PowerHome Solar, based in Mooresville, has filed a suit against Generac contending the equipment manufacturer provided defective equipment and, for more than a year, failed to resolve the problem.
By John Downey – Senior Staff Writer, Charlotte Business Journal
Sep 12, 2022
PowerHome Solar laid off 500 workers and stopped sales in North Carolina, Texas and Georgia today, citing losses related to defective equipment that led the company to sue its former provider last month.
This is the second round of job cuts PowerHome, doing business as Pink Energy, blames on the failure of a safety component in battery storage systems provided by equipment manufacturer Generac.
With today’s layoffs and another 600 let go last week, PowerHome has lost more than half of its workforce. At least 200 people were laid off in North Carolina last week. The company says it cannot say how many people were affected here in the current round.
CEO Jayson Waller acknowledges the cuts are impacting his company’s Mooresville headquarters.
“There is nothing worse than laying people off,” he says. “In all the businesses I’ve ever been involved with, especially this one, we’ve always had awesome growth. To have to lay off 1,100 employees is just sad.”
Solar installations halted in three states
Waller says the layoffs have come across the board for installers, electricians and customer service workers. The company has entirely shut down a few locations nationwide and has stopped selling new systems in North Carolina — its home market and its largest — as well as Texas and Georgia. It is dealing with the financial fallout of a high rate of failures in systems using the Generac equipment.
PowerHome Solar CEO Jayson Waller, pictured here at the company headquarters in Mooresville, blames the layoffs and financial damage on its former partner, electric equipment manufacturer Generac.
MELISSA KEY/CBJ
Waller says his company is continuing to service its existing systems in those three states. It is still installing solar systems in 13 states.
In its lawsuit filed Aug. 1 against Generac in federal court in Lynchburg, Virginia, PowerHome asserts it has suffered about $155 million in lost revenue due to canceled installation contracts and sales appointments.
PowerHome also contends in the suit that its valuation has plummeted to $452 million from a valuation of $1.05 billion — “a direct … result of the harm Generac’s defective products have caused to (PowerHome’s) business and reputation,” it says.
PowerHome now has 1,000 employees nationwide.
Generac says it is not to blame
Generac (NYSE: GNRC) has not yet filed its formal response to the lawsuit. But spokeswoman Tami Kou did respond to the allegations in the suit and in Waller's general public assertions.
"In certain situations, especially when product installation guidelines have not been followed, as appears to be the case with some Pink Energy installations, customers may have experienced certain issues with a particular Generac component of their solar energy system," she says. "We have introduced a new next-generation, rapid-shutdown device, which has been designed and engineered to the highest reliability standards."
She says the company is working to get those "upgrades and warranty replacements taken care of as quickly as possible."
“Generac is a leading manufacturer of solar + storage solutions, and we sell our products to a wide range of distributors and solar contractors,” she wrote in an email. “As a company, we stand behind our products and will continue to honor our customer commitments.”
Waller maintains the defects and the failures to quickly resolve them are all Generac's responsibility.
Failures lead to fire, increasing complaints
The two companies formed a partnership in early 2020 to market PowerHome solar installations with Generac batteries and system components. Waller says Generac’s status as a major public company, with around $2 billion in annual sales, made it appear a reliable and ideal partner.
But Generac had just recently expanded into the home-solar market through an acquisition. By April 2021, PowerHome realized that customers were seeing failures in a safety component meant to cut back on output from solar systems. By August of last year, failures had led to at least one fire at the home of a PowerHome customer in Kentucky. No one was injured, but Waller says the defective Generac part was to balme.
Problems were found in Generac's PWRCell system, which PowerHome had agreed to market with its solar-panel installations to make for a complete package with power management and battery storage. At issue was the "photovoltaic rapid shutdown system." That is a safety feature required in solar installations to allow emergency workers to reduce or completely shut off the output from the system to reduce the chance of injury. One of the components in that system was burning out and caused system failures, creating a hazard.
PowerHome eventually learned of failures experienced in the Generac systems by other installers. After the Kentucky fire, PowerHome says, Generac released a component upgrade to resolve the problem. But PowerHome says that fix led to new problems in which parts of the solar systems were being shut down without notice.
That reduced, and in some cases completely curtailed, output for some customer installations, leading to a significant increase in complaints to PowerHome.
Generac, Waller says, was not reimbursing PowerHome for repairs it had to do on Generac equipment. And he says, when PowerHome finally prevailed on Generac to take on the repairs itself, the manufacturer has dragged its feet and left PowerHome customers with faulty operations of their systems.
BBB raises flag, PowerHome starts business as Pink Energy
The increase in complaints was flagged by the Better Business Bureau in the spring. Customers complained of poor power output and long delays in repairs. The BBB temporarily withdrew its A+ rating for Pink Energy, as it is listed with the bureau, and gave it an a "not rated" designation. That hurt the company's reputation, Waller says. But PowerHome worked with the BBB to explain the situation and to explain what it would do to address the complaints, and the bureau restored the rating.
"Pink Energy recently terminated their relationship with Generac, a key supplier of batteries and components for their solar installations," the bureau said in an Aug. 24 update to the rating. "BBB believes that this step is addressing the product quality issues."
PowerHome began doing business under the name Pink Energy in April, as the issues with the Generac systems worsened.
Waller has called on Generac to issue a recall of its control systems, which he contends are a safety hazard. He says that about 40% of the Generac systems installed by PowerHome have experienced some kind of failure. He says PowerHome discontinued its partnership with Generac when it filed the lawsuit.
Kou rejects those assertions and says PowerHome unilaterally ended the partnership when parts are readily available to resolve the customer issues.
"It is unfortunate that Pink Energy appears to not want to take any accountability for their actions," she says. "By their inflammatory public statements and the lawsuit, we believe Pink Energy may be hoping to distract customers from the many complaints and allegations that reportedly have been leveled against them regarding poor installation and service, as well as public accounts of dubious marketing claims and sales tactics."
In 2021, PowerHome was ranked seventh among 228 home solar installers in the U.S. by Solar Power World. It has installed systems for about 35,000 customers and made the Inc. 5000 list of the nation’s fastest-growing companies in four of the last five years.
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