuch, BGB). A promised result, such as keeping the plant functional and remedying faults, points to a contract for work (Werkvertrag, sec. 631 (1) and (2) BGB). A list of activities owed regardless of outcome points to a contract for services (Dienstvertrag, sec. 611 (1) BGB).

The Federal Court of Justice (Bundesgerichtshof, BGH) formulated this test for maintenance contracts on software and websites:

„Verträge über die ‚Wartung‘ oder ‚Pflege‘ von Software, EDV-Programmen oder Websites sind als Werkverträge einzuordnen, soweit sie auf die Aufrechterhaltung der Funktionsfähigkeit und die Beseitigung von Störungen (und somit: auf einen Tätigkeitserfolg) gerichtet sind, wohingegen ihre Qualifizierung als Dienstvertrag nahe liegt, wenn es an einer solchen Erfolgsausrichtung fehlt und die laufende Serviceleistung (Tätigkeit) als solche geschuldet ist.”

“Contracts for the ‘maintenance’ or ‘support’ of software, computer programs or websites are to be classified as contracts for work insofar as they are directed at maintaining functionality and remedying faults (and thus at a result of the activity), whereas classification as a contract for services is obvious where such a result orientation is lacking and the ongoing service (activity) as such is owed.”

BGH, judgment of 4 March 2010 – III ZR 79/09, para. 23 – our translation

The case law is not uniform. The Higher Regional Court (Oberlandesgericht, OLG) of Cologne treated a service contract for a photovoltaic plant as a Dienstvertrag because it listed services owed irrespective of need (judgment of 15 March 2017 – 16 U 104/16, para. 19). The BGH, by contrast, treated a contract to keep an area clear of snow and ice as a Werkvertrag despite a flat seasonal fee and a long term (default judgment of 6 June 2013 – VII ZR 355/12, paras. 9–12).

Classification matters. Under a Werkvertrag the owner has defect rights, including price reduction (sec. 634 no. 3 BGB), and defect claims for maintenance become time-barred two years after acceptance (sec. 634a (1) no. 1 and (2) BGB) or after completion where acceptance is excluded by the nature of the work (sec. 646 BGB). Under a Dienstvertrag there are no defect rights, and the owner claims damages for breach of duty (sec. 280 (1) BGB).

If the solar farm is a building structure (Bauwerk), a maintenance contract may even be a construction contract where the work is essential for the structure, its existence or its use (sec. 650a (2) BGB). Technical installations can themselves be building structures if they are firmly connected to the ground or to a building, even by their own weight, and are intended for permanent use (BGH, judgment of 2 June 2016 – VII ZR 348/13, para. 29). Whether a ground-mounted farm meets these criteria is assessed case by case.

How should the availability guarantee be drafted?

An availability guarantee is a contractual promise that the plant will be ready to generate for a set share of time or energy in a settlement period. The German Civil Code (BGB) does not regulate it, so the contract definitions decide: formula, period, data source and exclusions. The provider should only guarantee what it can influence.

A time-based formula measures the share of hours with irradiation above a threshold during which the plant was ready to operate, usually weighted by the capacity of the unavailable equipment. Example: a year has 3,000 such hours, and an inverter serving 10 % of the farm’s capacity is down for 120 of them. Availability is 100 % − 10 % × 120/3,000 = 99.6 %. With a 99 % guarantee no penalty arises, with a 99.8 % guarantee 0.2 percentage points are missing.

An energy-based formula compares actual output with expected output calculated from irradiation data, so the same outage costs more in June than in December. The period should be annual, as monthly settlement stops good months offsetting weak ones. The contract should also fix the data source, raw data access, a deadline for objecting to the report and the effect of data gaps.

The exclusions should cover grid events first. Operators of generating plants with a rated capacity of 100 kW or more must adjust their output when requested by transmission system operators (sec. 13a (1) of the Energy Industry Act, Energiewirtschaftsgesetz, EnWG), and the same applies to distribution system operators (sec. 14 (1) EnWG). The plant operator receives financial compensation for this (sec. 13a (2) EnWG), so such downtime should not count against the service provider.

Other usual exclusions are defined force majeure, waiting for manufacturer parts beyond an agreed period, lack of site access, owner instructions and agreed maintenance windows. The nature of the guarantee also matters. A debtor is generally liable only for fault, but stricter liability may follow from the contract, in particular from a guarantee (sec. 276 (1) sentence 1 BGB). A provider unwilling to answer for downtime it did not cause must say so expressly.

Availability penalties: contractual penalty or liquidated damages?

Payments for missing availability points can be a contractual penalty (Vertragsstrafe, sec. 339 BGB) or liquidated damages (pauschalierter Schadensersatz). With a penalty the owner need not prove loss, whereas with liquidated damages the provider may prove a lower loss or none. The primary purpose of the clause decides, not its label.

A contractual penalty puts pressure on the debtor to perform and spares the creditor proof of loss, and whether a penalty was agreed depends on the primary aim of the clause (Federal Labour Court, BAG, judgment of 22 February 2023 – 4 AZR 68/22, para. 25, relying on BGH case law). Liquidated damages in standard business terms (Allgemeine Geschäftsbedingungen, AGB) are permissible if they reflect the loss typically to be expected and the debtor can prove a lower loss (BGH, judgment of 10 February 2021 – KZR 63/18, headnote 2). Between businesses that proof need not be allowed expressly, but it must not be excluded (ibid., para. 33).

The statutory mechanics favour the provider unless the contract changes them. The penalty is only forfeited once the debtor is in default (sec. 339 sentence 1 BGB), and there is no default where the debtor is not responsible for the delay (sec. 286 (4) BGB). If the owner claims damages for the same breach, the penalty is the minimum amount of the loss and is credited against the damages (sec. 341 (2) in conjunction with sec. 340 (2) BGB).

The review of standard terms adds arguments. A single penalty amount for breaches of very different weight is valid only if appropriate even for the typically least serious breach (BGH, judgment of 20 January 2016 – VIII ZR 26/15, headnote 2), and an invalid clause is not cut back to a permissible level (ibid., para. 38). A clause allowing a penalty and liquidated damages to be claimed side by side disregards the crediting rule in sec. 340 (2) BGB and is invalid even between merchants (BGH, judgment of 24 June 2009 – VIII ZR 332/07, para. 12).

The 5 % cap comes from the BGH default judgment of 23 January 2003 – VII ZR 210/01 and concerns delay penalties in the employer’s standard terms of a construction contract. It does not transfer automatically to an O&M contract, which is assessed under sec. 307 (1) BGB. Individually negotiated penalties are not subject to the review of standard terms (sec. 305 (1) sentence 3 BGB), and a penalty promised by a merchant in the course of its business cannot be reduced under sec. 343 BGB (sec. 348 of the Commercial Code, Handelsgesetzbuch, HGB).

Are liability caps and exclusions of lost profit enforceable?

Liability caps and exclusions of lost profit are generally possible, within limits set by the German Civil Code (BGB). Liability for intent cannot be excluded in advance (sec. 276 (3) BGB). A cap in standard business terms (AGB) is also subject to review under sec. 307 BGB.

Sec. 309 no. 7 (a) and (b) BGB prohibits standard terms that exclude or limit liability for injury to life, body or health and for other losses caused by gross fault. The provision does not apply directly to businesses (sec. 310 (1) sentence 1 BGB), but a blanket exclusion of liability for personal injury and gross fault is invalid there too (BGH, default judgment of 19 September 2007 – VIII ZR 141/06, headnotes a and b, confirmed in the judgment of 3 February 2021 – XII ZR 29/20, paras. 48–49). Whether merely limiting liability for gross negligence is allowed between businesses was expressly left open (VIII ZR 141/06, para. 15).

A limitation of liability for simple negligence must not hollow out duties without which the contract cannot be properly performed and on which the other party is entitled to rely (sec. 307 (2) no. 2 BGB). The bare term “Kardinalpflichten” (cardinal obligations) without explanation lacks transparency even towards a business (sec. 307 (1) sentence 2 BGB, BGH, judgment of 20 July 2005 – VIII ZR 121/04, section X of the reasons). In an O&M contract, responding to faults may be such a duty, so the clause should describe it.

Excluding lost profit calls for caution, because the typical loss from plant downtime is lost electricity revenue. A complete exclusion in the provider’s standard terms risks being seen as undermining the purpose of the contract. A safer structure makes the availability penalties the exclusive compensation for lost generation up to an annual cap, with exceptions for intent and gross negligence.

Under a Werkvertrag, sec. 639 BGB must also be considered. A contractor who fraudulently conceals a defect or gives a guarantee as to the quality of the work cannot rely on an exclusion or limitation of defect rights to that extent. Whether an availability guarantee is such a quality guarantee depends on its wording, so its relationship to the liability cap should be set out expressly.

Who bears the risk of hail, theft and grid failure?

The contract allocates the risk of external events first. Under the German Civil Code (BGB) the provider is liable only if it breaches a contractual duty and is responsible for the breach (sec. 280 (1) BGB). Hail, cable theft or a grid outage are not in themselves a breach, unless the contract covers, for example, site security or a no-fault guarantee.

The general rules only provide a framework. If performance becomes impossible, for instance because a destroyed inverter can no longer be maintained, the claim to performance is excluded (sec. 275 (1) BGB) and, as a rule, so is the claim to the fee (sec. 326 (1) sentence 1 BGB). The provider keeps its fee where the owner is solely or predominantly responsible for the obstacle (sec. 326 (2) sentence 1 BGB). How these rules work with an annual lump sum and partial destruction of a farm is uncertain, so the contract should deal with it.

Under a Werkvertrag the contractor bears the risk of accidental loss of the work until acceptance (sec. 644 (1) sentence 1 BGB) or, where acceptance is excluded, until completion (sec. 646 BGB). Example: during a repair the provider lays a new section of cable, which is stolen before the repair is accepted. The loss may then fall on the provider, so the contract should specify when repair work is deemed accepted.

The contract should define force majeure (hail, storms, floods, theft despite agreed security), suspend availability counting during such events and treat remedying their effects as additional work under a price list. It should also separate the owner’s property insurance from the provider’s liability insurance and assign responsibility for fencing and CCTV. Output adjustments requested by the grid operator under sec. 13a of the Energy Industry Act (EnWG) should not count as unavailability.

How is a solar O&M contract terminated, and what must be handed over to a successor?

Termination depends on classification under the German Civil Code (BGB) and on the contract. Under a Werkvertrag the owner may terminate at any time until completion but owes the agreed fee less saved expenses (sec. 648 sentences 1 and 2 BGB). A fixed-term Dienstvertrag ends when the term expires (sec. 620 (1) BGB) and can be terminated earlier only for good cause (sec. 626 (1) BGB) or as the contract provides.

The BGH held that a customer may terminate a contract for work with a 36-month minimum term at any time, and that a contractual right to terminate for good cause does not exclude this (judgment of 27 January 2011 – VII ZR 133/10, headnote 1, on the former sec. 649 BGB). The contractor then receives the fee for the minimum term less saved expenses (ibid., para. 14), with 5 % of the fee for the unperformed part presumed (sec. 648 sentence 3 BGB), as explained in our article on compensation after termination of a construction contract.

Termination for breach of duty generally requires an unsuccessful deadline for remedy or a warning (sec. 314 (2) BGB, for a Werkvertrag via sec. 648a (3) BGB), and under a Dienstvertrag termination for good cause must be declared within two weeks of learning of the reason (sec. 626 (2) BGB). The OLG Cologne held that terminating a service contract for a photovoltaic plant without the written warning required by the contract was invalid and awarded the provider its fee for the period afterwards because the owner was in default of acceptance (sec. 615 BGB, judgment of 15 March 2017 – 16 U 104/16, paras. 21–25).

Long terms in the provider’s own standard terms have limits as well. The BGH held that a ten-year tie to a maintenance contract for a telephone system, combined with a unilateral right to raise prices without a right for the customer to exit, was invalid even against a merchant (judgment of 17 December 2002 – X ZR 220/01, decided under sec. 9 AGBG, the predecessor of sec. 307 BGB).

If the O&M contract were a construction contract (sec. 650a (2) BGB), termination would require written form (sec. 650h BGB), meaning a handwritten signature (sec. 126 (1) BGB), so it is prudent to observe that form in every case. The duty to hand over what was obtained in performing the mandate (sec. 667 in conjunction with sec. 675 (1) BGB) applies to contracts for the management of another’s affairs (Geschäftsbesorgung), and it is not settled that technical maintenance falls within that category. The contract should therefore cover documentation, export of monitoring data, system access, the spare parts stock and a transition period.

Construction and maintenance in one hand: how to separate the EPC warranty from O&M duties?

Where the same company built and maintains the solar farm, the owner can base a failure claim on defect liability under the EPC contract or on the O&M contract. The provider should separate construction defects from maintenance issues in advance and check how the maintenance award affects limitation of construction claims.

If the VOB/B conditions are incorporated into the EPC contract, a special rule applies. For parts of mechanical and electrotechnical or electronic installations where maintenance affects safety and functionality, defect claims become time-barred after two years, unless otherwise agreed, if the employer has decided not to entrust the contractor with maintenance during that period (sec. 13 (4) no. 2 VOB/B). For building structures the VOB/B provides four years (sec. 13 (4) no. 1 VOB/B). Awarding maintenance to the EPC contractor therefore preserves the longer period for those parts.

The German Civil Code (BGB) contains no comparable rule in sec. 634a. Defect claims become time-barred after five years for building structures and after two years for maintenance work, in both cases from acceptance (sec. 634a (1) nos. 1 and 2 and (2) BGB). Acceptance of the farm and acceptance of maintenance work should therefore be documented separately, as we explain in our article on solar farm acceptance in Germany.

Maintenance must be distinguished from repair. In a car maintenance case the BGH held that repairing damage discovered during maintenance is not part of the maintenance service and requires a separate agreement (judgment of 7 February 2019 – VII ZR 63/18, para. 22). An O&M contract should therefore separate preventive maintenance, repairs covered by the lump sum, warranty repairs under the EPC contract and repairs paid under a price list.

In a dispute about the cause of a failure, documentation decides. The BGH set aside a judgment holding the installer of swimming pool equipment liable for a fault that may have arisen during work under a separate maintenance contract between the owners and a third party, because the court had not heard the witness offered on that point (order of 29 March 2023 – VII ZR 7/22, paras. 19–20). Such a fault may not be attributable to the installer as the act of its vicarious agent (sec. 278 sentence 1 BGB). More on the burden of proof in our article on construction defects, and on EPC and O&M contracts on our page on solar farm contracts in Germany.

Frequently asked questions

Is a solar O&M contract a contract for work or a contract for services?
It depends on its content. A focus on functionality and fault removal points to a Werkvertrag (BGH III ZR 79/09), while a list of activities owed regardless of need points to a Dienstvertrag (OLG Köln 16 U 104/16).

Is an availability penalty due if the downtime was not the provider’s fault?
As a rule, no. The penalty requires default (sec. 339 sentence 1 BGB), and there is no default without responsibility (sec. 286 (4) BGB). It is different if the provider has given a no-fault guarantee (sec. 276 (1) sentence 1 BGB).

Does the BGH’s 5 % cap apply to O&M contracts?
Not automatically. The default judgment VII ZR 210/01 concerns delay penalties in the employer’s standard terms of a construction contract. A penalty in an O&M contract is assessed under sec. 307 (1) BGB (see BGH VIII ZR 26/15).

Can the service provider exclude liability for lost electricity revenue?
In an individually negotiated contract largely yes, except for intent (sec. 276 (3) BGB). In standard terms a complete exclusion of liability for gross negligence is invalid even towards businesses (BGH VIII ZR 141/06).

Do output adjustments ordered by the grid operator reduce availability?
Only if the contract does not exclude them. The plant operator must adjust output at the request of the transmission system operator (sec. 13a (1) EnWG) and receives financial compensation (sec. 13a (2) EnWG).

Can the owner terminate the O&M contract early?
Under a Werkvertrag at any time, against the fee less saved expenses (sec. 648 BGB, BGH VII ZR 133/10). Under a fixed-term Dienstvertrag only for good cause (sec. 626 BGB) or as the contract provides.

Basis of this article: BGH case law – judgments of 17 December 2002 – X ZR 220/01, 20 July 2005 – VIII ZR 121/04, 24 June 2009 – VIII ZR 332/07, 4 March 2010 – III ZR 79/09, 27 January 2011 – VII ZR 133/10, 20 January 2016 – VIII ZR 26/15, 2 June 2016 – VII ZR 348/13, 7 February 2019 – VII ZR 63/18, 3 February 2021 – XII ZR 29/20 and 10 February 2021 – KZR 63/18, default judgments of 23 January 2003 – VII ZR 210/01, 19 September 2007 – VIII ZR 141/06 and 6 June 2013 – VII ZR 355/12 and order of 29 March 2023 – VII ZR 7/22, as well as OLG Köln, judgment of 15 March 2017 – 16 U 104/16 and BAG, judgment of 22 February 2023 – 4 AZR 68/22. Provisions: sections 126, 275, 276, 278, 280, 286, 305, 307, 309, 310, 314, 326, 339, 340, 341, 343, 611, 615, 620, 626, 631, 634, 634a, 639, 644, 646, 648, 648a, 650a, 650h, 667, 675 BGB, section 348 HGB, sections 13a, 14 EnWG, section 13 VOB/B. Legal position: September 2026. This article is for general information and does not replace legal advice in an individual case.

Related topics