The top 6 threats facing the residential solar industry in 2024

The biggest challenges you need to know about and how to get ahead of them
Author : 
February 8, 2024

Solar is making headlines, and it’s unfortunately for all the wrong reasons.  Solar companies are filing for bankruptcies or simply closing their doors.  Job losses are mounting, with CA dubiously leading the way with over 17,000 jobs lost in 2023 alone.  

It makes you sit and wonder, what will happen in 2024? 

We have seen some positive indicators.  The cost for solar hardware is at its lowest price ever; domestic solar manufacturing is finally starting to take off; and perhaps the biggest driver of continuing solar adoption?  Utility companies keep increasing rates.  As one of our CA customers put it:

"PG&E is the best company at marketing for solar. They announced a rate hike this January and another is coming in March."

Everything is far from perfect, though.  There are some major landmines that could sink the solar industry this year.  Below we’ve shared 6 overlooked solar challenges in 2024, including how they’ll impact your business and how you can plan around them. 

Threat 1: Growing consumer distrust of solar

When solar makes the local evening news, we know that's not a good sign.  Over the past year, we've seen new coverage of customers being scammed in places as far apart as Pennsylvania to Florida to Nevada.  Time has now published multiple articles of solar sales people advertising incorrect rates, or even signing up people for solar without their knowledge. 

It’s true that the solar market has been flooded in the past few years with predatory solar bros and pop-up companies that are misleading homeowners and businesses.  These companies pitch customers on a “zero cost” solar project, claiming government incentives and tax breaks will make it so they never have to pay a penny.  Others go even further and lie about interest or utility rates.   

On top of that, as companies go out of business (Pink Energy, Vision Solar in both FL and CT, and Erus Solar to name just a few), they leave behind consumers with incomplete installs or systems that aren’t working and with no one to help them.  

Though this is a small fraction of the industry, the negative headlines result unfortunately, in a prospective customer base that is more skeptical than ever on the promise of PV.  In fact, a 2020 report found that 13% of consumers did not trust solar companies to be honest and upfront.  This makes navigating the solar landscape difficult for reputable solar sales teams.  

How to get ahead? One solar company we spoke to made the call to break up with their sales dealer and invest in an internal sales team.  This allowed the company to lower sales costs and keep its pipeline full.  You could also invest in community events to educate local consumers about solar and your company's offers.  No, this doesn’t mean you have to invest in a presence at your local Costco.  These can be small events, like a farmer’s or green market, or larger events around your community, sometimes in partnership with equipment manufacturers who can bring additional marketing dollars to the campaign

Finally, nurture your own organic, outside-sales-force —  your own customers.  Make sure your team is working to keep the champions of your company well informed of the latest on your company so they can advocate for you on your behalf and keep sending in referrals and writing you 5-star reviews.

Threat 2: Absurd legislation being introduced at the state level

There’s no beating around the bush:  In 2024, there are some absurd laws being pushed by state officials.  For example, a new bill being introduced in Utah allows a solar consumer to cancel their contract up to 15 days after their second monthly utility bill for any reason after the system has been commissioned.  Yes, you read that right.  It’s absurd.  

If passed, solar companies in Utah face the prospect of removing everything that has been installed and returning absolutely all money to the homeowner within 10 days.  And if the bill does go through, this type of legislation isn’t just going to affect people in Utah — copycat legislators can easily duplicate this in their state, impacting everyone in the country. 

We see similar bad-faith legislation elsewhere in the country.  Nevada has outlawed door knockers, forcing solar companies to use only in-house sales, no third-party vendors.  While in threat 1, we brought up the idea that more solar companies might move sales in-house, this should ultimately be a decision left to the installer, not one dictated by politicians outside of the industry.

How to get ahead? If you want to fight back against this kind of legislation, joining local trade associations like CALSSA, MSSIA, or FLSEIA is a great way to stay updated with what’s happening in your area and learn ways you can impact the legislation.  Larger organizations, like NREL, DOE, or even the Library of Congress, are other ways to keep abreast of past and upcoming legislation for state and federal changes in the solar industry.  Also, working to educate your local solar community, including homeowners, allows you to push back on anti-solar legislation.  The Department of Energy put together a great resource on how local governments can increase their community’s access to solar energy deployment.

Threat 3: Utilities changing the rules of the game (again)

Implementing NEM 3.0 has cost the California solar industry over 17,000 jobs, and these changes are coming for other states across America, including Arizona, Idaho, and West Virginia.  Even when the job loss is not as stark, we’ve seen how similar net-metering changes by utilities in Indiana last year have decimated solar adoption, resulting in a 67% decrease in solar installations.  Of course, we all know these changes are led by utility companies hoping to disincentivize solar installations and keep ahold of their energy monopolies.  By the way, guess what company the sponsor of the Utah bill works for?

How to get ahead?  It is important to take proactive measures to ensure you can combat these challenges.  For example, solar installers in CA that have a history of selling solar + storage or storage add-ons have fared much better than the installers who only focused on solar after NEM 3.0 took effect.  By staying up-to-speed on technical options to get around utility decisions, like batteries, you can simultaneously gain new revenue streams, as well as position yourself as an energy expert in your community.

Also, joining trade industries is a great first start, but it isn’t everything.  You have to work with your local community to push back on these changes, secure their ability to install solar on homes and businesses, and receive adequate compensation for helping move the renewable energy industry forward and securing energy independence.

Threat 4: Thousands and thousands of aging systems

It’s a point of pride that solar has such a rich history.  So many systems have been installed in the last 20 years, each one doing its part to help drive down the cost of solar and increase its rate of adoption.  However, these aging systems are starting to cause problems of their own.  Inverters are hitting their design life, older panels that are falling out of warranty are becoming difficult to replace, and younger panels that have problems and need to claim warranty replacements are taking up a lot of the industry resources. 

Now, the industry as a whole is holding its breath and hoping it won’t snowball completely out of control.  At the same time, solar companies are going from managing 1000 systems to over 10,000 systems, resulting in service departments that are already stretched thin. On top of that, there are plenty of systems that have been installed by companies that are no longer in business or have systems that are out of warranty.

How to get ahead?  Companies need to shift into a mindset where they see their service department as a profit center, not a cost center.  Investing in a good customer service department and building an actual service offering is a good start.  This allows you to generate additional revenue servicing orphaned customers while also helping you build the capability to service your own growing fleet.  

The next step is to implement a monitoring platform that actually works for your team, so they can proactively keep up with customers long after the installation.  Best of all, since not all solar installers understand the looming importance of service, you will be at the forefront of this shift.  As for those orphaned systems left behind by now-defunct solar businesses?  A company with a well-oiled service department can create a win-win by rescuing those owners from solar purgatory while opening up a new revenue stream.

Threat 5: Tariffs keeping solar costs higher than necessary

Tradecases, and the threats of supply chain disruptions and retroactive tariffs that they bring, are among the key ‘features’ of the solarcoaster we all know and love, and they’re back, rearing their ugly head again. 

The Biden Administration commerce department has walked back the tariffs threat by rolling out the Anti-Dumping/Countervailing Duty (AD/CVD) waiver.  With this waiver, solar imports have a free market once again (and less forced-labor-built modules…) — meaning lower costs on solar hardware.

However, the mysterious entities behind the non-manufacturing manufacturer Auxin Solar, have filed a federal lawsuit, which, if won, per Solar Power World, could result in tariffs being applied to solar panels installed up to two years ago!  

How to get ahead?  Vote for political candidates that are aligned on the economic, security, and job creation opportunities created by the solar industry.  And, again, support your trade organizations. Fighting this sort of thing is exactly the reason that trade organizations exist. 

Threat 6: Financial reckoning

An eye-opening report by Forbes has spotlighted some questionable practices from some of the biggest names in solar, including Sunrun, SunPower, and Sunnova.  Whistleblowers contacted the Securities and Exchange Commission (SEC) about how federal green subsidies might have fueled improper financial behaviors.  The Act was designed to boost the solar industry by allowing investors to claim 30% of the cost of a solar system as tax credits.  

Now, there are allegations that some have been manipulating the system’s value and pumping up the price through shadowy practices.  If these allegations prove true, then the SEC and IRS will take action, leaving these organizations in a more precarious situation amid this tough market.

How to get ahead? We recommend that you diversify your financing options.  Don’t bank on just one of these three major players.  While it won’t always be something as dramatic as an SEC investigation, the past year has shown how putting all of your financing eggs in one basket can rock a solar business’ stability.  Whether it’s loans, PPAs, or other financing products, you don’t want to become overly reliant on one way of doing business.

Get ahead of solar threats

Even though we are going into 2024 facing all these problems, there is a light at the end of the tunnel. The CEO of Enphase predicts Q1 to be the bottom of solarcoaster, after which the residential industry will begin to expand once again. To prepare, one of the best ways to differentiate your business is to invest in your customer experience — whether that’s post-sale or even post-install. Bodhi helps you automate your customer communications at every stage of the project, giving your customer peace of mind and earning you more 5-star reviews. If you’re curious about how Bodhi can help your solar business, get started today for free!

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