How to protect yourself against solar scams

Canary Media’s Electrified Life column shares real-world tales, tips, and insights to demystify what individuals can do to shift their homes and lives to clean electric power. Canary thanks EnergySage for its support of the column.

Fraudsters can dim even an industry as bright as solar.

Solar scams are rare, but on the rise as more and more consumers install panels at their homes. While just 1.5 percent of households report being dissatisfied with their solar installations, according to a Forbes survey this year, regulators have seen an uptick in solar consumer complaints over the past decade.

Individuals say they’ve been misled into getting solar arrays that they can’t afford or that don’t deliver as promised. Bad actors inflict a steep financial toll, as systems typically cost upwards of $20,000. Leases and loans can swell those costs far higher.

Early this month, five federal agencies — the Federal Trade Commission, the Consumer Finance Protection Bureau (CFPB), and the departments of Treasury, Energy, and Housing and Urban Development — announced that they’re joining forces to better protect Americans from solar swindlers. As one of their first steps, they issued a slew of helpful advisories.

Gleaned from this guidance, expert interviews, and other resources, here are six ways to protect yourself from solar scammers. 

1. Don’t believe the ​“free solar” ads.

Ads for ​“free solar” are among the most pernicious scams, says Andrew Posner, founder and CEO of nonprofit Capital Good Fund, a financial institution working to help low-income families adopt solar.

There are rare programs that offer this specific demographic low- or even no-cost solar installations. And the $7 billion federal Solar for All initiative will expand such efforts around the country. But these programs probably aren’t taking out ads on Facebook. You can check if a solar equity program is real by sourcing it to its government or utility website.

Solar is also sometimes erroneously marketed as ​“free” when the panels are owned by a third party. But that’s like saying a house is ​“free” when you rent it. The customer doesn’t have to buy the panels outright but instead either leases them or pays for the power they generate.

If you can afford to buy solar panels with cash or a loan instead of leasing them, you could save thousands of dollars over the system’s lifetime.

2. Don’t rush into getting solar panels.

Salespeople who show up at your door may try to lock you into a solar contract then and there. They could use a phone or tablet that makes it easy to gloss over the true complexity of the deal. And the worst predators may brazenly lie, telling you that if you sign up now, you can always back out whenever you want. Ignore their urgency.

“If you’re feeling pressured or uncomfortable in any way about your decision to move forward, … take a step back,” says Ben Delman, senior director of communication for nonprofit Solar United Neighbors. Get a copy of the contract and compare it with other solar offers.

Salespeople may say that a deal is available for only a limited time or that a key incentive, the federal solar tax credit, is going to expire soon. But the tax credit is around for 10 more years, and at its full 30 percent value until 2033.

3. Do your own research on solar and incentives.

If you’re interested in solar, ​“do a little bit of research, just like if you were buying a car,” Posner says.

Know what to expect on the price. Salespeople may be given a floor for what they need to charge, but can inflate the project costs to the consumer, pocketing the difference. Nationally, the average solar array costs about $2.75 per watt before incentives, according to the clean energy marketplace EnergySage. But prices vary widely state to state.

Also look into how the federal tax credit will work for you. It provides a discount of 30 percent of the solar installation cost, but since it’s a tax credit, you only get that discount when you file your taxes. And if you don’t have a big enough federal tax bill, you may get only a portion of the discount in the first year and the rest in later years.

Local incentives could bring down the cost further; find them by checking with your state energy office or the Database of State Incentives for Renewables & Efficiency.

And think ahead about how big of a solar array you want. Solar reps may try to upsell you, but it’s best to follow the data. If your electric bills show your household uses 10,000 kilowatt-hours per year, depending on your future electrification plans, you probably don’t need a system that’ll deliver 20,000 kilowatt-hours, Posner says. ​“Unless you’re planning to get an electric vehicle or a big battery system, that’s just too much.”

4. Get an independent estimate of solar savings.

The value proposition for solar hinges on utility bill savings, so you’ll want to get a realistic picture of how much solar could actually deliver for you.

Salespeople may forecast bigger savings by assuming utility rate increases beyond historic averages. For most of the country, it’s better to use an annual increase of 3 percent, not 5 percent as some companies do.

Solar sellers may even promise you won’t pay electricity bills, but you almost certainly will. Solar power varies with the weather and, without a home battery, isn’t available at night. You’ll need to buy grid power to make up the shortfall.

Posner suggests using Google’s Project Sunroof for a quick estimate on savings from a solar system that’s sized to meet your home’s needs.

For a more thorough assessment of your potential savings, the Treasury Department recommends getting an energy audit that takes solar into account.

5. Shop around for a reputable solar installer.

Get at least three quotes before committing to a solar project, Delman says. You can shop around, including using the federally backed EnergySage marketplace, and peruse reviews on Google, Trustpilot, and Angi (formerly Angie’s List). Ask your neighbors with solar if they recommend the solar companies they’ve hired.

Make sure any potential installer is legitimate. Ask for client references, check if they’re registered with the Better Business Bureau, and verify that they have the right licenses to work in your state. Another hot tip from the CFPB: See if consumers have made complaints about the company in the agency’s database or with your attorney general.

6. Watch for hidden fees if you’re financing instead of buying.

Solar loans may come with hidden costs. Known as ​“dealer fees,” these markups typically range from 10 to 30 percent of the cash price, but can be more than 50 percent, according to the CFPB. The fees can add thousands to the loan principal. To figure out just how much they raise the system cost by, ask this question: How much would I pay for the solar panels if I paid in cash instead?

A solar loan may hold another unwelcome surprise. The lender could structure it assuming that within the first 18 months, you’ll make a big payment equal to the value of the federal tax credit. If you don’t, then you’ll see the monthly payment suddenly balloon.

The CFPB recommends taking any solar financing offer to your local bank or credit union. Loan officers can help you understand the terms and conditions — and possibly make a better counteroffer. When in doubt, consult a lawyer before signing a contract, the Treasury Department advises.

What to do if you do get ensnared in a solar scam

Regulators and companies are taking steps to crack down on misbehavior in the solar industry.

If a business defrauds you, report it to the Federal Trade Commission to help prevent future victims and follow the agency’s instructions to recover your money. If the problem is with a solar financial firm, file a complaint with the CFPB; the agency will contact the company, and it has to respond. In some cases, that can resolve the issue for the customer.

More solar resources

Before you get solar, start with these guides from Canary Media, EnergySage, Rewiring America, and Solar United Neighbors. Employee-owned solar installer ReVision Energy provides an extensive list of questions to help you vet installers. You can also get personalized assistance as you make solar decisions from Solar United Neighbors’ free help desk.

Solar scammers ​“don’t want educated buyers,” says Janice DiPietro, chief customer officer at ReVision Energy. ​“They want people who will just sign on the dotted line as quickly as possible.”

EnergySage is the leading online comparison-shopping marketplace for rooftop solar, energy storage, heat pumps, and community solar. Supported by the U.S. Department of Energy, EnergySage is trusted by over 10 million consumers across the country to help them make smarter energy decisions through simplicity, transparency, and choice. Unlike traditional lead-generation websites, EnergySage empowers consumers to request and compare competing quotes online from a network of more than 500 pre-screened installation companies — a proven formula that has led to 20 percent lower prices on average.

Check out EnergySage to learn more and shop for quotes!