About six months ago. ADT Solar exited the solar energy installation business, and now the former behemoth, SunPower, has declared bankruptcy. We predicted this would happen, noting in this previous article that you should always hire a local solar contractor and that all the big solar sales outfits would eventually fall.
SunPower announced two weeks ago that they would halt all installations, new financing, and product shipments. The writing was on the wall, but the death knell came today when the Chapter 11 bankruptcy was announced. Trading is down 46% today, August 6, 2024 in pre-market trading.
SunPower Stock plummets in pre-market trading as bankruptcy is announced.
Built To Fail
SunPower was never a solar contractor. It was a confused entity that manufactured a state-of-the-art product, marketed it as super-premium with a corresponding price, and focused on training its dealer network on how to bamboozle people into buying a good product for an exorbitant price.
Then SunPower got out of the manufacturing business by spinning off its manufacturing arm, and focused on sales and marketing. They started to finance systems directly, following the money into the solar financing boom of the early 2020s. The marketing fluff continued.
All the while, they did installations through a network of solar contractors that were indoctrinated into the SunPower world through sales and marketing training, and a hint of installation training.
At one point, even SunPower bought an up and coming solar racking company and took it proprietary. The problem – it wasn’t that good relatively speaking, and it made it nearly impossible for non-SunPower dealers to service systems due to the proprietary tooling required.
SunPower always seemed like a confused company, navigating the solar energy industry with no real compass. If there was one consistency, it was the sales and marketing hype and puffery that permeated their reputation among non-SunPower dealers.
Bankrupt (Literally and Morally)
The overblown claims about performance and longevity have always come at a steep price. At one point, SunPower was selling their solar modules at around double the price of great quality products with the same test ratings. While SunPower may have had technology that reduced degradation, increased longevity, and provided customers with some peace of mind, the outrageous cost of these panels and systems were never worth the money.
We tried to warn people who were comparing our quotes to the local exclusive SunPower Dealer’s offering. The scare tactics employed be SunPower dealers, who were trained directly by SunPower’s sales and marketing organization, turned off quite a few people. Unfortunately, not all people were convinced and ended up buying SunPower products at wildly inflated prices.
That’s not to say that peace of mind doesn’t have value. But where are these consumers now? They are left with panels, and in many cases inverters, from a company that is bankrupt. The proprietary nature of the products means the warranties are probably worthless, the monitoring systems’ viability in question, and service and replacements may be hard to find, if not impossible.
SunPower had over $1.6B in sales in 2023, but failed to produce any operating income in the last 5 years (except for a paltry $137,000 in 2021). They somehow lost over $250 million in that timeframe. SunPower has been a listing ship that finally capsized after failing to professionally navigate the solar energy waters for a long time.
SunPower has been a listing ship that finally capsized after failing to professionally navigate the solar energy waters for a long time.
Risks For Existing SunPower System Owners
Solar panels rarely fail, and we don’t have any indication that there will be widespread warranty issues that go unresolved. The panels will probably be fine for their intended lifespans.
However, SunPower got into the inverter game by partnering with successful inverter manufacturers over the years. They slapped a SunPower label on existing technology an called it their own, changing the model number and telling people it was somehow better. One example is the Enphase microinverters that they rebranded, changed the software, and forced people into the SunPower monitoring portal rather than Enphase’s already world-class monitoring. Only time will tell if existing clients will be able to continue monitoring systems. Hopefully the company purchasing SunPower’s assets will continue the SunPower monitoring portal. If not, maybe Enphase can devise a way to transfer these clients to the Enphase Enlighten portal.
Service and repairs will undoubtedly become an issue for system owners. There is an opportunity for existing and non-SunPower dealers to take on this service, and find ways to fix systems with issues, even if the service is performed as non-warranty work. Things like panel replacements and microinverter replacements will probably end up being deletions rather than swaps.
It’s hard to say exactly what problems will become prevalent, but things like proprietary tools for some racking systems and lack of monitoring access could become serious issues for existing system owners. It could also become more difficult to sell a home with SunPower panels and especially inverters.
To Be Fair
Some might say that this problem exists regardless of what sales company, manufacturer, dealer, or brand you choose. For example, Enphase has millions of systems installed worldwide. If they went under, where would those system owners be left? The proprietary monitoring is integral to the function of the system.
The one thing that a company like Enphase has (and Tesla while we are talking about it), is a cohesive product and valuable brand across a huge user base. If one of these companies failed to be a viable business, surely someone would come along to take on the behind-the-scenes technology that allows these systems to be monitored and continue to function. There would be legal and technical challenges, but there seems to be value there, even if existing system owners are forced to pony up some money to keep their systems fully functional.
While SunPower seemed to chase the latest money grab in the industry (manufacturing, sales and marketing, financing, etc), companies that Enphase were focused on creating an ecosystem that just works, without all of the marketing fluff. They had purpose and vision. For example, we can add Enphase batteries today to solar panels and microinverters that we installed a decade ago.
Conclusion
There is always going to be risk when choosing a solar manufacturer. That is why it is critical that you have a solar contractor that is on your side, and looking out for your best interest. We can’t predict with certainty which big company will be the next to fall, but surely there will be more.
Solar contracting is a local business. Let me correct that – should be a local business. The national solar agencies that call themselves solar companies are nothing but sales peddlers masquerading as solar contractors. When it comes down to it, who are you going to call when you need help? A call center in Texas (or much further away if you know what I mean)?
As the solar industry retracts somewhat from the boom of the early 2020s, caused largely by higher interest rates and hostile policies in states like California, the big solar companies will continue to fail, while small businesses that are owned and operated in your community are likely to survive, and even thrive. In Southwest Florida, there are a handful of solar contractors that have existing for a decade or more, and a few that have been around for decades.
The final thought, as we have been saying (warning) for years, is buy local.
