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Minnesota solar installer bankruptcies leave unfinished projects, calls for better oversight

Minnesota solar installer bankruptcies leave unfinished projects, calls for better oversight
(The state’s solar energy trade group has made improving consumer protections a priority after a string of bankruptcies in recent years left dozens of customers stuck with unfinished projects.)

By Frank Jossi, Energy News Network

The state’s solar energy trade group has made improving consumer protections a priority after a string of bankruptcies in recent years left dozens of customers stuck with unfinished projects.

Minnesota solar industry leaders are working with state officials to tighten oversight of residential solar contractors after the bankruptcy of a Utah-based company left dozens of homeowners with unfinished projects.

The Minnesota Department of Labor and Industry reached an agreement last week with the trustee of Empire Solar Group LLC, a national solar installer that went bankrupt earlier this year. The trustee promised to help 45 homeowners pay other installers to complete their projects.

As the volume of residential solar installations grows in the state, so too is the volume of complaints about installers. The Minnesota Solar Energy Industries Association says the majority of solar firms in the state are reputable companies, but it’s received emails complaining about individual installers. 

The trade association is sharing that information with the state attorney general’s office and labor department for potential investigation. If the problem involves an association member, Executive Director Logan O’Grady said he will speak to state officials and the contractor to help create a resolution.

“I wouldn’t want to allow this to get out of hand and we’re left defending the existence of the solar industry,” O’Grady said. “The majority of our members and the majority of solar companies in the state are good actors, and are trying to do the right thing for their customers and run a business and make payroll for their employees.”

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A string of solar company bankruptcies in recent years prompted increased collaboration between the trade group and state officials. Since 2018, Northstar Solar, Altaray Solar, and Able Energy closed shop, leaving dozens of clients scrambling to have their installations completed. According to Minnesota-based installers who have worked with their stranded clients, both Altaray and Empire Solar had headquarters in Utah and used high-pressure, door-to-door sales tactics to sign up customers. Minneapolis attorney Jeremy Kalin has also been working with around 16 homeowners who say they are struggling to get work finished by another Utah company. 

Still, it’s hard to gauge how many homeowners have been affected by the installer bankruptcies. The state and the solar association collect little overall data except when homeowners seek compensation from the state’s Contractor Recovery Fund, which receives money from licensing fees. Just how many homeowners pay to finish solar installations or find sympathetic contractors to do it for free remains a question, O’Grady said.

Michael Allen, CEO of All Energy Solar, said he received calls from frustrated customers of Empire Solar and other bankrupt firms. Their stranded projects could take thousands of dollars to finish. He’s angered that companies go out of business and face no fines. “We’d like to fix the customers going through this but we’d rather figure out a way not to allow these companies to come in,” Allen said.

O’Grady and his members remain concerned with out-of-state companies that have gone bankrupt and left customers with half-finished solar systems. Homeowners in that situation have few options for recourse. One is financial compensation from the recovery fund, but that requires upfront legal work. Charles Durenberger, director of licensing and enforcement for the state, said a customer must first win a civil judgment against the solar contractor. The contractor must have a residential building license for clients to qualify for the recovery fund.

After past solar company failures, Xcel Energy began requiring contractors using its Solar Rewards incentive program to have a residential building license, Durenberger said. He said the department has seen homeowners unable to access the fund because their installers lacked residential building licenses.

Any Empire Solar client who signed a contract before Jan. 22, 2021, for instance, cannot receive help from the recovery fund because the company did not have a residential building license before that date. Durenberger said that customers of a Wisconsin-based solar firm that closed after the owner’s death had no chance at the recovery fund because the company farmed out work to subcontractors and had no residential building license.

Altaray had both residential and electrical licenses, which led to nine of its customers receiving nearly $46,523 from the recovery fund in 2020, he said, and they used the money to complete installations. Though the number was far fewer than the total number of Altaray customers affected by the bankruptcy, others also found relief. Kalin represented 21 Altaray clients who did not receive money from the recovery fund but worked out confidential settlements with the company.

Sometimes lending institutions collaborating with solar companies pay to complete customers’ projects after a collapse. Empire Solar’s bankruptcy trustee agreed to release 45 homeowners with nearly completed projects from bankruptcy proceedings. That saves them a significant amount of money, as much as $5,000, in attorney and court fees. 

Durenberger said the trustee arranged an agreement with Goodleap, Empire’s third-party lender, to complete projects with local contractors at no additional cost to the homeowners. The trustee also announced a plan to sell the company’s remaining Minnesota projects to local solar contractors who can then finish the projects.

Empire Solar’s founders remain mired in lawsuits. Former employees brought a class action suit and the company that loaned Empire Solar millions of dollars has now sued it in a New Jersey court, bringing a wide range of charges.

Kalin said the trustee’s decision does not surprise him. Many solar lenders have provided homeowners relief. In the Altaray case, “lenders stepped up and did the right thing” in helping clients finish projects, he said.

O’Grady saw the Empire Solar deal as good enough. “As an organization, we felt relieved that there was finally going to be some sort of resolution for these customers and we hope we can work with them to get the solar installed,” O’Grady said. He said that two Twin Cities firms, All Energy Solar and TruNorth Solar, have stepped forward to assist Empire Solar customers.

The Legislature will reconsider legislation that failed a few years ago, which would require all solar contractors to have residential building licenses, O’Grady said. The solar association may also try to put together a buyer’s guide to help homeowners and businesses interested in solar.

Allen believes the state could consider having a nonprofit consider applications to sell solar in Minnesota. The organization would verify the solar company’s record, financial status, and marketing materials and check whether they have complaints filed against them locally and nationally. The Utah companies gave clients power generation estimates 25% higher than possible for the size of the installation, Allen found. “This would make sure you’re not having a lot of companies selling unrealistic projects,” he said.  

Durenberger said consumers have to read contractors closely and ask to see evidence of a residential building license. For now it’s still a buyer-beware environment. “It hurts me when I hear these stories of consumers that end up getting ripped off by these contractors,” he said. “But in many cases, they could have easily avoided the situation by not agreeing to a huge down payment, or structuring their contract in a way that doesn’t put them in a situation where if a contractor does fail that they’re in a situation where they owe a lot of money.”

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