🌞 Navigating the Solar Market: Avoiding the Pitfalls of Bankrupt Providers

Homeowners who want to save money and benefit the environment by producing their own energy have embraced it in ever-growing numbers. The explosion of the solar industry over the past two decades brought a surge of start-ups and manufacturers, but many have been faltering – and failing. The industry has been strikingly susceptible to boom and bust cycles. Some solar companies appear to be doing fine, but, in fact, may be running at a loss. Why have so many gone under? What’s behind the appearance and the perception of solar companies that fail so quickly? How can consumers protect themselves from bad investments? Here are a few of the many reasons why solar companies struggle financially and go bankrupt:

No Reserves for a Slowdown

The US solar industry is increasing at a nearly exponential rate. Between 2009 and 2013, employment in the US solar industry grew 212 per cent, and at the same time US residential installations increased 310 per cent. Solar companies are springing up almost everywhere to keep up with the demand, producing everything from panels to complete systems. Unfortunately, this rapid growth puts these companies at a greater risk of failure. Many are growing too quickly (or with borrowed capital) without putting aside sufficient funds for a slowdown or fluctuation in demand.

The Boom and Its Aftermath

What does the significant rise of the Australian solar market in the early 2000s tell us about the boom in renewables? Certainly, from a technological and environmental point of view, the decade was one of immense change. Solar panels and the potential for renewable energy had moved from the fringe to the realm of potential mass-market consumer products. In many ways, you could say that this period was a ‘gold rush’ in which a range of new companies rushed to enter the market in response to what appeared to be high demand. The problem was that not all of these companies were in the business for the long term, or were committed to giving customers the highest level of service or product quality. For some, making as much money as possible by being involved in the industry for as short a time as possible was the driving force. Many of these companies are no longer in business.

Common Pitfalls Leading to Bankruptcy

Several key issues have been identified among solar companies that eventually went bankrupt:

• Compromise on Component Quality: Most of the companies recognised as failures on our test can be attributed to providing lower quality components, which in turn led to system failure and customer dissatisfaction.
• Unethical Business Practices: It is not unheard of for other companies to conduct such practices as overpromising on system performance, including direct comparison of features not even offered, or ‘forgetting’ to prioritise customer service.
• Poor Installation Standards: Failure to correctly install heating systems can compromise efficiency but also jeopardise property and people leading to poor customer experiences and legal battles.

Moreover, these companies were absent in the local community, meaning that the customer, faced with any kind of dispute, was left with no recourse – a circumstance known to remove any feeling of trust in anything.

Finding Quality Solar Providers

While these challenges make the sector a bit bumpy to navigate, when approached with the right strategies, finding reliable solar providers is quite easy.

• Look for CEC Approval: The Clean Energy Council’s accreditation is the benchmark of quality and reliability for solar installers.
• Ascertain Local Presence: There’s no value in purchasing equipment from a remote vendor who won’t be there to help you should any issues arise after installation. With a local provider, you’ll be better able to maintain the vitality of your system.
• Quarterly and Yearly Review: You can review your usage with a quarterly readout from your utility company, or a yearly review of your usage data. Both can help you determine the best size of solar energy system.
• Measure Your Roof: Measuring your roof can give you a good estimate of how much sunshine it receives during the day. Having this information can help you determine the optimal placement of solar panels.
• Compare Quotes from Various Providers: Compare different offers and get quotes from different sellers to find the best deal for you.
• Read Feedback and Reviews: By doing this, you can minimize any additional costs for inverter equipment and financing.

To summarise, although the fast-growing solar industry has experienced its share of irrational exuberance, and there have been some casualties among the operators of solar sales companies, well-informed consumers are well positioned to deal with the solar industry. Grid-tied homeowners can still buy quality systems that will make good long-term economic sense, help make a clean energy revolution possible, and jump-start a new generation of local manufacturing.