Your Quick Guide To Solar Panel Scams
6 - Minute Read
PUBLISHED: Dec 28, 2022
The home solar market is booming right now! Electricity rates are rising across the United States, and the federal solar tax credits recently increased to 30% through 2032. As a result, more solar companies are springing up all the time. Although some are reputable companies with solar energy expertise, others aren’t.
If you are thinking about going solar, beware of scams and deals that seem too good to be true. Read the fine print before signing a contract and understand your financial obligations before moving forward.
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Red Flags Of A Solar Panel Scam
How do homeowners identify a good deal from a solar energy scam? We’ll help you spot the red flags so you can identify quality opportunities.
Red Flag #1: Scam Offers For Free Solar Panels
Offers for free solar panels or solar panel systems paid for by the government are likely to be scams or misleading. In many cases, these offers require homeowners to lease or sign a power purchase agreement (PPA) rather than own the solar equipment.
Although there is usually no upfront cost, you will need to make monthly payments for years, so the solar panels really aren’t free. In these scenarios, the homeowner usually doesn’t own the solar equipment on their roof. Unfortunately, sometimes third-party ownership is misrepresented, and the Better Business Bureau (BBB) recently issued a scam alert for free solar panels.
However, when discussed honestly, solar leases and PPAs can be legitimate low-cost ways to get rooftop solar panels with no upfront costs. Only select renewable energy companies with a strong track record for quality customer service, and don’t evaluate an installer just by its webpage, social media posts and marketing materials.
Red Flag #2: Solar Deals That Promise Too Much
If a deal sounds too good to be true, it probably is. Although solar power systems can have a high return on investment and dramatically lower electric bills, beware of ads that promise too much.
For example, some offers say they will eliminate power bills, but often going solar means that the homeowner still needs to pay monthly connection and distribution charges to remain connected to the electricity grid. This fee varies but is usually between $5 and $20 a month.
Some promotions advertise generating income from a solar system with net metering or solar renewable energy credits (SRECs). Under net metering, homeowners usually receive credits on their electricity bill that offset their consumption, but they typically do not receive actual payments from their energy company. However, homeowners can receive payments for SRECs if they live in a state or district with an active program, such as Delaware, Illinois, Maryland, Massachusetts (stopped excepting new members), New Jersey, Ohio, Pennsylvania and Washington D.C.
Red Flag #3: The High-Pressure Salesperson
Beware of solar companies that use tactics that create a false sense of urgency or that misrepresent the terms of solar incentives, including tax credits and rebates. There are federal and sometimes state government or utility programs that reduce the cost of installing solar panels, but some companies provide incorrect or misleading information about them.
For example, some may falsely imply or even state that a financing program is only available in your area or for a limited time, or they may misrepresent themselves as utility or government employees. Also, they may claim there is a “special program” sponsored by the government or utility company that is actually a loan not associated with a utility or government program.
Others may say that the federal tax credits are ending soon, which is not true. In addition, some companies may use door-to-door salespeople that can pressure homeowners into signing a contract.
The best way to avoid these issues is to do some research before moving forward to make sure the information you were given is accurate and from a legitimate company. Also, look at companies that offer a consultant or advisor to help guide you through your solar process. Only sign a contract once you feel assured it is in your best interest and not due to high-pressure tactics from a solar installer. Going solar is a major financial decision you shouldn’t make in a rush!
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How To Avoid Solar Panel Scammers
Follow these tips to vet solar installers to avoid scammers.
Get Competing Bids
Like with any major home improvement project, getting multiple bids is a good idea. However, the lowest-cost system isn’t always the best deal long-term.
When comparing solar quotes:
- Compare the recommended system sizes. The size of a residential solar system is measured in kilowatts (kW), which is 1,000 watts.
- Evaluate the cost per watt for each system. You calculate this by dividing the total cost by the system's capacity in watts. For example, if it costs $15,000 for a 5 kW (5,000 watts) solar system, it is $15,000/5,000 = $3 per watt.
- Know the type of components and the manufacturers for each bid, including the solar panels, inverter, battery storage, etc. Some proposals will include higher-quality equipment that will produce more energy over the system's lifespan.
- Understand the labor, equipment and performance warranties for each solar bid.
Don’t Provide Banking Or Financial Details Upfront
Unethical companies may want access to your credit reports. Refrain from giving financial information just to receive a solar quote. If a company is a total scam, it may use your financial data for fraudulent purposes, like identity theft.
However, it might be appropriate to share financial information after you’ve compared bids if you are serious about installing solar panels, have researched a given company, know they are legitimate and ethical and need financing. Once you’ve chosen a reputable company, check their privacy and data sharing policies to confirm their sharing practices.
Research Prospective Installers
Learn about prospective installers before contacting them for a quote. If you have friends, coworkers, neighbors or family members that have installed solar, ask them about their installer and experience. If a solar company contacts you, vet them with the BBB and online reviews. Avoid making a decision before getting multiple quotes and comparing the warranties, product lines and system sizes.
Ask The Right Questions
Prepare a list of questions to ask solar companies before making a final decision. These can include logistical questions about the installation timeline, permitting, utility interconnection and design or technical questions about the product manufacturers and warranties. It’s also essential to understand the financial aspects of your system, such as leasing, PPA, loan options and payment terms.
Get A Quote Before Signing A Contract
It’s important to get a proposal before signing a contract. All the items the salesperson promised verbally to you should be in the quote, plus the payment terms, solar equipment, warranty periods, system size and installation timeline. Most solar installers handle all the required permits and utility interconnection with your local power company.
Only Sign Secure Documents
Unfortunately, unethical companies may say that you’re only signing something to see if you’re eligible for solar panel financing or incentives. Then, scammers can use your electronic signature on other documents. Therefore, it is best only to sign documents sent via a secure program like DocuSign to help prevent this issue.
Know Your Federal, State And Local Incentives
It is helpful to research renewable energy incentive programs before discussing a solar installation with a salesperson. Although the federal solar tax credit will remain available at 30% through at least 2032, homeowners need sufficient tax liability to qualify. Speak with a tax expert about your situation to ensure you are eligible.
Also, solar incentive program terms can change. For example, some programs are only in effect until funding is exhausted. PV system prices from solar companies shouldn’t include incentives, so you will know the system cost if you do not qualify for the incentives or the program ends. A knowledgeable solar company will be able to help you understand the incentives available to you.
FAQs About Solar Panel Scams
Let’s examine some common questions homeowners have to avoid solar energy scammers.
Are some solar sales scams?
Yes, there are reports of solar scams that involve providing inaccurate or misleading information to homeowners. In fact, the BBB recently issued a fraud alert for free solar panels, but scammers have used a variety of tactics. So before signing a contract, read the fine print and make sure you are working with a reputable company.
Why am I getting calls for solar panels?
Some solar companies use marketing methods that include calling, going door to door or using social media. Sometimes, these are reputable companies that complete quality work. However, some salespeople may make incorrect claims that mislead homeowners or pressure them into signing contracts. Be sure to research any companies reaching out to you before proceeding.
The Bottom Line: Know The Red Flags Of A Solar Panel Scam
Because electricity rates are the highest ever in some areas, many homeowners are looking for ways to dramatically lower their electric bills and take advantage of solar incentives. Unfortunately, some people are taking advantage of this by scamming people into signing contracts or even fraudulently using financial data. Thankfully there are plenty of reputable companies out there that want to help you go solar.If you’re ready to work with a reputable solar installer, consult an advisor at Rocket SolarSM.