SEC probes Sunrun, SolarCity over customer cancellations
- The U.S. Securities and Exchange Commission last week began probing two major solar companies over whether they are adequately disclosing customer cancelation numbers, Wall Street Journal reports. The SEC issued a subpoena to Sunrun and is reportedly looking into SolarCity.
- According to unnamed sources in the paper, cancelations rose as high as 40% this year at Sunrun, and about half the customers at SolarCity backed out of contracts before solar panels could be installed in 2016. For Sunrun, the number of cancelations led to diminished growth expectations, and Tesla disclosed in a report earlier this year it was ceasing door-to-door sales.
- The investigation comes as larger solar companies struggle to compete against smaller installers, face negative policy decisions over net metering and watch prices fall for solar panels.
The residential solar sector is facing some growing pains as the market matures, more competitors enter the marketplace and utilities increase pressure to cut compensation rates for excess energy sent to the grid.
Multiple media reports speculate the possible cancelation numbers played a part in lowering growth expectations for major players like Sunrun and SolarCity.
Cancelation numbers are a popular metric for investors to ascertain a company's health, and while some solar companies disclose that customers are canceling contracts in quarterly earnings calls and reports, they are not revealing actual numbers.
A Sunrun spokesperson told Bloomberg that “we only provide guidance on installations and not on bookings and we have been within 1% of our annual guidance to investors in both 2015 and 2016 when we have been public."
Sunrun installed 282 MW of solar, 3 MW short of forecasted installations, according to the news outlet. And a SolarCity spokesperson said the company doesn't focus on pre-install cancelation rates, with growth projections based on "actual deployments."
In Q1 of this year, Tesla, SolarCity's parent, only installed 150 MW, a 25% drop compared to the previous quarter, PV Tech reports. The company is also streamlining its solar business by dropping door-to-door sales, previously the bedrock of its sales technique, and halting advertising.
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