Solar panel demand hits record highs as prices set to skyrocket by 15%. This could cause a solar crisis as soon as this summer

Solar panel demand hits record highs as prices set to skyrocket by 15%. This could cause a solar crisis as soon as this summer

This article is provided courtesy of Lightning Solar & Electrical

There is a big concern in the industry right now for even the top tier solar companies. As the demand for installers and systems is ever increasing, the number of good solar installers are not.

The solar companies predicted to be hardest hit will be the big ones, focusing on volume-based solar systems.

With a surplus of work becomes a deficit of solar installers and this could mean bad news for the industry.

It’s predicted by the end of the year there will be a solar crisis. Panel prices are increasing due to increased shipping costs meaning that sales and marketing type companies won’t be able to sell cheap systems or go bankrupt in doing so.

Here’s everything we know about the predictions and how they may affect you.

Solar panel installation has never been more in demand than right now

Over the past 8 months we’ve seen a huge increase in solar panel demand. Lot’s of frustrated homeowners are looking for the light at the end of the tunnel when it comes to their energy bills, and of course, that light is solar.

Since Covid, most homeowners are now working from home. Unlike before, where they would be using energy from the office, they are now having to suck more and more from the grid. This is leaving most with an outrageously high energy bill at the end of the month. The pandemic has caused solar demand to rise a lot.

Of course one of the best ways to combat this in Australia would be to invest in solar. Therefore, many homeowners have begun to make the change to a more affordable future. In turn, this has caused a ‘mini boom’ for the solar industry, and a lot of companies are taking advantage of it.

Along with the help of the solar panel rebate dropping, solar companies are having an abundance of enquiries. Of course, this soon becomes a free-for-all for hungry salesmen and companies offering the ‘cheapest’ price.

This increased demand doesn’t seem to be slowing down either, but can these solar companies handle this extra pressure?

The cost of solar panels has been rumoured to increase within months due to low supply

I say rumoured, but we’ve already seen it first hand from our suppliers. There is going to be an increase in the price of solar panels and it’s already started to happen.

This is because there is a global price increase on shipping costs which is unheard of. It’s not only affecting the solar industry but all other industries as well.

However, solar has particularly taken a hit. In Australia, we import 90% of all solar panels and inverters. Known brands like Jinko solar are all from overseas and have taken the hit.

We haven’t seen a price increase like this in years. In fact, solar panel prices have been dropping each year for the past 10 years. This is definitely a big change and something that has arguably been overdue.

So, what exactly does this mean for the solar industry, and how is it being handled?

The solar installation market was already ferociously competitive, but it’s gotten worse…

Up until recently, Australia was not affected by the price change in solar panel supply. This meant that solar companies and installers were taking advantage of the solar boom.

We all know that the solar industry is already a ferociously competitive market, however since there has been an increase in demand, the competition has gotten worse. Left-right and centre prices are being slashed on quotes and systems are being offered at cost price.

Most of the time, the companies can afford to take the hit on selling a system at a cost price because they will cut the costs elsewhere. For example, they will cut costs in solar installation, safety or equipment and after-sales care.

Companies run by sales and marketing types are just cashing in on the solar boom, not thinking about the future.

They will sell cheap systems and cut costs, but for how long will this last?

Volume based solar companies selling cheap systems will be hit the hardest

One of the types of solar companies that will be hit the hardest is the big ones, focusing on volume-based solar systems. Their goals are to sell as many cheap systems as they can in the fastest period of time.

However, this will be their downfall.

Given that the solar industry demand has increased so much, more subcontracted installers are booked up for the next 6 months. This leaves the companies to push people’s installs until the summer.

With this price increase, it may mean that the systems that were sold these past few months won’t be feasible after this price increase. This means that when they come to charge the customer, they will realise that the system they sold is not costing more than the original quote.

I don’t know about you, but I can’t see these companies sticking by their quotes but instead pulling out or going bankrupt. This will leave homeowners frustrated and without solar, potentially causing further demand.

When prices increase, they won’t be able to absorb the cost because their prices were too low

Now that prices have started to increase, all the systems that were sold months ago and pending payments will have to be re-assessed by the solar companies.

Of course, when they quote these systems they leave the margins so tight that they will not be able to absorb this price increase. Instead, they are left with no choice but to cancel or file for bankruptcy.

It’s forecast that solar panel prices will increase as much as 4x the original price (which is unheard of).

Both just as bad as each other, and of course leaving homeowners in the dust with potentially lost deposits.

When prices increase, they won’t be able to absorb the cost because their prices were too low

Now that prices have started to increase, all the systems that were sold months ago and pending payments will have to be re-assessed by the solar companies.

Of course, when they quote these systems they leave the margins so tight that they will not be able to absorb this price increase. Instead, they are left with no choice but to cancel or file for bankruptcy.

It’s forecast that solar panel prices will increase as much as 4x the original price (which is unheard of).

Both just as bad as each other, and of course leaving homeowners in the dust with potentially lost deposits.

Homeowners will be left without their systems being installed or without a warranty if the companies go bust

Even more concerning, if these companies do go bust, they leave previous customers and homeowners without the workmanship warranty on their systems. Any faults that happen will be left unanswered.

Of course, it’s very common to see faults in these cheap systems as well because most of the time the companies cut costs by subcontracting the work to unqualified, cheap installers.

Again, this is another reason why it’s so important to not get the cheapest thing. Your house is your biggest asset, so why risk it by buying the cheapest system?

This will create the solar crisis…

Our solar experts that have been doing this for over 10 years are all predicting the same outcome.

A solar crisis by the end of the year.

This could be triggered by the price increase and the huge demand for solar over these past few months along with volume-based solar companies jumping on the solar boom to get ‘rich quick’.

Author: Luke Cove is the Managing Director of Lightning Solar & Electrical.


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