The recent news that ADT is shutting down its solar division may raise one big question. What happens to me if my solar company closes? What is the warranty?
The good news is that ADT honors its warranty. An ADT representative told CNET in an email:
“ADT stands behind the products we sell and the work we do. We back these beliefs with strong warranties that help protect our customers,” the spokesperson said. “Regardless of ADT’s change in strategic direction, our commitment to and follow-through on the 25-year limited workmanship warranty and 25-year power production warranty we provided in the contract will remain unchanged. Additionally, all manufacturers’ warranties remain unchanged. Guaranteed. Key system components: panels, inverters, racking and mounting systems.”
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The solar industry has exploded over the past few years, breaking residential installation records and adoption rates. Where there is a lot of money to be made, the market can quickly become saturated and we often see businesses fail.
“This market is pretty crowded,” said Gilbert Michaud, an assistant professor at Loyola University Chicago’s School of Environmental Sustainability. “This is leading to more companies operating in the sandbox.”
For example, ADT, best known for its home security space, entered solar power with the 2021 acquisition of Sunpro Solar, expanding its solar footprint to 22 states. Now, just a few years later, it is falling off the bandwagon, citing poor financial numbers.
The solar business is changing rapidly and companies come and go.
Closing your solar company may seem like a nightmare scenario, and it is certainly difficult. But there are strategies to keep your solar array in tip-top shape, even if your installer is no longer in business. In fact, there is a lot you can do in advance, such as choosing a trustworthy installer, to prevent the worst outcome.
After speaking with experts, here's what we learned:
Why do solar energy companies go out of business?
According to Michaud, there are a number of reasons why a solar installer may go bankrupt. Here are some common elements:
- Some companies get in the game to take advantage of government subsidies, perform low-quality work, and end up getting burned. This is the proverbial “bad apple.”
- Sometimes companies are merged or sold to larger companies.
- Some installers enter the industry for the right reasons, but lack experience and don't survive.
- Other installers are less specialized and may perform other types of work such as roofing or electrical. These contractors may eventually go out of business or go out of business altogether.
- A combination of poor customer service and low-quality equipment can quickly put a solar company out of business with a bad reputation.
- Bankruptcy or legal action (which can result from the factors mentioned above) can also lead to the demise of a solar company.
![Two workers are installing solar panels on the roof of a house.](https://www.cnet.com/a/img/resize/78c37ceb0811b45685ec8428a1fc62aaee9a5d93/hub/2024/01/26/bf5586da-7565-4c4b-81be-70b7ddb6bfe0/gettyimages-1882736475-1.jpg?auto=webp&width=1200)
Experts say it's important to choose a good solar installer from the start.
What happens to my solar lease or loan if the solar company goes out of business?
If you received a solar lease or loan through a solar company that went out of business, that lease or loan should, at least in theory, be transferred to the new company.
This will depend on your original contract, so Michaud advises taking a close look at that contract and reading the fine print. You may also receive a notification that the installer has stopped working and your solar panels have a new tenant.
If your solar loan is made through a bank independent of the installer, nothing changes. You just have to keep making payments to your lender.
What happens to the warranty if the solar company goes out of business?
If the warranty on your solar panels is provided by the actual solar panel manufacturer (usually a different company than the installer), the warranty should not be affected at all, Michaud said.
That said, you may still want to contact the panel company and ask a few questions. Michaud advises finding the phone number on the equipment and calling the manufacturer. “Equipment can help you figure out what to do next,” he said.
For example, if your solar installer is SunPower, your solar panel equipment is likely to come from manufacturer Maxeon (CNET's pick for best solar panels).
If the warranty is for a solar installer that is no longer in business, the warranty may be transferable. Technically, the company is obligated to honor the guarantee, so unless it is in fact a shady actor, there should be a mechanism to do so.
How do you protect yourself if your solar company goes out of business?
The best way to protect yourself in situations like this is to prepare before it happens. Michaud emphasizes the importance of finding a solid company first, but there are other steps you can take.
- Buy an extended warranty through your solar panel manufacturer to protect yourself against your installer going out of business.
- Keep your documents in a safe place so you can easily contact them if you need to read the contract again or find a phone number.
- If your panels require maintenance that you and your installer cannot do, look into solar operations and management companies that specialize in maintenance. But the same advice applies here. Do your due diligence before hiring anyone.
- If you believe you have been scammed, consider seeking legal help.
- If you believe you have been taken advantage of, the Department of Energy states on its website that you can report suspected scams, scams and overall “bad business practices” to the Federal Trade Commission.
- At the state level, laws vary. This tool from USA.gov allows you to search for the local consumer protection office in your state.
What are ‘fly-by-night’ solar companies and what impact do they have on the industry?
A “fly-by-night” solar company is the type of company mentioned above. This is about taking advantage of customers and tax deductions to make a lot of money by doing the lowest quality work and hoping no one notices.
Michaud said this has a dramatic impact on the solar industry as a whole. “Word of mouth and reputation are important,” he said. “Even people who have had a bad experience… go and talk to their neighbors and friends.” This could snowball into a larger sentiment that solar as a whole is some kind of scam, driving down adoption.
Like anything else, fly companies create a biased reputation for the entire industry because people who have had good experiences don't make as much noise as people who have had bad experiences.
Why it is important to choose a reliable solar company
First of all, working with a reputable company can save you a lot of trouble. Here's a detailed guide on how to find the right installer for you:
Michaud advises homeowners to look at reviews, ask neighbors and make sure the company they choose is insured and certified, has been in business for at least five years and uses high-quality materials. If an offer seems too good to be true, it probably is. “You sometimes get what you pay for,” he said.
Check with the North American Board of Certified Energy Practitioners before signing with an installer.