Australian Solar Power’s ‘Pizza Wars’

Australian solar retailers have been dropping like flies over the last year – and their demise isn’t just due to government policy.

In the last 12 months, a number of well known solar retailers have wound up in the hands of receivers.

– Clear Solar went into administration in June 2011 and was bought out by an electrical wholesaler.

– In August 2011, SolarGen faced the liquidator, with settlement of the sale of its assets occurring in February this year.

– In September last year, Adelaide-based Solar Shop was put into the hands of receivers as it was unable to meet debt obligations to Westpac. It has since been sold to an existing solar company.

– Early this month, Neco Holdings Pty Ltd went into receivership, with the final tweet on their Twitter account stating:

“Neco is no more. We did our best to survive but government policy and dodgy cut-price competitors finally caught up with us. Sorry everyone.”

– Beyond Building Systems is the latest to fall, reportedly collapsing as a result of a $1 million debt to the Australian Taxation Office and problems with its SunnyRoo brand of solar inverters.

.. and the list goes on. Additionally, some companies might still be operating, but only just.

The events have not only impacted on many jobs, but also affect consumers who have paid deposits on systems and are still waiting on installation; or are experiencing difficulties with their system.

The solar retailer arena may increasingly become a case of survival of the fittest rather than the cheapest says Jeremy Rich, CEO of national commercial and residential solar provider Energy Matters.

“We’ve been fortunate in that the decisions we’ve made have seen Energy Matters remain strong. While wishy-washy government policy has certainly played a role in the demise of some; as Neco mentioned , the industry can be its own worst enemy at times. It’s become incredibly competitive and price-cutting wars don’t always see the consumer being the winner.”

Mr Rich compares the situation to “pizza wars”; with one important distinction.

“You might buy a $5 pizza on a Tuesday, then buy another on a different day at a higher price – the company can still make enough profit overall to make the $5 deals viable. Even if you only buy pizza on $5 days; there is still some margin, a repeat business element and additional purchases of other items may occur. In the case of solar – you buy a system, or should only have to buy it, once in many, many years.”

Mr. Rich warns the age-old wisdom about deals seeming too good to be true can certainly apply to solar panels.

“What good is a super-cheap solar power system if you can’t get it installed and the company disappears with your money; or if it fails after a few months with no-one left to be accountable? Flashy TV ads aren’t an indicator of the strength of a firm either – in fact, extravagant promotion can push a company deeper into the red.”

Mr. Rich believes competing purely on price is a very dangerous business.

“Price is certainly important, but there must also be something to differentiate you from your competitors. This is what Energy Matters has focused on, offering true value-for-money solar power solutions; with value being something more than just the price tag,” he states.

“This approach is why we remain solid company looking forward to installing thousands more solar power systems and helping households slash their electricity bills. We applaud any solar company who approaches the business in the same way, as everyone wins.”