Why Titan Solar and Other Major Bankruptcies Are Not the Death of Residential Solar

On June 13th, 2024, Titan Solar Power—one of the largest residential solar companies in the country—abruptly closed its doors. That day, Titan’s employees received an email that said company leadership had tried and failed to find a buyer for the company and bring in new sources of capital and that the company would close effective immediately.

A week later, Titan filed for Chapter 7 bankruptcy liquidation in Arizona. The U.S. Bankruptcy Court for the state of Arizona lists a total of 26 entities related to the filing, operating in 22 states. A statement provided on the Court’s web page says, “In most of the cases filed, it appears that there are no assets available to pay creditors.”

Titan's closure is the latest in a string of high-profile solar company failures, including Pink Energy (formerly Powerhome Solar), ADT Solar, and others. 

In mid-July, Sunpower announced it would cease offering lease and PPA agreements, and rumors of its impending demise are flying around industry forums and LinkedIn. Recent data from Ohm Analytics and Roth Capital Partners indicates that residential solar installations will decrease by 20% in 2024.

Do all these high-profile troubles mean this is the end for residential solar?

No, they don’t. In fact, it might be a turning point for a more ethical industry.

There are several reasons why:

• The industry is waking up and taking steps to curb bad actors.

• Regulators are starting to pass solar consumer protection laws.

• Companies with poor operations and business models are failing while better companies are succeeding.

• Retail electricity prices are higher than ever, and demand is not going away.

• The underlying technology and manufacturers remain strong.

By taking on bad actors, reducing the risk of poor outcomes for homeowners, assisting state governments with consumer protection legislation, and employing excellent operational practices, good solar companies will succeed and continue to serve 

Let’s look at each of these factors in turn.

The industry is (finally) waking up and taking steps to curb bad actors

In 2023, the Solar Energy Industries Association (SEIA) became an accredited ANSI standards development organization.  The organization's newly proposed 401 Consumer Protection and 201 Installation Requirements Standards establish guidelines for ethical sales and installation practices, including requirements for employee training and contract disclosures. 

ANSI standards are voluntary, meaning it’s up to the biggest players in the industry to adopt them and raise consumer awareness so homeowners know to look for companies that follow the standards. The proposed standards are now open for public comment and will be finalized later this year. 

In addition to the standards, a new industry tool called Recheck launched in June 2024. The company’s goal is to provide industry stakeholders like contractors and financing providers with tracking and verification of salesperson conduct. 

Recheck says it will allow solar companies to “vet sales partners, prevent poor practices by unregistered salespeople, and identify individuals with a history of consumer protection violations who try to move from company to company.”

When the company announced its arrival, it already had partnerships in place with SEIA and nearly all the major solar lending companies.

Another company doing its part is Solar Insure, which offers insurance-backed warranty protection for homeowners. The company has long offered its warranty coverage to homeowners who get a new solar installation from one of its thoroughly vetted solar contractor partners. Those partners carry out repairs and maintenance for covered systems during the warranty period.

I spoke with the CRO of Solar Insure, Dean Chiaravallotti, who told me the company has a risk intelligence program under which they constantly monitor the health of solar contractors. “We take a lot of information from data sources that are not straight from the contractor,” he said. This information includes credit reports, number of installations, homeowner complaints, and “a plethora of other data” that the company monitors for contractors they work with—and those they don’t.

Solar Insure is now offering a program called SolarDetect, under which the owners of solar systems whose installation company has gone out of business can apply for ongoing warranty coverage to keep their systems operating properly. These customers are known in the industry as “solar orphans.” Chiaravalloti says Solar Insure currently manages over 10,000 such systems and is ready to take on more through the SolarDetect program. 

Regulators are starting to take notice and pass consumer protection laws

In early 2024, lawmakers in Utah and Washington took steps to improve solar consumer protection. 

Utah’s H.B. 215 updates a 2018 law, and requires a new paper disclosure form at the time a solar customer signs an agreement. It also imposes a four-business day waiting period between contract signing and installation, allowing the customer to cancel within three days. An earlier version of the bill required the disclosure form to be presented ten days before signing the agreement and provided a 15-day right of rescission. 

Washington’s H.B. 2156 establishes new rules requiring electrical contractor licenses for solar contractors and a long list of disclosure requirements. Among these are that a solar contract must include information about solar loan dealer fees and separately itemize any roofing work that would not be eligible for the federal solar tax credit. 

The solar industry has generally welcomed these new laws. The Washington Solar Energy Industries Association (WASEIA) collaborated with the Washington Department of Commerce. In a statement on its website, the group said Washington needed H.B. 2156 to curb deceptive online and in-person sales tactics and called the bill “a commendable display of bipartisan unity.” 

Shawn O'Brien, President and CEO of the North American Board of Certified Energy Practitioners (NABCEP), says he expects more states to get involved soon. “There is going to be a major push… with these companies falling by the wayside. Quality assurance has become more important.” He said he feels it’s just a matter of time before state lawmakers pass laws to require tougher standards through licensure boards.

Companies with poor operations and business models are failing, while better companies are succeeding

In its employee-facing farewell email, Titan called itself “a leader in the solar industry” and touted that it “helped over a hundred thousand families go solar.” Those families are now left without the warranty protection they were promised in their contracts, and many of them were left with problems with their solar equipment that can’t be solved without outside help. 

To many in the industry, it was obvious that Titan was not one of the leaders. The company’s business model relied on legions of sales reps who didn’t have a direct connection with the people actually doing the installations. 

This model of sales led the company to grow extremely quickly, but there was a disconnect between what the salespeople told homeowners and how the installations actually went. This led to systemic problems, customer complaints, and litigation. 

Aaron Davis, the owner of Firefly Solar in South Carolina, laid out some of the issues with Titan’s business model in a LinkedIn op-ed in late June. He told me the company “had thousands upon thousands of sales reps out there, who know next to nothing about construction, or solar, or financial… and [Titan] turned enough of a blind eye for long enough that it caused a huge amount of problems. They tried to turn things around in their last 12 months. They tried to bring in-house salespeople in. That's a much tougher path to take, and I know that from firsthand experience. But it's the right path.” Ultimately, though, Davis thinks the costs of such rapid growth were too much, and the company’s model was no longer sustainable.

On the other hand, many successful solar companies are growing. Solar Power World recently released its 2024 Top Solar Contractor Rankings, and of the top 50 residential companies, 72% were either new to the list or reported increased installation volume in 2023. And vertically-integrated installers (who employ their own sales, engineering, and construction workers) are doing better than EPCs (engineering, procurement, and construction firms that don’t employ workers in the same ways).

Demand is not going away

If there’s one thing that homeowners can be fairly certain of, it’s that the cost of electricity from their utility company is high and will continue to increase. That fact alone makes residential solar appealing, and since the start of the pandemic, those rates have been increasing at a greater rate than the historical rate.

What will happen with state net metering programs is much less certain. High-profile changes to net metering policies in states like California, North Carolina, Arkansas, and Indiana have already led to declining installations in those states. But batteries are getting cheaper, and new technologies like virtual power plants are allowing more homeowners to afford batteries and help the grid at the same time. 

Rooftop solar has the technical potential to generate about 45% of U.S. electricity usage (a number that will continue to grow as panels become more efficient). But, only about 3 percent of the nation’s 145 million homes have a solar installation. And the demand for power is set to increase much faster than it has in the past, guaranteeing the need for more rooftop solar. 

Aaron Davis put it quite nicely. “Solar is still the future of energy,” he said, “and I think the future is bright. We’ve just gotta hang in there. Interest rates will come down again, and utility rates are going to climb. They sort of balance each other out.” 

Manufacturers aren’t going away

According to the U.S. Energy Information Administration, solar and batteries represent 81% of all planned additions to the grid’s generating capacity in 2024. At 36.4 gigawatts (GW), the total amount of solar expected to be built this year is about double what it was the year before. 

That’s just utility-scale solar. According to SEIA and WoodMackenzie, residential solar will represent an additional 6.3 GW of capacity in 2023. Analysts expect the residential market to shrink by 14% in 2024, but that it will grow in 2025 and beyond.

That means the residential solar market will represent just 13% of all solar installed in the U.S. in 2024. 

The best solar panel manufacturers are smart and diversified. They serve the commercial, residential, and utility-scale markets, maintain active residential capacity, and can retool when needed to adjust to the marketplace's demands. 

Manufacturers don’t have much to worry about, considering the utility-scale market continues to add dozens of GW in capacity each year. And, supported by the Inflation Reduction Act, the bulk of new solar panels installed in the U.S. will be built by American companies. 

What happens now

Everyone I spoke to for this article is confident that the residential solar industry will weather the current storm. Each indicates that we haven’t seen the last of major solar company closures, but they also point to many companies that are thriving. 

O’Brien sees rooftop solar as entering the maturity phase of the industry life-cycle. “Part of that is companies start pulling back a little bit, and there's a lot of consolidation that goes on, which we're seeing,” he explained. “And, like with a lot of industries, the companies that are not performing up to consumers’ level of satisfaction just don't stay in the game.”

“We definitely see consolidation and mergers and acquisitions,” said Chiaravalloti. He added that “more closures are coming” but that the industry would be resilient. “As time goes on,” he said, “we're going to see a definite increase in solar adoption because the electrification of the home and automobiles will drive the demand. Solar and batteries are going to be one of the main solutions for homeowners to avoid paying more for electricity bills.”

The consensus seems to be that the companies that will survive the recent troubles are those that share a few characteristics. They tend to be vertically integrated and strongly focused on customer satisfaction from the beginning of the sales process until long after the installation is complete. They have their own team of maintenance technicians and cover a local or regional market, with intimate knowledge of the local utilities and permitting requirements. 

By working together to follow high-quality operational and ethical sales practices, help craft thoughtful public policy, and promote consumer education, the industry will see its way through our current situation and thrive in the years to come.