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What happens when a solar company files for bankruptcy?

The solar industry is growing rapidly, which means solar installers and manufacturers are competing with ever-growing numbers of companies for space in the market. This can lead to bankruptcy cases for solar companies who fall behind in the industry, as seen recently with Sungevity and SolarWorld. As a solar shopper you may be concerned about the state of warranty coverage for your panels in the event that the solar company you are working with goes under. In this article, we will look at solar manufacturers and installers, and what their financial positions mean to you as their customer.

Equipment manufacturer bankruptcy

The fact that a company has filed for bankruptcy doesn’t mean that their customers will lose support for the products or services that they’ve purchased. In the U.S., filing for Chapter 11 bankruptcy sets off a reorganization process where the company will sell its assets, and in many cases the buyer also takes over responsibilities like upholding warranties.

There are a few ways to avoid being left without a production or equipment warranty in the event that your solar equipment manufacturer files for bankruptcy:

1. Buy an extended warranty

One option for hedging against solar manufacturer bankruptcy concerns is to purchase an extended warranty from your solar installer. Extended warranties can be purchased through most solar installers, and in the event that your equipment manufacturer goes out of business, your installer is still contractually obligated to honor your warranty. However, if both your installer and manufacturer end up bankrupt, you could be at risk for losing any kind of warranty protection.

2. Insure your solar installation

Many insurance companies now offer plans for renewable energy and solar, and covering your installation with one of these plans will protect you from defective panels, decreasing output, and other damage to your solar array. While expensive, these types of policies can cover installation and operations damage, power output, and general equipment health. It is important to keep in mind that you may end up spending the same amount of money to replace parts like inverters or single panels as you would entering an insurance agreement.

3. Buy from a warranty-insuring manufacturer

The safest way to prevent being left without a warranty from a bankrupt solar manufacturer is to buy your panels from a warranty-insuring manufacturer. A warranty-insuring manufacturer commits their warranties to being held up through third-party backing even if they themselves declare bankruptcy. One example of this kind of policy is SolarWorld’s Extend Warranty coverage.

Solar installer bankruptcy

A question that EnergySage Solar Marketplace users frequently ask is, “What happens if my solar installer goes out of business?” Depending on if you are working with a large installer with business across the country or a local company only servicing areas near you, installer bankruptcy may affect you differently.

Large/national-scale installers

Large solar companies declaring bankruptcy have been making news headlines recently as the solar market space becomes more mature and solar prices continue to fall. One such recent case was Sungevity’s bankruptcy: after declaring bankruptcy in March of 2017, Sungevity was purchased by Northern Pacific Group, and their existing solar financing agreements were acquired by the solar company Sunrun. As part of the agreement, Sunrun becomes the solar service provider for Sungevity customers. As a result, Sungevity customers saw no interruption in service, and Sunrun took over management of Sungevity’s solar lease agreements.

Cases like Sungevity and Sunrun’s are somewhat of the norm for large solar installation companies. When these large companies declare bankruptcy, they are almost always bought by another solar company or an equity fund. This means that as a customer, you shouldn’t worry about losing your installer services because they will most likely be transferred to another experienced solar company.

Small/local installers

As with large installers, local companies will often be bought by a separate entity that will take responsibility for all of the installer services that were originally promised to you. In this type of small company bankruptcy, the installer that is servicing your panels may change, but the installer warranty and originally promised installer services for your panels will still be available to you.

However, not all small installers will be bought by a larger company. Because of this, it may be smart to consider investing in a solar panel operations and maintenance (O&M) plan. O&M plans are purchased through separate companies not involved in the installation of your solar panels, and provide long-term services for your solar panels. In the case that your local installer goes bankrupt, your O&M provider will still work to diagnose and repair issues with your solar energy system that your installer would have handled, like cleaning, electrical systems maintenance, and general system inspections.

If you don’t have an O&M plan, there are still resources to help you make sure your solar energy system is running properly. Whether your solar installer is a national company or a mom-and-pop setup in your area, you will still be covered by the equipment and production warranties provided by the manufacturer of your solar panels even if your installer goes out of business. These warranties typically guarantee around 80% electricity production capacity over 25 years and materials coverage for 10 to 25 years. You can contact your equipment manufacturer, who will likely be able to connect you with a contractor who can diagnose and repair your damaged or faulty system for a one-time fee.

Compare your solar options with EnergySage

On the EnergySage Solar Marketplace, you can solicit quotes solar projects from qualified, pre-vetted installers in your area. Installers on the EnergySage marketplace provide quotes with all types of solar panels, inverters, and racking systems, and comparing quotes side by side is the best way to make sure you are getting the best package deal for your solar project. If you have a question, concern, or preference regarding your solar equipment, you can leave a note on your profile outlining your question, and installers will know that you want more information about specific product offerings.


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