Why Do So Many Solar Companies Go Bankrupt?

The “Solar Boom”

The solar industry in 2021 is booming. It looks vastly different compared to its situation 10 years ago when solar first started building momentum. From dramatic price drops, to the improved manufacturing process, solar is more affordable and well-received amongst homeowners and businesses then ever before. In the middle of this “solar boom” however, many solar companies are leaving the industry. Unfortunately since 2011, the list is long of solar companies that have closed, gone into bankruptcy protection, received bail out funds (like Solar City now Tesla) or sold at fire sale prices. This leads to an epidemic of installed systems where the retailer is no longer around. These systems are referred to as ‘orphaned’ systems. In an industry with such a bright future, how is it possible that an alarming number of solar companies have gone out of business?


Why does a Solar Company Goes Bankrupt?

When a solar company decides to close, it can often come down to their approach to the market. Race to the bottom pricing may lure customers in, but what lies beneath are poor business practices and slim margins to provide long term service. Many solar companies go into bankruptcy protection when they repeatedly face claims due to poor workmanship, product malfunction or failure and are unable to rectify these.  

This is usually when the company decides to declare bankruptcy, as it would cost them less instead of trying to service a huge number of failed installations. This leaves the customer with very few options for replacing their faulty product, often leaving them to scrap their current system and start again with another company. This is extremely costly for the customer but could be prevented by choosing a reputable company with longevity. 


What should consumers know?

For those looking to install a solar PV system, here’s what you should know:

  1. Do your research

As with any investment you make, doing research is a critical aspect of ensuring you choose the right service provider. Online research can include doing a contractor CSLB check of the company, such as checking the office address is a legitimate location. You should also confirm that the company has been around for more than 5 years, as the 5-year mark is often when things can start to go wrong with a system. If a company can get through this period, you have a better chance of them sticking around.

We also recommend reading reviews as this will give you an indication of how the company engages with its customers and handles their disputes. Reading up about the company and the products being offered is also extremely important, as this provides you with a good understanding and knowledge of what you’re getting into.

  1. Compare Options

We always encourage our customers to get multiple quotes. This ensures you’re getting a fair price and have a good understanding of what the average cost of your system should be for your recommended system size. If you’ve received a quote that is excessively cheaper than the other quotes, its more than likely that particular company is cutting costs somewhere along the process. In California the Avg cost per watt is between 3.00 and 3.30 before any cost adders or financing. While the cheap price may seem tempting at first, you’ll pay for it later down the road if the system fails. As mentioned above, when companies face regular warranty claims and are unable to meet them, it increases the likelihood of them going bankrupt. Don’t put yourself at risk by choosing a cheap, low-quality system.

  1. Read the fine print

While anyway you go solar, you’re probably better off that staying with you’re utility. There are many different solar options available. Lease/PPA, purchase, lien, no lien against your home just to name few. Make sure you know what you’re getting yourself into. Also get your warranty information upfront. Don’t just take the salespersons word for it. If it’s not in writing it doesn’t exist. At Flex Advisers we are fully transparent, everything is in writing before we even inspect your home.

  1. What happens if my solar company goes out of business? 

If you find yourself in a situation where your company has gone bankrupt, we advise you contact the equipment manufacturer directly. As long as your equipment manufacture is still in business your warranty is still in place. However, you may need to cover any labor associated cost to fix or repair your system if needed.

By following these tips, you can minimize the risk of going solar with the wrong company. At Flex Advisers we only work with installers that have proven track record of service. We choose who we represent as much as you choose who you want to do business with. After all our reputation is on the line as well as our installation partners. To learn if solar is good option for your home. 



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