Any new and fast-growing industry will attract its share of fly-by-night companies and salespeople who are willing to use unscrupulous tactics, and the solar industry is no exception. And as the markets in leadings states such as California and Hawaii contract under new policies and with all of the easiest customers already signed up, the pressure to close deals has intensified.
However, now federal securities regulators are looking at the two largest residential solar providers, investigating whether or not these companies have fully disclosed to investors how many of their customers are backing out of the contracts they have signed.
The news of the Securities and Exchange Commission’s (SEC) investigation was first reported by the Wall Street Journal, but Tesla has since confirmed that the investigation is taking place. According to the Journal, SEC has additionally subpoenaed Sunrun employees at the company’s office in San Francisco.
Sunrun has emphatically declined to discuss this matter either with pv magazine or any other publication. Tesla referred us to its comments already published, which state that its growth projections have never been based on the number of contracts signed, only the systems which actually make it to the roof of a customer’s home.
However, the problem is deeper than the SEC investigation. According to WSJ state attorney general offices have received “hundreds” of complaints regarding the sales practices being used by solar companies.
pv magazine looked at this issue in an article published in our December 2015 print edition, and found that by 2013 the California State Licensing Board was already receiving more than 100 complaints per year regarding solar companies, which would reach more than 250 by the end of 2015.
And while some may point to a few rogue companies, much of the criticism that pv magazine staff has heard both within the solar industry and the published statements by state officials to date has been directed towards the large third-party solar providers.
Solar Energy Industries Association (SEIA), which has a consumer protection division, notes that the volume of such complaints are small in relation to the scale of the industry. “In the residential solar industry, integrity and word of mouth recommendations are paramount, and the solar industry would not have achieved more than 1.4 million installations without satisfied customers,” SEIA Executive VP Tom Kimbis told pv magazine. “Our investigation of state public records suggests that the number of complaints represents a very small fraction of the number of successful solar installations nationwide.”
SEIA notes that it has developed a range of consumer protection resources, including a consumer guide to solar power and model contract, but also acknowledged that there is more work to be done on consumer protection. Kimbis states that the organization is working with attorney generals nationwide “to ensure customers are both well-informed and protected”.
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High pressure sales and inexperienced sales people and the companies they represent should not be selling PV systems. The problem is systems that are sold and installed are either malfunctioning and or not performing as promised and the customer doesn’t realize any savings. Not all clients contact the state license boards and may not even be aware of that avenue for a formal complaint. Clients sign an agreement with the solar company that forces them into arbitration, and some clients don’t even bother with filing complaints or go to arbitration. The magnitude of these unethical business practices is not fully known and is much greater than what is being reported.
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