Phoenix companies and the importance of warranty

When some people hear the word ‘phoenix’, they might think of a beautiful mythological bird, or perhaps a sunny city in south-west USA. But for the last few years in Australia, the term has come to represent a business practice so sinister, that the Australian Parliament moved to pass a law earlier this year making it against the law.

In short, illegal phoenix activity occurs when one company transfers its assets to another company, leaving only the debts behind. When liquidators come to collect the debts from the first company, the business has no assets to sell, meaning creditors can’t be paid – and the second company rises from the ashes, like a phoenix.

This gives the business an unfair advantage, as it has lower operating costs and of course, much less debt. Many businesses employing this practice try to make the two companies look the same to consumers, giving the impression that it is business as usual. A 2018 report by the Australian Government found that phoenix activity costs the economy between $2.85 – $5.13 billion.

Unfortunately, this impacts the solar industry as well. The ABC obtained information about more than 700 solar companies which have gone out of business in recent years, many of them phoenix companies. Homeowners dealing with these companies are often sold a cheap, sub-par system that fails after a short period of time, unable to make a claim on their installer’s warranty as that business no longer exists.

Homeowners looking to invest in solar should do their due diligence on both the products they are looking to use, as well as well as the company that will be doing the installation. Here’s what you need to know.

Solar panels typically come with two types of warranty from the manufacturer:

  • Product warranty: this covers you if there are any defects or issues with the panels from the manufacturer.  The minimum product warranty for solar panels is 10 years, some brands come with 12, 15, 16, 20, 25 or even 30 years. It’s important to note that the length of product warranty is not an indicator of quality, and to look for reputable brands, with demonstrated reliability and performance.
  • Performance warranty: this promises that the solar panels will deliver a certain amount of output for the length of the warranty. The industry standard is a guarantee of 80% of output promised for a period of 25 years.

Many quality solar installers prefer LG solar panels due to the piece of mind they offer. Not only are the panels themselves high-quality and high-performing, but the sheer size of LG’s business means it is highly likely to withstand the ups and downs businesses face – to put it simply, if you make a claim on your business in 24 years the LG business will still be around to honor it!

Inverters are typically more complex components of a solar panel system, as they work to ensure the sun’s energy captured by your solar panels can be turned into electricity you can use in your house. As a result, inverters typically have shorter warranty than solar panels, with 5 years the industry standard. The highest quality inverters on the market, from companies like Fronius and SolarEdge come with 10- and 12-year warranties, respectively, but this is not the only consideration. Fronius and SolarEdge are also easy to use, they’ve demonstrated reliability and performance and they have Australian based technical, service and warranty facilities. SolarEdge is the largest inverter supplier in the world, and has financial stability we can rely on.

Most batteries come with similar warranty periods as inverters, with market leaders LG Home Battery and Tesla both coming with a 10-year product warranty and a 10-year performance warranty.

The final warranty homeowners need to pay attention to is the installer’s warranty. This is where much of the phoenix activity occurs – manufacturers typically need to have factories for their products, so they are less able to cut and run so quickly. Installers on the other hand typically have less inventory and no factories, so it is much easier for them to disappear and then rise from the ashes.

The industry standard warranty solar installers should provide you with is 5 years, and you should confirm what it covers over this period. At a minimum the installer’s warranty should cover your system for any workmanship and installation defects, with quality installers also ensuring you are covered for the cost of any repairs incurred under warranty.

It is important to determine from the onset if the manufacturers of solar panels and inverters have a registered office in Australia with local technical, service or warranty centers – or will you need to send faulty items back to their country of manufacture when making a warranty claim?

When you buy a solar system the warranty is between you and the manufacturer of the equipment, a good retailer or installer may assist with the warranty process, even then, you need to carefully select a reputable retailer or installer that can stand by their installation and workmanship warranty.

One of the most important things to check is that you are partnering with a certified Clean Energy Council (CEC) Retailer. CEC certification not only means your installer is trained and qualified to design and install a system that suits your needs, it is also necessary for rebates to be claimed from the government.

It is especially critical to do your due diligence with your installers.

Clipsal Solar is backed by two of the strongest companies in the electrical industry. Clipsal, one of Australia’s most iconic brands, is celebrating its 100-year anniversary this year and has its roots in Adelaide.

Clipsal Solar has the support of Schneider Electric, one of the world’s largest and most sustainable electrical companies, founded in 1836. Schneider Electric helps some of the world’s largest companies reduce their energy consumption with digital technology – essentially an enterprise-grade version of the Pulse Analytics Kit and mobile app.

With an unrivaled 184 years of sustainable electrical excellence behind it, you can guarantee that Clipsal Solar’s business – and your warranty – won’t go up in flames.

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