Good Morning
What we’re reading this week:
DOE announces $3.5B for charging infrastructure (UD)
The future of charging (MR)
How megafires are remaking the world (NYT)
An intro to climate offtake agreements (C)
The Greendicator
Top Deals of the Week
![EVPassport EVPassport](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F2f2d8db5-87a9-4328-a11d-492bdb9b9210_750x986.png)
Charging infrastructure startup EVPassport raised a $200M round from Northleaf Capital Partners (TC)
Fast energy storage startup Skeleton Technologies raised a $114M debt / equity round from Siemens Financial Services, Marubeni Corporation, and others (EU)
Lithium extraction and refinery tech startup EnergyX raised a $50M Series B led by General Motors (FN)
myenergi, a British smart home energy technology manufacturer, received a $36M investment from Energy Impact Partners (FN)
Collaborative sustainability platform Scope3 raised a $20M Series B led by GV (BW)
Green hydrogen developer NovoHydrogen received a $20M equity commitment from Modern Energy (BW)
Overstory, a startup using AI to mitigate wildfires and protect biodiversity, raised a $14M Series A led by B Capital (BW)
Grid monitoring and analytics startup Ampacimon raised a $10.6M Series C led by Junction Growth Investors (FN)
Earth imaging startup Urban Sky raised a $9.8M Series A led by New Legacy Ventures, Lavrock Ventures, and Lerer Hippeau (TC)
Cloover, a Berlin-based climate fintech, raised a $7.6M pre-seed round led by 9900 Capital (EU)
Carbon Equity, a climate VC and PE fund investing platform, raised a $6M Series A led by BlackFin Capital Partners (FN)
Volteras, a data startup for EVs, raised a $2.9M seed round from Exor, Long Journey Ventures, and more (TC)
Sustainable fashion resale platform NOLD raised a $1.1M seed round led by Tilia Impact Ventures (EU)
Climate change fighting game Zeedz raised a $1M seed round led by Die Hohle der Lowen (EU)
Green Theory
Are solar leases driving a rise in solar fraud?
In a Time article where reporter Alana Semuels complains about buying out a residential solar lease, the key piece of evidence of rising solar fraud comes in the form of instances of complaints containing the phrase “solar panels” from reportfraud.ftc.gov. The page title for the article (different from the article title, oddly) reads “Leased Solar Systems are Failing Across America.”
The key chart (shown below) illustrates a stark increase in solar fraud claims over the last 6 years. Semuels explains that leasing a solar system, instead of buying one with cash or a loan, “left [many homeowners] in the lurch when those [solar lease] companies went out of business. Often, their solar leases were packaged and sold, alongside thousands of others, to private equity companies and other investors who were not incentivized to ensure, years into the leases, that service was good or that panels even worked.” Indeed, private equity firms have a strong record of ruining socially positive (and even essential) services and products—just look at nursing homes.
The founders of Sunrun—the largest residential solar installer in the US, who owns nearly all systems they install on US homes—come from finance backgrounds. Ed Fenster, one of the co-founders, summed up the world of private equity that awaited them, if they chose not to launch Sunrun:
My co-founder, Lynn … when we were making the final decision to launch the company, she was like, ‘Well, we could go back to private equity and sell mattress companies back and forth to our friends, or we could do this!’
Kudos to them. Ed, in this same interview, also relates that early Sunrun customers told him they are betting on Sunrun to fail before their 25-year lease agreement is complete, so they can keep the solar equipment for themselves. Perhaps these homeowners thought Ed was laughing with them, but given his background in private equity, it’s probably safe to assume he was laughing at them.
![](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F626444e5-702d-4a12-a8ce-4ce2cfe6c093_1694x1438.png)
Even though Sunrun is still in business, 16 years after its first 25-year contracts were inked, we can see plenty of other examples of failed solar companies that, as Semuels rightly points out, sold off their installed assets to ill-prepared financial firms who bought the privilege of billing homeowners in exchange for providing nothing.
Mr. Fenster would know that these lucrative solar contracts don’t evaporate along with a firm going bankrupt. Outside Sunrun, rates of solar bankruptcy have been dramatic. The CEO of EnergySage, a rooftop solar marketplace, shared with Time that for “over half of all solar installations … the company that originally installed the panels or pledged to maintain them has gone out of business.” Taking advantage of the vacuum of solar maintenance support, companies such as Omnidian specialize in this service for homeowners and business owners.
Still, it’s not just solar leases, and other third-party-owned (TPO) systems, evoking complaints of fraud from homeowners: solar loans and cash systems’ sales lead to their own debacles. As Semuels highlights:
Companies that sell, rather than lease, solar panels are unpopular, too; dozens of customers have filed complaints against a company called Pink Energy, which abruptly went out of business in September 2022 and filed for bankruptcy after allegedly selling defunct solar panels and misleading customers about their benefits.
Given the solar fraud cuts across the rooftop solar industry (not just TPO), how do higher volumes of fraud claims stack up against increases in solar installs?
Fraud Reports Growing
Looking at financing and installation data published by the Solar Energy Industry Association and EnergySage, we can put the FTC fraud complaints in perspective. To be sure, the volume of fraud reports are increasing, even relative to the amount of solar installed on rooftops. From about 4 megawatts installed per solar complaint in 2018, the industry now gets a complaint for almost every US residential MW installed. Over that time, systems have also been getting larger, so as a share of residential installations, complaints have moved from about 2 in 1,000 up to 7 complaints per 1,000 installations.
It’s hard to pin these complaints on leases and other TPO products, which have been losing market share to loans 5 out of the last 6 years. Even though Semuels complaints mostly focus on the post-installation service guarantees that have gone neglected, it’s not necessarily the financial mechanism of a solar lease to blame for the bad relationships. Afterall, the installers who maintain ownership over the system (such as Sunrun, offering leases) actually stay in contact with homeowners, and have some incentive to build a functional long-term relationship, unlike turnkey installers who walk away after bolting on hardware, never to be contacted again—bankrupt or not.
![Chart](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa2a65fdc-3f7a-40fa-aece-c17c955457cf_1544x954.png)
Complaints (dashed red) are strongly correlated with the rise in residential MW installed overall (orange), and strongest for loans’ share (gold), among these types. Still, given growing system sizes, and possible differences across financing types, these relationships merely represent the first steps in contextualizing blanket reports of solar fraud. The underlying FTC claims, for their part, aren’t the most clear source of truth.
While the rise in the ratio of complaints to installations should spur reflection in the rooftop solar industry, how many of these fraud reports were for scams that didn’t result in hardware getting bolted to their roof? With the growth of solar, and the general increase in fraud reported, more solar phishing and solar phone scams are likely. Of the millions of general claims made on the FTC site, 74% report losing $0. If you go and fill out the form yourself, you’ll see how little detail is required to lodge one. For these reasons, perhaps it’s unfair to assign each of these complaints to a real installation.
On the other hand (and saving the least cynical explanation for last) perhaps this rise in reports is simply the system working. Following this thinking, it’s reasonable to assume many solar scams never make it to the FTC site. As homeowners learn more about solar, especially by word of mouth from their neighbors and network, they also learn more about how to advocate for help, secure solar legal defense, and report on predatory businesses. We’d want to see a rise in reports if there’s been unreported fraud.
Zooming Out on Rooftop Solar
The excitement and urgency of the green energy transition cannot ignore the complaints of solar lease or system owners preyed upon by opportunistic installers, or neglected by absentee private equity firms.
Who could make the biggest difference, fast? Inverter companies with ample market share could act as a neutral party: reporting on solar production to not only installers, maintenance, and homeowners, but also legal arbitration bodies. Every grid-tied system in the US needs an inverter.
At the same time, solar is the only green option for bringing energy resilience and independence to homes and local communities. Project Drawdown puts distributed solar, such as residential and rooftop, as one of the most essential pathways to eliminating emissions. Financially, we collectively stand to recoup a 36,000% return on investment in these distributed solar assets, even though they cost more per watt than utility-scale solar farms.
Fraud won’t solve the climate crisis, or reduce emissions, but the rise in solar FTC fraud claims is still limited to less than 1% of installations. Regulators, sector players, and green communities, nevertheless, ought to work to keep the true percentage low, whatever it is: advocating for fairer business practices, calling out scams, and building cooperative solutions.
The Closer
A striped mackerel in action. (Credit)