Defects, False Promises Equal Trouble for Solar Panel Makers

Solar panels have been lauded as a green source of energy that anyone can use: simply fix the panels to your home and harvest the power of the sun. The technology behind solar panels is a feat of engineering, and just last week, the world’s largest solar power plant opened in the Mojave Desert, California. The plant came at a cost of $2.2 billion, covers five square miles and is set to power 140,000 homes. The initiative, a joint project between NRG Energy, Google, and BrightSource Energy, also received a $1.6 billion federal loan guarantee.

Environmental concerns have already put the brakes on a second similar project.

Not everything may be as it seems, though.

While the panels at the plant differ from photovoltaic panels commonly used by the public (the plant uses solar thermal technology to boil water using the sun’s heat, generating steam to create power), The Wall Street Journal is already warning of evidence that “the technology it uses is killing birds” as temperatures around the plant reach 1000 degrees Fahrenheit. Environmental concerns have already put the brakes on a second similar project. It remains to be seen if environmental worries will eventually outweigh the plant’s green credentials. One thing’s certain – this isn’t the first problem to hit solar panels.

A $5 million class action lawsuit was filed in early February against a group of solar panel installation companies alleging that they lied about the savings customers could gain on their electricity bills. The suit, filed by brother and sister Twyla Torregano and Clement Torregano Jr., lists Sader Power LLC, Sader Power Enterprises LLC and Griswold Power LLC as defendants, and was filed in the U.S. District Court of the Eastern District of Louisiana on February 7. According to the siblings, they both installed solar panels on their houses after seeing advertisements in print and on television promising savings on their electricity bills. This, it turns out, was not realistic. The lawsuit claims the defendants engaged in unfair trade practices and employed a scheme to show falsified customer bills that suggested a quarter reduction in costs once solar panels were installed – and even went so far as to claim bills could be reduced to nothing in the future. The suit alleges violations of the Consumer Leasing Act, and the Unfair Trade Practices Act, as well as unjust enrichment.

The Torreganos now estimate the class membership at around 2,500, and seek compensation, restitution, disgorgement of profits, treble damages and statutory damages.

In the Northern District of California state court, meanwhile, Home Depot and the now-defunct BP Solar International Inc. are facing a putative class action that accuses the companies of selling defective solar panels. We reported last year that the speed of the solar panel boom has left quality lagging woefully behind (Solar Panels Facing Increasing Problems with Quality and Safety) and this suit, originally filed in January, alleges breach of express and implied warranties, violations of the state’s consumer protection statutes, and unfair business practices.

BP’s panels are said to have been commonly defective, failing regularly due to problems with a junction box. Home Depot was responsible for selling the allegedly defective panels throughout California. Making matters worse, the complaint claims that BP knew about the defects and continued to sell the products. The complaint puts it bluntly:

"Because of the defect in the junction box, all solar panels relevant to this litigation have failed or will fail before the end of their expected useful life.”

BP Solar International shut down in 2011, and plaintiffs now claim that the company misrepresented written warranties and led customers to believe that the panels were free from defect and, should they need it, would be replaced or repaired. As BP no longer operates a solar panel company, repairs and replacements are impossible. "The only effective remedy for breach of the warranty is to remove the existing solar panels and replace them with solar panels manufactured by others," the complaint said.

In line with the Torreganos’ complaint, the lawsuit against Home Depot and BP also alleges the companies make claims that installing the solar panels would “drastically” reduce or even eliminate electric bills, as well as “increase the value of your home.” BP and Home Depot agreed in 2004 to work together under the name BP Home Solutions. The complaint says BP was aware of the junction box defect in 2005 and released only a cursory product advisory in 2012 that understated the issue at hand. With that in mind, plaintiffs are seeking undisclosed damages, estimating at least $20,000 per class member, with six subclasses being represented. The suit has now been removed to federal court.

So, things aren’t looking so bright for the solar panel industry right now. It may be that production quality needs to be improved; it may that more realistic information about solar panels’ impact on electric bills needs to be made available. Either way, there’s a clear disconnect between what consumers want and what they’re getting, and in an industry that’s up against such stiff competition as traditional energy companies, these are mistakes that solar panel companies can’t afford to make.