All industries try and stuff away their demons in the closet. Unfortunately for solar our closet is bursting at the seams. How many industries have a dedicated Facebook page showcasing shoddy workmanship? Well Solar does, don’t believe me? Just search ‘Crap Solar’. With over 23,000 members it truly highlights the weaknesses and vulnerabilities of the industry and the amount of cowboys still out there installing.
With more ups and downs than an amusement park ride, the last of 10 years of solar has ironically been dubbed the ‘Solarcoaster’. Unfortunately not many companies know of the struggles endured in the 10 years, mainly because most of them haven’t been around that long. You only have to look at the numbers and of the last 8 years, 700 companies nationally have phoenixed or liquidated. Yep you read that right 700 companies in 8 years, that is 1.68 companies per week. Here is a link to a list of those companies
Probably asking what is phoenixing?
Illegal phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements also customer warranties and servicing requirements.
I didn’t know what the term was until we fell victim to it ourselves.
An Australian company who manufactured inverters and was a popular choice from 2010 – 2012. Our company installed many of these inverters, a few failures but nothing out of the ordinary. One day we lodged a warranty claim, this claim was met with a rejection. Unsure of why a simple claim that had been accepted before was rejected, we were quick to jump on the phone. When we finally got through to a human, who answered the phone using the full company name, they began to explain that the company became insolvent the previous day and was no longer warranting the products, regardless they were happy to sell us the same inverter as a replacement for their failed inverter…….. Shocked? Yep so were we! Don’t worry any inverter from this manufacturer that failed we replaced at our own cost, yes it was a very costly lesson but one that changed our business model and got us through the last 10 years.
Unfortunately phoenixing has become a business model for many solar companies, some companies have phoenixed several times. I know of one owner in WA phoenixing his company 3 times before finally giving up…. Don’t worry he is now the sales manager for one of our competitors Ha!
Why have so many companies phoenixed/become insolvent?
The answer is simple, low cost problematic products, shoddy workmanship and unscrupulous management.
Low cost problematic products:
To give you a rough idea it is approximately $1500-$2500 to replace a 5kW inverter or $300 per panel. If a company is holding the warranty baby because a manufacturer no longer operates or warrants their products it doesn’t take long for those costs to add up.
Not only is this the main cause of damage to properties but it is the number one source of bad reviews and publicity hence ‘Crap Solar’. A lot of companies say we only use in-house installers, as if this makes them insusceptible to bad workmanship. This is definitely not the case, as the old saying goes ‘pay peanuts, you will get monkeys’. Let me give you an example, a Perth company based in the Armadale region was actually given a warning because they were publicly advertising for 417 working visa travellers. Not only is this against regulation it is a fine example that a lot of companies try to cut cost through cheap labour workers. Another trick to cutting costs is hiring roofers to fit the panels/inverter, run the cables then have an electrician follow them round fitting off the connections.
Rip off merchants:
Setting a business up to fail sounds crazy doesn’t it? Well that is exactly what phoenixing is. But forgetting the cheap and nasty side of the market, let’s turn our attention now to the ‘take them for all you can get’ part of the market. Ever had those pesky door knockers followed by the slick salesman who has this special offer that is only available today and will not be available if you do not sign up now? Well you guessed it, the solar industry has plenty of these companies too and they never seem to hang around. It doesn’t take long for people to figure out the $10k – 15k they paid for the 6kW is well above market average doubling the ROI. Usually by the time the system fails these customer have lost all faith in solar
Are there good companies out there?
No need to stop your search for solar yet, there are good companies out there doing the right thing by you. To make things easier for you, we have created another blog with our best questions to ask the companies you might be dealing with.
Click Here to see what questions you should be asking.
Click Here to see an ABC article highlighting the state of the industry.