Avoid a Solar Panel Scam With These 7 Tips – CNET

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Making a big purchase can be a nervy experience. But unlike a car or even a house — things you likely interact with every day — solar panels are a big-ticket item that might feel foreign to most people.

Shopping for solar panels without a clear understanding of the industry, technology, regulations and incentives puts you on the back foot in conversations with salespeople who may be promising too much. If you’re looking to go solar, whether to lower your energy bill or reduce your reliance on climate-warming fossil fuels, a bit of education can go a long way to getting you a good deal.

Experts anticipate solar installations will increase by 21% each year on average from 2023 onward. While much of that will be utility-scale installations, expanded incentives from the Inflation Reduction Act could have homeowners adopting more solar, too. That means more people could be navigating an unfamiliar industry full of unfamiliar companies to save money on energy.

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One high-profile case of the danger happened in the Detroit area, where customers claimed Pink Solar, then called PowerHome Solar and now bankrupt, made promises its solar panels couldn’t deliver. It sold expensive solar panels that generated far less energy than promised. Though that isn’t proof solar panel scams are widespread (customer satisfaction data isn’t widely available), dishonesty happens.

Instead of avoiding going solar altogether, empower yourself with knowledge. Here’s how to identify seven signs of a bad solar deal.

How to avoid solar panel scams

Depending on your source, you’ll find different definitions of what a scam is. For the purposes of this article, we’ll focus on making sure that what you get is what you expected. While this means we’re dealing with a spectrum of dishonest deals, the same principles apply.

Before diving into the details, there’s one precaution you should always take, according to Melanie McGovern, director of public relations at the International Association of Better Business Bureaus.

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“You want to get three bids. You want to compare prices,” she said. 

Not only will you be able to weed out anything egregiously expensive, you’ll also have plenty of opportunity to ask questions and learn through the process. A bit of education can go a long way toward getting the best deal for your situation, and reputable solar companies shouldn’t have a problem answering all your questions. 

What to know before you start shopping for solar panels

There’s fierce competition in the booming residential solar industry. Solar companies employ a variety of sales strategies, from in-house sales teams to third-party companies. Tesla’s solar arm relies solely on online inquiries. While there are industry guidelines for consumer protection, tactics vary from company to company and, as the report from Detroit showed, they can verge on dishonesty. Going in with a strong understanding of some key solar topics can help you spot when a salesperson is flouting those guidelines.

The federal solar tax credit

Salespeople are likely to tout the federal solar tax credit. When you install solar panels (and certain other related technology) you receive a portion of the cost back on your taxes. For 2023, the portion you get back is 30% and will stay there through 2031 as laid out in the Inflation Reduction Act.

The tax credit isn’t a check the government will send you, or a rebate. Instead, it’s a credit you can count against the taxes you need to pay each year. To take full advantage, you’ll need to pay federal income tax and pay enough of it to match 30% of your system’s cost.

The effect of solar on your utility bill

If a salesperson says your electricity bill will disappear after installing solar and that you can kick your utility company to the curb, that could also be an exaggeration. Your bill will vary depending on your net metering agreement with your utility, your electricity usage and the base rate utility customers pay to keep up grid infrastructure. Solar panels installed and operating correctly will reduce the electricity you use and can save you a bunch of money, but the effect on your bill will vary.

Before going solar, be sure you understand how your utility compensates you for the electricity you produce. These rates aren’t necessarily set in stone. In California, regulators recently changed net metering in the state. Typically, there will be a hard deadline for any big change to net metering, and if you have your system installed before that date, you’ll receive the older (and often richer) terms.

What free solar really means

If you see ads that claim you can put solar panels on your house for free, make sure you understand what “free” means. Likely, it means the product advertised is either a power purchase agreement (PPA) or a solar lease. Though this means you don’t pay a large up-front cost for the panels, you will pay monthly to the company that owns them. These are legitimate services and part of the reason residential solar has exploded in the last decade. You’re likely to save more money overall with a purchase than a solar lease or PPA. Still, the low up-front cost of these two options may make solar more available and still save you money in the long run, even if the solar electricity isn’t exactly free.

With leases and PPAs, you save money if the amount you pay doesn’t rise faster than the cost of electricity from your utility.

Does your home work for solar?

Siting solar panels on your roof is another potential issue. In the northern hemisphere, panels produce the most electricity facing south, though east- and west-facing panels work too. Panels facing west might be useful in areas with time-of-use rates, where afternoon and evening solar production can offset more costly electricity. 

A house with solar panels behind a coniferous tree.

If a tree shades your solar panels, they’ll produce less electricity.

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“That’s one of the biggest things when anybody wants to consider solar: Is this something that is good for your house?” said McGovern, who added that a solar company had reached out to her about installing solar panels on her completely shaded roof.

If your roof is shaded, make sure an installer has a plan for addressing that. For solar to work well, you may need to cut back trees or install panels somewhere other than your roof. Your roof should be in good shape, too. Taking panels off to fix the roof likely carries additional costs. It’s important to address these issues before a contract is signed and panels are installed on your roof.

For all of these issues, any installer should give you clear answers. An installer pushing you to sign before you’ve read a contract or had all your questions answered is a red flag. If you do sign something you later regret, by law you have three days to cancel most door-to-door sales, according to the US Federal Trade Commission.

Solar sale red flags to avoid

A pushy salesperson is — besides rude — a sign that their sales pitch might not hold up to scrutiny.

“Legitimate companies will answer your questions,” McGovern said.

Here’s a quick list, from Solar United Neighbors, the US Department of Energy and others, of additional red flags and questionable claims that should prompt you to do some research.

  • “The federal solar tax credit is going away soon.” The federal tax credit was increased and extended in 2022. It now sits at 30% through 2032 and is slated to drop to 26% in 2033 and 22% in 2034.
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  • “There’s a special program ending soon.” Some utilities are moving away from net metering, and government programs do end. Make sure you get the specifics and understand whatever program is being discussed.
  • “You only have one choice of equipment.” Most solar installers have preferred providers for equipment but can accommodate preferences from customers.
  • “Your utility is going to raise electricity prices XX% each year.” Electricity rates do go up (and have been particularly uncertain recently), but you can find historical electricity costs for your area and judge whether a company’s estimate passes the smell test.
  • “You can save up to 70% on your electricity bill.” Seventy percent sounds great, but that “up to” could be doing a lot of work. Do most people save 70% or do most people save far less? Be sure to ask.
  • “Put solar on your roof for free!” This almost certainly doesn’t mean free, but rather no money down. You’ll still have a monthly payment after that.
  • “You can say your home is powered by green energy.” This is only legally true if you get to hold on to the solar renewable energy certificates. In a PPA, you might sign those over to the solar provider, who then gets to claim the environmental benefits.

Resources for getting a fair deal on solar

There are plenty of organizations, including industry groups and governments, aiming to help people go solar with the best possible experience.

  • The Department of Energy: The DOE has a guide to going solar that has a long list of things to consider before settling on an installer. 
  • State offices: Many states run consumer protection offices with state specific advice, sometimes specifically for solar.
  • The Federal Trade Commission: The FTC also offers advice on how to get a good solar deal.
  • Advocacy groups: Groups like Solar United Neighbors and GRID Alternatives help people go solar. If you qualify for their programs, you may score an expert guide through the process.
  • The Better Business Bureau: The BBB grades companies based on their responsiveness to complaints. It also has an accreditation process companies can go through. Checking a company via the Better Business Bureau is a good idea, if possible. 
  • Certifying boards: You can find certified installers by checking with the North American Board of Certified Energy Practitioners.
  • Your neighbors: If you have friends, family or neighbors who’ve had a recent solar panel installation, ask them about their experience with their installer.

Because many people haven’t had an experience with solar energy, selecting an installer can feel like a daunting task. But it’s possible to go solar and start saving money on your energy costs. There were 1 million solar installations (not just residential ones) from 2016-2019. If you plan on adding to that number, with a bit of work you can make sure it’s a positive experience.

Correction: An earlier version of this article misstated how companies get grades from the Better Business Bureau. They receive grades regardless of whether they’ve paid to go through the bureau’s accreditation process.

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