Commentary by Marita Noon

Clouds on the solar horizon

Consumers considering installing solar panels on their rooftops have far more to think through than the initial decision to "go solar."

They may search for the best price, only to discover, as customers in central Florida did, that after paying $20,000-40,000 for their systems, they are stuck with installations that may be unusable or unsafe. BlueChip Energy—which also operated as Advanced Solar Photonics (ASP) and SunHouse Solar—sold its systems at environmental festivals and home shows. Buyers thought they were getting a good deal and doing the right thing for the environment. Instead, they were duped.

A year ago, it was revealed that BlueChip Energy's solar panels had counterfeit UL labels—this means that the panels may not comply with standard safety requirements established by the independent global certification company Underwriters Laboratory. The Orlando Sentinel reports: "UL testing assures that a product won't catch fire, will conduct electricity properly and can withstand weather. Without such testing, no one is certain if the solar panels may fail." Additionally, it states: "Without the safety testing, they shouldn't be connected to the electric grid"—which leaves customers nervous about possible risks such as overheating. Other reports claim that BlueChip inflated the efficiency rates of its photovoltaic panels, which do not meet "65 percent of the company's published performance ratings."

In July 2013, BlueChip's assets were sold off at pennies on the dollar and customers were left with rooftop solar packages that now have no warranty.

With the shakeout in the solar photovoltaic industry, bankruptcy is a key concern for buyers. No company equals no warranty.

Two of China's biggest panel makers have failed. On March 20, 2013, Suntech, one of the world's biggest solar panel manufacturers, filed bankruptcy. Earlier this month Shanghai Chaori Solar became China's first domestic corporate bond default. The Wall Street Journal reports that another, Baoding Tainwei, has reported a second year of losses and investors are waiting to "see if officials will let it fail."

Regarding Suntech's bankruptcy, an industry report says the following about the warranties: "While Suntech has said that it was committed to maintaining the warranty obligations on its products following the bankruptcy, we are unsure if customers will be willing to take a risk considering the firm's faltering financials."

Last month, it was reported that solar panels can be "dangerous in an emergency." Firefighters have been forced to stop fighting a fire due to electrocution concerns. The report quotes Northampton, MA, Fire Chief Brian Duggan as saying electrocution is not their only concern: "cutting through the roof for ventilation would also take a lot longer." Springfield fire commissioner Joe Conant says: "nothing will stop them if there's a life to be saved, but if it's simply to save the structure, solar panels may keep them from going on the roof.

A Fox News story on the risk solar panels pose to firefighters states: "Two recent fires involving structures decked with solar panels have triggered complaints from fire chiefs and calls for new codes and regulations that reflect the dangers posed by the clean-energy devices. A two-alarm fire last week at a home in Piedmont, Calif., prompted Piedmont Fire Chief Warren McLaren to say the technology 'absolutely' made it harder on firefighters. Weeks earlier, in Delanco, NJ, more than 7,000 solar panels on the roof of a massive 300,000-square foot warehouse factored into Delanco Fire Chief Ron Holt's refusal to send his firefighters onto the roof of a Dietz & Watson facility."

In part, due to the increased fire concerns, roof-top solar panels can increase the cost of homeowners insurance. A potential solar customer told me: "If you are thinking solar panels on the roof, check your home insurance. Ours would have added a costly rider to cover them and roof. That was another strike in our decision."

Then, of course, there are new concerns about scam artists like the one in North Carolina who collected "money from victims under false pretense that he would buy and install solar panels in their residences."

As if all of that wasn't enough, a new potentially fraudulent scheme has just been exposed.

A recent report from the Arizona Republic, points to complaints the Arizona Corporation Commission—the state's top utility regulator—is getting from Tucson customers of SolarCity Corporation. They claim: "the solar leasing company is misleading them regarding the state rules for hooking up a solar array."

In essence, customers in Tucson are being told one thing by their utility, Tucson Electric Power (TEP), but something else by a private solar power company, SolarCity—the nation's second largest solar electrical contractor. This has drawn the ire of Bob Stump, Chairman of the Arizona Corporation Commission (ACC). "This is an issue of consumer protection and solar installer transparency," Stump told the Arizona Republic.

Stump made his concerns clear in a March 12 letter to Lyndon Rive, SolarCity's Chief Executive Officer: "I am concerned that you—as well as other solar providers—may be communicating with customers in a way that is both confusing and misleading and which deprives them of the balanced information they need in order to make informed decisions."

The letter states: "Some customers ... say that solar providers have told them that the rates, rules and regulations applicable to net metering are 'grandfathered,' thereby implying that the rates associated with net metering are not subject to change." As a result, Stump says: "Customers are then surprised, disappointed, and angry to learn from TEP that this may not be the case."

As a vocal advocate for responsible energy—which I define as energy that is efficient, effective and economical—I have closely followed what is happening with Arizona's solar industry. There, when the ACC proposed a modification to the net-metering policies to make them more equitable to all utility customers, the solar industry mounted an aggressive PR campaign in attempt to block any changes. When the decision was made in November to add a monthly fee onto the utility bills of new solar customers to make them pay for using the power grid, I applauded the effort.

In light of this new issue, with a leading solar company misleading customers, it is time for the nation's regulators to take a hard look at their states' policies. Remember, this past summer, Georgia regulators voted for solar leasing such as SolarCity offers.

Pat Lyons, one of New Mexico's Public Regulatory Commissioners, watched what happened in Arizona's net metering battle. Upon learning about SolarCity's potential deception, he was alarmed. "As solar leasing, like SolarCity pushes, moves into additional markets, regulators across the country need to be aware of the potential pitfalls and misrepresentations."

It is vital that solar providers be held to the same high standard to which we hold our electric utilities and are made to answer tough questions about consumer protection, safety, and operation issues. Stump's letter to SolarCity's CEO asked for responses to his questions by March 31 and said he will "be placing this matter on a Commission open meeting agenda in the near future in order to discuss these important concerns with my fellow commissioners."

It may be too late to protect some solar customers in Tucson, but there is still a chance to make sure others are treated fairly. If things don't change, the dark clouds hovering over the industry will be raining on unsuspecting customers.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens' Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations' combined efforts serve as America's voice for energy.