Homeowners have questions after SolarZero liquidation

Wednesday, 27 November 2024

SolarZero is in the hands of liquidators and its 15,000-odd customers have unanswered questions, but answers are in short supply.

SolarZero’s customers had very long-term contracts with the company ‒ sometimes up to 25 years ‒ which owned solar arrays installed on their roofs, and had an obligation to keep them maintained and replace storage batteries should they fail.

The company, which owned roughly a third of the country’s solar power installations and was majority owned by the world’s biggest investment fund manager, BlackRock, was put into liquidation in a shock move announced on the company’s Facebook page Tuesday night.

Customers have been told their services would continue “uninterrupted”, but have been given no signal as to what the long-term future holds for them.

Public relations company Sherson Willis was hired to handle the liquidation announcement, but it referred all queries to liquidator Grant Thornton, and SolarZero was making no further comments.

Liquidator Russell Moore had nothing to add to the statements already made, but it appeared the intention was to try to sell the business as a going concern.

In preparation for the liquidation, a company called Verofi was appointed to run the current SolarZero contracts with homeowners, but its executive director Jonathan Flaws would only say the company intended to publish a communication on Wednesday afternoon.

SolarZero installed solar systems on homeowners’ roofs under contracts which would see the homeowners charged monthly subscription fees.

In return they would get power generated from the sun, which brought down their monthly power costs, even though they continued to need to draw power from the grid.

The reason for the liquidation was given as “unsustainable operating losses” in part related to its finance costs, and it was its financiers who the company asked to appoint liquidators.

“The business is unable to continue in its current form,” homeowners were told.

But the question homeowners wanted answered was whether their contracts would be honoured for the remaining years that remained on them, including having the batteries on their systems swapped when the time comes.

In the absence of answers, speculation was rife on social media, including Reddit.

Some were hopeful that BlackRock would take a bath, and sell SolarZero’s assets at a discounted price to a new owner who would carry on in business, honouring the contracts.

“The current business bought the panels for X, and returns Y per year. This clearly yields a business that is likely nearly, but not quite profitable given it has gone insolvent,” posted one person.

“This is probably because they had thin margins based on pre-Covid borrowing rates to buy the panels on finance, now rates have gone up their income isn’t enough to service their loans.

“A new business buys the existing panels and contracts for X/4 from the insolvent company (which goes to paying creditors as determined by the liquidators), but still returns Y. Now that business is extremely profitable.”

“Will likely be sold onto a competitor/new company for cents on the dollar, so not much will change for those people,” another posted.

Another said: “The contracts are worth less, but they aren't worth $0. They still represent income, just less than was required to keep SolarZero afloat.”

Others were less hopeful, and several commenters on Reddit expected to see pressure put on SolarZero customers to “break their contacts”.

There were also theories about why SolarZero failed. Some believed it had under-priced its offering, locking in flat power prices for many years.

“The rate for power we purchase through them above what the panels generate is real cheap, it was locked in for 20 years at that rate two years ago and we use a reasonable amount more than what the panels produce. I feel like that might have something to do with this turn of events,” one SolarZero customer said.

Another felt the company may not have been operating as it should.

“I haven’t paid a monthly bill in 3 years but also haven’t had my solar working for that time. No surprise they’re going under really,” one said.

More to come