How to Avoid Solar Scams in Australia

Fast read

Solar scams, also known as Go Bust or phoenixing scams, have been a recurring issue in the solar industry, leaving customers in difficult and unsupported situations.

Some companies offer solar packages with cheap solar panels and low-quality equipment, resulting in system failures after a short period. When warranty claims go up, companies may go bankrupt, leaving customers without the products or support they were promised.

In Australia, around 30% of solar panels are considered "Solar Orphans." This term refers to panels installed by companies that have since gone out of business. As a result, customers are left without any means of receiving service or making warranty claims. This leaves customers with no way to get service or product warranty claims.

To avoid falling victim to these scams, customers should thoroughly research solar energy companies, read customer service reviews, and seek advice from reliable sources before committing. If the solar panel system is extremely cheap - please be careful and research the situation a little more.

What is the Go Bust solar scam in Australia?

The Go Bust solar scam in Australia has happened many times within the solar industry, as it has in other sectors such as construction.

Installing solar involves a long-term investment that requires spending several thousand dollars and is expected to last over 25 years with low maintenance costs. Many companies offer products with extended warranties, including 25 years for solar panels and 10 years for solar inverters and solar batteries. Consumers are buying solar systems with the promise and expectation of long-term reliability and backup support from the original solar company for the system’s life.

The Go Bust solar scam in Australia, also known as phoenixing in the solar business, refers to a scenario in which a solar company intentionally falls bankrupt or ceases operations. Leaving customers who have paid for solar installations or services in a challenging situation. They could end up with a low-quality product or service.

How often does this occur?

Many companies have started selling solar packages with low-cost equipment from manufacturers without a presence in Australia. This can lead to issues with service and warranty support. These solar power systems are often marketed as premium quality exclusive solar products at an affordable price to the consumers who buy them.

Companies may also sell them as cheap systems to move vast volumes of systems quickly. This poor-quality solar system starts failing after a few years. The solar scam company finds that they need support from the manufacturer to cover the warranty issues of panels or inverters. It also finds that the increasing number of failures becomes a liability for them and costs them real money.

The company owners usually made good profits in the early years. But now the many warranty-related calls mean they are unable to cover the costs of servicing these claims and looking at making a loss. It’s time to pull the plug, and this is how the solar scams in Australia operate.

The company becomes deliberately insolvent and enters bankruptcy. Often the directors and owners of these companies can start up a new business under a new ABN and company structure, have no responsibility or liability for the liabilities of the old company and start the whole process of selling dodgy solar equipment.

Recently, company directors must register for a director-specific number, partly to enable the future identification of serial bankruptcy directors and hopefully prevent the practice in Australia.

hand pressing scam button

What happens to the customers of these deliberately go-bust solar scams in Australia?

Solar scams in Australia can devastate customers who trusted the company and made financial commitments based on the promised solar installations. While not all victims of solar scams in Australia, estimates suggest that close to 30% of solar installations in Australia are “Solar Orphans.” That is, the company that initially installed the system is no longer in operation, nor is the equipment manufacturer. So the customer cannot call them if they have any service or warranty requirements.

To avoid such solar scams in Australia, thoroughly investigate and assess any solar firm before entering into an agreement or making payments. If a solar system promises a $3000 return per year and the system costs $6000 and is supposed to last 25 years, don’t be greedy – such a deal sounds too good to be true.

Look for credible organisations with a track record of success, read customer reviews and ratings, and consider talking with professionals or getting advice from reliable sources. Furthermore, it is prudent to thoroughly study contracts and payment terms to verify that safeguards are in place to protect your investment and give redress if the company collapses or breaches the contract.

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