Ingenero one of Australia’s largest solar companies have called in the administrators and shocked the industry. Ingenero have been responsible for some of the countries largest renewable projects including the 1.5MW facility on top of the University of QLD. This also puts into doubt many upcoming projects including Rio Tinto’s 23M dollar hybrid facility in Weipa. What is the lesson in this? With the industry going through a sharp contraction only those who can carefully manage their overheads will survive. Any companies carrying large sales and or marketing operations combined with heavy lease responsibilities – such as most of the solar companies you see on tv – will be at very clear risk of been unable to complete on margins.
We see it all the time – the classic profile is a fancy office with huge numbers of management, administration and marketing staff all held up by external contractor’s and a single service technician. The important thing to take note of is that for every $ a company spends on marketing that is another $ that they have to re coup from you the customer.
Many of these companies were modeled and created during the unsustainable boom periods of STC multipliers. Now with falling installation rates their models simply arent reliable – and having locked in long term lease and finance arrangements they are unable to move fast enough to beat the administrators.
So far the history of solar in Australia is telling us that it is tight in house operations which are delivering the best results in a sustainable fashion. Having in house installation allows careful control of labor costs. Furthermore many of these boutique companies have not sized themselves to the boom – rather preferring to deliver a consistent throughput of quality installations and therefore constantly reducing marketing overheads – and at the same time increasing referrals. Some of the larger companies are battling the opposite – poor installations have led to ever reducing referrals and ever increasing marketing budgets.
Eventually something was always going to pop and it is – in a far more spectacular fashion than anyone foretold.
Dont fall for sales speak – demand well documented and designed systems – and use reputable products of some historical standing. There are still plenty of ways that solar can be purchased with low risk and high return.