A recent study commissioned by LG found that since 2011 more than 700 solar installation companies have had a change in trading conditions, gone into liquidation or simply stopped trading in Australia. Even more alarmingly, this trend shows no signs of slowing, with 127 such cases reported last year.
The study has estimated that these 700 companies existed for an average of four years and installed around 250 systems each year. That’s a total of around 650,000 solar systems that are now “orphans”.
With the installers gone, the owners of these systems have no option but to call on external solar companies who aren’t familiar with the system when something goes wrong; a recipe for trouble.
With figures like this, there is little wonder Australians have lost confidence in the renewable energy sector.
Why is this occurring?
In a “booming industry”, the increasing number of failing solar companies and poor practices should ring alarm bells.
Choice Energy’s Chief Operating Officer, Christopher Dean, says anecdotal evidence suggests that a high percentage of solar companies go insolvent when they are faced with a myriad of consumer claims.
“The main reason why solar companies go bankrupt is due to poor business practices and management. What appears on the surface as an effort to offer the lowest prices, often results in margins being too slim,” he says.
“When prices are lowered to unsustainable levels to attract business, bad operational behaviours usually follow, as businesses try to compensate for the margin elsewhere.
“This typically leads to companies hiring poorly qualified sub-contractors at the lowest price possible - which in many cases results in workmanship faults,” he says.
“In some cases, this can lead to installation companies needing to repair 1,000 panels or 500 inverters in short periods. This can become an extremely costly exercise and some operators figure it’s cheaper to go bankrupt rather than replace the equipment.
“As a result, many distributors and importers have now left the solar industry. Interestingly – and worryingly – a number of these companies and distributors are then relisting as a new entity just weeks after. And the worst bit is, at the end of the day it’s the customers who are left high and dry, with rejected warranty claims and additional out of pocket expenses.”
Evolving technology coupled with low barriers to entry has fuelled a rise in the number of small suppliers, making it a ruthlessly competitive industry.
“Many companies are bidding for work at a loss just so they can pay their staff and overheads,” said Dean.
“Quality has been compromised, due to a shift in focus towards job volume, which has led to liquidation of some of Australia’s largest installation companies, including Energy Matters and True Value Solar. Clients are being left with no warranties or support.
“This industry has a real ‘churn and burn’ attitude as there is very little repeat business.
It begs the question, what makes a good quality solar system? And which companies can be trusted?
The most important factors to consider when selecting solar providers
Choice Energy’s difference when it comes to solar, is a guarantee on the system output, which is followed by ongoing monitoring and a monthly report on your system’s output.
Therefore, if the panels underperform, Choice Energy will make up the shortfall by cutting the client a cheque.
Additionally, Choice Energy’s business is diversified and doesn’t solely rely on solar sales, which solar clients will continue to benefit from – and will ensure Choices’ longevity into the future.
“We encourage all customers to buy from quality solar companies who have been in operation for year and who offer quality solar solutions.“We’d rather offer our customers long term value with quality customer service you can trust," Dean said.