Two major Solar companies exit solar industry – What is going on?
In the past few months, two very large solar companies have exited the solar business. The most recent is NRG, a major energy company based in Texas. The name NRG may be recognizable as they had naming rights to the Football Stadium in Houston where the Super Bowl was just played. There will be several additional national companies exiting the explosive solar industry.
But wait a moment—isn’t the solar industry one of the fastest growing industries in the US? Was there not record growth in 2016? Why are they getting out?
The reasons are rather simple:
- Most of these companies are major corporations with share holders and stockholders. They are constantly pressured to return a profit. In the competitive business world in America, a company must continue to show financial improvements and a return on money. These companies did not, and many of the national companies still in the solar industry are still not. So the pressures are mounting, especially for national companies still holding on and watching others cut their losses and exiting.
Along with the financial pressures, the share holders and board of directors of these companies look at their other lines of business who are making a good return and are in need of company dollars to make more money. So the board of directors look at the ROI on solar versus the other businesses and make decisions to stop the bleeding or invest the dollars in more profitable lines of businesses. It’s simply a numbers game. I once ran a division for a utility. We grew our business from $68 million in revenue with a $16M loss to a gain of $265M in revenue to a profit of $5M, BUT, it was not enough and they sold our division.
These are national companies and the fact is there are only 8-10 states which are solar friendly, (with state incentives such as SRECs or Feed in Tariffs). So we have national solar companies owned by International companies which are trying to be profitable on a national scale but only have 8-10 states in which they can grow. So they can not grow in the other 40 states which do not have state incentives. The regional solar companies don’t have to worry about state incentives in states where they do not operate. A company based in Massachusetts doing business only in Massachusetts does not have to worry about the lack of incentives in other states.
What do I do? I bought from one of the national companies.
Not to worry. There is a good chance the manufacturer of your solar system still has a solid financial performance. The solar industry in the US and especially internationally is still robust. So your warranties are sound. A strong suggestion is to make sure you contact your solar installer. Openly discuss the state of affairs in the industry with them. Ask them about their financial position. Read about their financial commitment to their solar division. In these days of online internet searches, we can find out so much about companies. MOST IMPORTANTLY – make sure they are monitoring your system for performance on a daily or weekly basis. IF NOT, reach out to a state based (regional) solar company to determine how they can assist.