The solar panel industry is booming. Solar companies are popping up everywhere to capitalize on what they see as an opportunity for success.
But what happens if your solar panel company goes bust?
This is a real risk. Some solar companies have been going bust lately due to less demand and cheaper competition from China.
So if this were to happen, what options would you have?
We will take a look at what could happen if your solar panel company went bust and what are your options in order to help provide some peace of mind.
Why do solar companies go out of business?
1. Bad Management
The first reason for solar companies to go bust is because they have run out of money to fund their operations.
For example, the company may not be able to pay its employees or vendors what it owes them which can result in bankruptcy.
2. Chinese Solar Panels
The second reason is because of what’s happening in the global economy.
China, which has been a major player in manufacturing solar panels for years, has been providing huge subsidies to its local companies, which means their products can be sold at a much lower price compared to what American manufacturers can offer.
This makes it much harder for American companies to compete and can result in bankruptcy or company closures worldwide.
3. Legal Actions Towards The Firm
This happens when the company is sued by its clients for what they see as negligence or other wrongdoing on behalf of the firm which results in hefty fines to pay off and loss of business due to negative press.
4. Poor Customer Service
Another huge reason that can make a solar company go bust is poor customer service.
This includes not responding to the needs of its customers and their requests for repairs or replacement panels which results in losing business from unhappy clients who would rather purchase products elsewhere.
What would happen if my solar company went out of business?
It really depends on the size of your solar company and what happens to it after it shuts down.
For instance, in the case of large, international companies going bust, almost certainly another solar firm will acquire the remaining assets and they will assume responsibility for all services promised to you as your original installer would have.
In other words, they become your service provider, so you can just think of it as a change in management rather than your solar installer goes bankrupt.
The same would happen for large, regional companies as well since they may be acquired by other firms in their area to expand their own operations and create economies of scale.
However, in the case of local solar panel installers going out of business, then it’s not guaranteed that they will find a buyer.
In this scenario, what would happen is that you may be offered a transfer of your service agreement to another firm, which of course will require a new credit and background check for you to do business with them.
But what does this mean? Well, what it means is that the new provider becomes responsible for servicing and maintaining all equipment installed by the original company going bust.
What would happen to my solar lease if my installer went out of business?
The best thing to do is plan ahead and consider what the worst-case scenario would be for you depending on what type of agreement you have.
If your panels are owned outright, then it means that there’s no long-term commitment to purchase electricity generated by them and what happens is that you might lose out on the renewable energy tax credit and other incentives offered by your state government.
However, if you lease solar panels instead of buying them outright, then you are stuck with the agreement.
Unfortunately, since most leases are locked into multi-year agreements with the service provider responsible for maintaining and servicing all equipment installed by the company going bust it means that you will be stuck in this agreement.
However, what can happen is that the company responsible for maintaining your solar panels may find a new provider to provide this service.
This means negotiating with you what type of agreement they can offer you in terms of cost and what it includes, but once again, there will be an additional credit check required which might affect your ability to get financing or open other accounts.
What would happen if you have a solar loan with your company and it shuts down?
If your installer happens not to be under contract with another firm but does have a credit history, then what will happen is what’s called an assignment for the benefit of creditors (ABC).
This means that an assignee or agent for the benefit of creditors would be assigned to sell all assets and what’s known as a ‘transfer of title’ so you become responsible for servicing and maintaining your own solar panels.
Finally, if there are no credit records then what happens is called judicial foreclosure which basically means that a trustee would be assigned to handle the sale of all assets in order for them to pay off any outstanding loans.
Now that we’ve covered what would happen if my solar company went out of business and what the consequences are it’s important to consider what you should do next.
As mentioned above, finding out what the process is for your specific panel installer going out of business can be achieved by speaking to a customer service representative or reviewing what’s known as an “easement agreement” provided by the company.
Once you understand what this means and what it requires from you, then you will have peace of mind knowing that your solar panels are safe and what your options are in the event that this happens.
In the end, we really hope you enjoyed this article as much as we did, and stay tuned for more awesome articles from Solar Energy Hackers.