Skip Navigation

Rooftop Solar Companies Struggling to Stay Afloat

October 3, 2016

The roof-top solar power industry is in freefall with customer complaints and bankruptcies mounting.

According to a report by The New York Times, many people who have installed solar panels on their homes in the hopes of saving money on their electricity bills while protecting the environment are not experiencing the savings they were promised when they signed up, and many have yet to receive an adequate explanation from solar power companies that reveals why the savings have not materialized.

The Times story focusses on the deteriorating relationship between Fort Worth, Texas-based solar panel installer Global Efficient Energy (GEE) and its customers.

“I am surprised and pleased the Times has addressed this issue,” said Marita Noon, executive director of the Citizens Alliance for Responsible Energy. “I addressed it in my report Solar Power in the U.S., and I can assure you GEE is not the only company with unhappy customers.

“Solar panel installation is a big investment, and customers need to be fully educated before deciding to go solar,” Noon said. “With the coverage the Times has given the topic, we can hope people will see the pros and cons to solar—‘cons’ as in ‘con job.’”

New solar installations on homes, depending on the size of the structure, often run between $20,000 and $25,000. Customers can either pay for the installment in one lump sum upon installation or they can pay it off in monthly installments, which is the more common approach.

In addition to rooftop panels, installations usually include solar-powered attic fans and the application of foam and sealants. Combined, these goods and services have been promised to produce substantial savings.

Complaints Lodged with BBB

Many customers have filed complaints with the Better Business Bureau, which says it is hearing from solar consumers who are unhappy with their solar-power systems on a regular basis.

Solar-power customer Chad Gregg had GEE install solar panels on his suburban Dallas home, and he says he is not pleased with the result.

“The system cost $19,900, which we would pay off in monthly installments over six or seven years,” Gregg told the Times. “Once we owned the system outright, the company said we’d pay next to nothing for energy.”

Unhappy with savings amounting to only about $9 per month since switching to solar power, Gregg tried to contact GEE to complain about the minimal savings, but he says he has not received a return phone call or e-mail from the company.

“I’ve lost all faith in GEE. I’d like our system removed and our $19,900 loan cancelled,” Gregg told the Times.

Financial Problems for Solar Industry

The Times’ report of GEE’s problems with its customers comes at a bad time for the solar industry. In May, hedge-fund manager Jim Chanos told CNBC SolarCity, the nation’s largest installer of rooftop solar panels, is in deep financial trouble.

According to Chanos, although the company, led by high-flying entrepreneur Elon Musk, has seen a surge in the number of installations, “They’re losing money on every installation and not making it up on volume.”

Musk stirred up controversy in June when he proposed merging cash-strapped SolarCity with Tesla Motors, a manufacturer of electric cars that Musk also runs. On September 1, The Wall Street Journal reported Tesla Motors acknowledged in a securities filing 15 institutional investors had passed on either acquiring SolarCity or injecting cash into it.

SunEdison, another solar company, has suffered a complete financial collapse, with liabilities exceeding assets by over $1 billion. It filed for Chapter 11 bankruptcy in April. On August 11, Judge Stuart Bernstein said SunEdison was “hopelessly insolvent.”

“This is what happens when government uses subsidies and mandates to push consumers and industry in a predetermined direction,” said James Taylor, president of the Spark of Freedom Foundation. “Rooftop solar may be environmentally friendly, but it is tremendously expensive.

“Other electricity options, such as natural gas, nuclear, and hydropower, are environmentally friendly and affordable,” Taylor said. “To the extent government inserts itself into the electricity market, it should do so with the central purpose of establishing a free and fair market in which competitors can vie for customers.”

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org