Perfect Power owner Lynn Paige said the company has cash-flow problems because energy grants that were supposed to provide substantial funding of the solar systems aren't being approved quickly enough. She pledged to deliver the systems or refund all customers by the end of the year.
Treasury officials would not comment on the situation. Government e-mails sent to Paige suggest Perfect Power's grant applications were incomplete. In them, officials point to problems with submissions and warn of potential denials.
Industry experts and owners of other solar companies in Arizona said that the grant program is fraught with risks for solar companies and that some built business models based on future payments from the government without the financial reserves to cope with delays. They describe the situation as a high-tech gamble that some companies lost.
Residential solar-power systems cost $15,000 to $40,000. The Section 1603 grant program, part of the American Recovery and Reinvestment Act, offered developers cash to offset 30 percent of the costs. Although the program was not available to homeowners, some companies tapped the grants to sell residential solar systems as leases. A company would install and own the system, then lease it to a homeowner.
Program rules required developers to complete installations before they could apply for reimbursement. But funding was not guaranteed, and even after systems were built, the government delayed approval of some applications and denied others.
"The (grants) appeared far too simple and attractive. That is where the problems began for inexperienced groups," said John Casey, CEO of GreenFuel Technologies in Phoenix, a solar-power and alternative-energy contractor. "I assure you, these groups have brought the problems on themselves."
Perfect Power, once viewed as a market leader in the solar-power industry, does not have the capital to immediately refund or build solar systems for all the customers who paid up-front fees, Paige said.
More than 40 percent of Perfect Power's business is tied up in the grants. Company officials have recently scaled back operations, moved the Phoenix-based company headquarters to a more affordable location and are working on a schedule to repay or deliver systems to customers, Paige said.
"We didn't tuck tail and run as some companies have done, or change our name five ways from Sunday or file bankruptcy," Paige said. "We have stayed the course and are working very hard to be the business we purport to be."
Paige pointed out that Perfect Power fronted the cost for nearly 200 residential solar systems it built under the grant program. She said long-delayed government reimbursements were supposed to be used to pay for the next round of projects.
Denna Bodfield of Queen Creek said she bought into Perfect Power's lease program in December under assurances that her system would be up and running by April.
"In this particular case, I feel like a sucker," Bodfield said, adding that e-mails from Paige left her frustrated. "You don't tell people that they are going to have a power system in four months and then push it back and push it back."
For months, Bodfield said, Paige would not give her an answer about installing her system or refunding her money. Bodfield obtained a refund in July. The check was issued on the same day Bodfield told Paige that Bodfield was being interviewed by Call 12 for Action.
Of 102 customers waiting for solar systems, 23 have requested cancellation of their leases, Paige said in July. As long as she can raise capital from projects unrelated to the grants, she will be able to front the costs for the remaining 79 customers by the end of the year, she said.
"All canceled leases will have to come from our current cash flow," she said.
Source: http://www.azcentral.com/business/articles/2012/08/17/20120817arizona-solar-power-clients-lurch.html#ixzz23o3XYzwl
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