Everybody loves SolarCity. Well, almost everybody.
If you've thought about getting a solar system installed in your home, you've probably heard of SolarCity, which currently sits at or near the top of the growing list of U.S. solar installers. In fact, few solar installers are as well-regarded as this one.
SolarCity, which was started by celebrity tech entrepreneur Elon Musk, has enough honors packed into its 'Awards' page to make all of its competitors green with envy (pun intended). In the last year alone, the company has been placed ninth on MIT Technology Review's 50 Smartest Companies 2015 and was included on Fast Company's list of the World's Most Innovative Companies in Energy. Suffice it say, SolarCity gets more than its share of love.
Having said that, the company-which makes solar affordable for homeowners by leasing out solar systems on 20-year agreements, instead of selling them-is not without its own issues. These problems leave customers feeling frustrated and disillusioned with what they thought was going to be an earth- and money-saving purchase.
So before you commit to leasing a solar system from SolarCity, here are the top six problems people tend to have with SolarCity (and which you might want to avoid):
From an investor standpoint, SolarCity can make some people nervous. The problem is not its revenues, which have grown 41% compounded annually since 2012. The problem is that the amount SolarCity spends on sales and marketing and general and administrative costs have skyrocketed by 85% and 79% compounded annually. David Trainer at Forbes explains:
"Essentially, the cost of attracting new customers and hiring more workers has far outpaced revenues."
And that's not all. SolarCity is about to receive an even bigger blow to their balance sheet.
One of the things that makes SolarCity click is the money it receives from the government. First, they've accepted more than $11 million in federal stimulus money. But even more impressive is the $411 million in tax breaks they've received as the proud owner of thousands of solar systems. But with the solar tax credit here in the U.S. set to expire in 2016, they're about to lose all that tax credit revenue.
This will put SolarCity, which already has negative profits, in an even worse position-and that's bad not just for its investors and employees, but also for customers. Why? Because SolarCity customers lease their solar systems from the company.
If the company ever went under or found itself in bad spot, they would have to sell that equipment and the lease to another company. Customers would find themselves stuck in a lease with an unknown company. These situations can get messy really fast, with the new company changing the terms of a lease or not honoring promises made by the previous company.
In their July 2015 review of SolarCity, solar industry observer Pick My Solar compared SolarCity's bids to those of its competitors in California. Shockingly, SolarCity's bids were 34% higher than the average for all California solar installers. That's an extra $10,000 for your run-of-the-mill solar system.
This would be understandable if SolarCity used premium equipment, but they're equipment has been shown to be the same as its competitors'. The real reason why SolarCity is more pricey is, frankly, a little shameful.
Pick My Solar's review pointed out that SolarCity prices its projects on a cost-per-watt basis, no matter the size of the project. That rate is always $5.10 per watt. Put on your accountant hat for a second and you start to see why this a bad thing, as explained by Pick My Solar:
"Having no discrepancy in price is an obvious red flag. Overhead, permitting, engineering, and transportation are generally consistent costs, no matter what the project size - which means more dollars are going to profit margins on larger projects."
Simply put, SolarCity uses their $5.10 cost-per-watt model as a way to squeeze more profits out of customers. It might even cause them to push customers into bigger projects than they need.
Does it always? Probably not. But Pick My Solar's review revealed that, while most solar companies in California completed their customers' installations within two to four months after signing, SolarCity took embarrassingly longer to turn things on:
"SolarCity is an outlier here, known to take six months or more to install a system due to backlog and inefficiencies. The MyPower contract confirms this exasperated timeline, stating that the installation will be done within 12 months!"
Of course, to give them the benefit of the doubt, this problem might be unique to SolarCity's California operations. But when customers decide they want to invest in solar power, they probably aren't expecting to wait a half-year to make that decision a reality.
Even when the moment of installation finally arrives, things can and do go badly. Search for SolarCity complaints on ConsumerAffairs.com, and you'll hear stories of installers failing miserably in so many ways.
One reviewer tells of a SolarCity technician coming to their house to survey and determine requirement, drilling holes in their garage ceiling, and simply leaving dust and chunks of drywall all over cars, the floor, and other items.
And then there's the damage that can occur during installation itself. On the Better Business Bureau page for SolarCity, one customer complaint recounts:
"My home has been damaged by their installation and product. They did not finish the install in one day and it took five weeks and numerous phone calls to get them to finish the job. Then my roof started leaking from their installation leaving my ceiling hanging in ruin."
Finally, sometimes the equipment just isn't installed correctly. "Many of the consumers complain that they have spent months trying to remedy faulty installation, only to receive either continuous boilerplate responses from customer service or no response at all," says Tori Richards of Watchdog.org.
But this problem is more than just a few poorly trained technicians. All three of these stories highlight how poorly SolarCity sometimes performs in customer service , leaving customer hanging for weeks on end with serious issues. When you're signing a lease with a company for 20 years, this is not the kind of customer service you want to be stuck with.
SolarCity's 20-year solar-power-purchase agreement sounds like a no-brainer right now. Customers get solar power with no money down, and, if all goes according to plan, they pay less per month than they do for their current power bill. Unfortunately, when you're talking about the next 20 years, the likelihood of things going wrong is high.
Pick My Solar points out that the utilities that currently buy excess power from SolarCity will inevitably lower their rates in response to so many customers turning to solar:
"Some predict it will lead to tens-of-thousands of contractual [power purchase] agreements that leave homeowners paying more for their solar system than they would be paying for electricity from the grid."
This is exactly what happened to one customer in Half Moon Bay, California. For $600 up front, SolarCity told Jeff Leeds he could expect to pay $182 per month for the next 20 years as part of their "performance guarantee." Fifteen months later, Leeds found himself in a very different situation:
"The local utility company has raised its rates and instead of a lower bill, Leeds is pushing $500 a month with no way out for the next two decades. And he has the eyesore of solar panels that cover most of his roof."
And then there's the problem of equipment. The rate at which solar technology is advancing all but guarantees that the equipment that customers sign a lease for today will be obsolete in a few years. Richardson explains:
"No matter how rapidly solar technology evolves, the SolarCity lease ties each homeowner to technology that is cutting edge only at the signing of the 20-year contract."
And what about in 20 years? The equipment customers are tied to might very well be unusable.
No list of SolarCity problems would be complete without the dreaded true-up bill. Countless online complaints against SolarCity speak of customers assured by the company that their system would cover all their energy needs. And even if it didn't, they could expect nothing but tiny, harmless monthly electric bills for the next 20 years. But then customers are surprised when one very large electric bill arrives at the end of the year.
One victim of the true-up bill, Angelina of Riverside, California recounts:
"After receiving our first true-up bill from Edison we were in shock to see that we owed them $1,150.00. Upon calling customer service we were told that our system was only designed to cover 60% and that 100% was not possible. We would never have agreed to 60%. Conveniently, the sales rep that we spoke with no longer worked for the company because she mislead people... But in no way, shape, or form was SolarCity going to honor what we were told and what we agreed to."
To be fair, true-up bills aren't a problem just for SolarCity customers. It happens with every major solar installer out there, when salespeople gloss over the subject and focus only on those monthly savings. And sometimes, customers are actually to blame.
Solar expert Craig Lawrence explains on Quora that there are two possibilities. One is that your solar system failed to produce the electricity it promised. If you see that your system is producing less than was promised in your lease, you have a production guarantee and can push SolarCity to fix the problem.
The second possibility Lawrence points out is that the customer's consumption has actually gone up dramatically:
"There is a psychological effect when some people get solar that says, 'Hey, I can use a bunch more electricity because I'm making all of this clean solar energy!' I've seen this happen many times, and it can wipe out your savings from your solar."
In these cases, it seems that customers should be able to work with SolarCity customer service to pinpoint the causes and possible fixes to the problem.
Regardless of the cause, however, SolarCity needs to do a better job of setting realistic expectations before customers get locked into leases.
As mentioned earlier, some of these problems aren't unique to SolarCity. True-up bills and long-term leases affect customers of most solar installers. And, I should mention that The Best Companys.com actually ranks SolarCity among the top three national solar installers, based on our own review and the reviews of actual customers. So, while SolarCity certainly has its problems with customer service and installations, if you're set on getting a solar system at your house, it's still one of your best options.
Need help choosing a solar installer? See how SolarCity compares to other solar installers on our Solar Company Reviews page today!
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