As several local solar energy companies are experiencing sunny skies in the marketplace, some industry officials forecast storm clouds on the horizon.
The possibility of a federal solar energy tax credit ending in 2024, ongoing pandemic-related solar panel supply issues and the need for long-term maintenance plans for system equipment are among the industry challenges cited.
The tax credit, currently 26% for residential and commercial solar systems commencing construction in 2020-22, is set to drop to 22% next year, according to the U.S. Department of Energy. By 2024, the commercial credit dips to 10% and residential’s expires, unless Congress passes an extension. Under the Biden administration’s proposed $1.75 trillion Build Back Better Act, which stalled last year in the Senate, the credit would have increased to 30% and extended another five years.
“If that tax credit goes away, it’ll affect the industry from top to bottom,” said Shawn Roberts, CEO of Nixa-based Arrowpoint Solar, adding the industry is still optimistic the tax credit could get an 11th-hour extension.
Roberts said his company has grown substantially with the tax credits in play, increasing revenue 173% over the past three years to $14.2 million in 2021.
However, he said as the solar systems that were purchased age, maintenance is becoming an issue that needs attention.
“Long-term maintenance is probably one of the biggest unaddressed areas in the industry,” Roberts said. “When you sell a solar system, the expectation is it’s going to last 20-30 years. What are the long-term plans for the needs of the customer and also if the system changes hands? It might not be anything nefarious, as sometimes companies don’t last 20 years.”
Solera Energy LLC Chief Operating Officer Ryan MacDonald said his company gets multiple calls each week from customers of other companies – mostly national firms – who need maintenance of their solar systems. Replacement of solar panels and inverters, which convert direct current electricity to alternating current electricity, are common requests.
“We have to be very careful about it. We don’t do a whole lot of maintenance or repair work on other people’s systems just because of the liability aspect of it,” MacDonald said, pointing to the potential to encounter poorly installed systems. “We kind of take on repair work on a case-by-case basis. We try to communicate and help out the consumer that purchased it.”
He said Solera has been in numerous situations where the company is the bearer of bad news for the caller, as it sometimes comes across a system that didn’t have a qualified master or journeyman electrician perform the installation.
Solera CEO Will Cox said he recently was contacted by a customer of an unnamed company who had gone eight months since the system was installed and it wasn’t working properly. It was likely the installer skipped some steps, he said, adding roughly 95% of any issues for a properly installed system should be discovered within its first 30 days.
Cox said Solera regularly refers other companies’ customers to contact the manufacturer if they can’t reach the person who sold them the equipment. The manufacturer typically then recommends companies that could help – an occurrence that he said Solera experiences “too often.”
“A couple times a week we’ll get a call. It breaks our heart – it really does,” he said, adding liability issues prevent them from physically helping any more customers than roughly two per month.
The 12-year-old Solera, which employs 34, is experiencing around 20% revenue growth this year from 2021, Cox said, declining to disclose figures. That’s fueled in large part by client projects in the educational field. One of those is the Sarcoxie R-II School District, for which the company has started a 911-kilowatt, 2,025-panel installation that is expected to provide lifetime savings for the school of roughly $4 million, according to past Springfield Business Journal reporting.
“The average home is about 10 kilowatts, so this would be the equivalent of 90 homes,” Cox said.
Like Solera, Arrowpoint also largely avoids maintenance work for systems they didn’t sell or install, Roberts said.
“It’s very, very rare that Arrowpoint does any maintenance for another company,” he said, also citing liability concerns. “At the end of the day, if we’re the last person that worked on it, we’re going to be the first person they call if something else goes wrong.”
Roberts said similar to how the housing industry requires home inspections from third parties before a consumer buys a house, he believes solar projects need an objective second set of eyes.
“My thought has always been there needs to be some type of sustainable third-party presence in the industry whose sole purpose is to provide unbiased diagnostics of your system,” he said, adding his company is making inroads in that space.
Arrowpoint last year started VeriWatt LLC, a new venture Roberts said operates as a third-party entity to the solar company. Roberts co-owns VeriWatt with two silent partners.
“It’s operated as a completely separate company from what Arrowpoint does,” he said, noting the three-employee VeriWatt audits the solar system installation and equipment a customer receives. It also audits the system performance and generates a report separate from what the installing company provides.
“We haven’t launched it beyond using it for our own commercial projects. We haven’t introduced it to the residential space yet,” he said, adding plans are to take it to market within 30 days. “We’ve been spending time since last year to work out the kinks and determine what diagnostics we want to do and make sure safeguards are in place to ensure the customer is getting a fair appraisal of what’s being done.”
Cox said he doesn’t see the necessity for a customer to reach out to third parties for auditing services.
“It has everything to do with the provider and not the product,” he said. “Credible solar and finance companies are already doing that. If (customers) ask a few simple questions, they should have peace of mind and will have a system that generates power for years to come.”
Those questions include asking if the company operates in state, is a member of the Missouri Solar Energy Industries Association, has references and how long it has been in business.
While Roberts has ownership in Arrowpoint and VeriWatt, he said the companies won’t be making recommendations for one another.
“We’re going to stay away from that because I don’t want to feel like we’re picking favorites in the industry,” he said. “If I was going to recommend anyone through VeriWatt, it would more than likely be an electrician, not another solar company.
“This is really about arming the customer with fact-based information that can be verified. They can then call the manufacturer, a local electrician, or if they want to call someone in the solar industry they could. But at least they would know ahead of time what they’re dealing with.”
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