Solar companies collapse like dominoes, in financial turmoil as industry consolidates
More than 20 solar companies have either collpased or encountered severe financial hardship during the past few months as the fallout continues after state governments slashed feed-in tariffs and other benefits.
It is only the latest suite of casualties in an industry plagued by a gradual move away from dependence on government benefits. Even larger players, like Solar Shop, were unable to escape collapse.
"I'm not surprised," John Grimes, head of the Australian Solar Council, told SmartCompany this morning.
"It's really been a roller-coaster ride for the solar industry in Australia. We go into these cycles of boom and bust and it's just really bad for both consumers and the industry as a whole."
A search for solar companies under ASIC's own database reveals a wide range of casualties - 23 individual businesses have either been placed in liquidation, administration, or have been hit with court orders in the last five months.ÂÂ
SolarEco, which describes itself as a "leading solar power system installer", was hit with a winding up order yesterday. Premier Solar, based in South Australia, was placed in liquidation last week.
Solar 1, a Western Australia-based company, was also placed in liquidation last month.
These are just a handful of the companies that have been affected by the drawback from solar support. At SmartCompany we've covered several more that have collapsed in the past 18 months.
Solar and wind energy provider Rewind Energy collapsed in July last year, following the collapse of others including DCM Green, First Growth Funds and Intelligent Solar.
Then in September, Solar Shop collapsed – the company was turning over $70 million.
In March this year, Beyond Building Systems collapsed due to a $1 million debt with the tax office and, in May, Melbourne-based solar hot water manufacturer Edson was placed in administration.
Grimes says the latest collapses are simply the fallout from states having dropped feed-in tariffs and benefits, most recently in Victoria.
It's a "time of transition", he says. Industry players are torn between the need for government assistance and the desire for the industry to stand on its own feet.
"Whenever there is news that a program is going to close or a benefit is going to change, everyone tries to rush in on the same two weeks' worth of work. That pulls forward future sales, so you have companies that just don't survive."
The industry is looking forward to the Federal Government's review of the renewable energy targets. Grimes says it's a possibility the outcome from those discussions could provide more certainty.
But for now, he says, it's imperative for companies to diversify.
"You have to remember the market is maturing faster than any other sector. What we saw take place in the IT industry over 20 or 30 years has been condensed, so you're seeing an influx of entrants."
"You're also seeing natural consolidation. Ultimately, it will work like any other industry, and there will be balance."
For more about the solar industry, read our IBISWorld feature on sustainable energy.