7 Tips to Avoid Getting Scammed When Buying Solar Panels
It’s no secret that solar panels aren’t cheap. Solar panels will cost you thousands of dollars, but they can save you thousands of dollars more over your lifetime. However, if you’re stuck with an overpriced system that underperforms, you’re going to save a lot less, if anything at all. That’s why we’ve put together these tips to help you avoid getting ripped off when buying solar panels — backed by expert advice.
With the much-hyped energy efficiency, electrification, and solar incentives of the Inflation Reduction Act now available, it might make sense to go solar now. Here’s what you need to know to be an informed consumer, find a solar installer, and recognize when a salesperson is making claims that their product can’t deliver.
The solar industry has a bit a bad reputation when it comes to sales and not without reason. When the industry was booming, some salespeople pushed for deals with Misleading claims and over-promised solar energy savings.
A notable 2022 case that illustrates the danger occurred in the Detroit area, where customers alleged that Pink Solar, then PowerHome Solar, and now bankruptmade promises that her solar panels could not keep. It sold expensive solar panels that generated far less energy than expected. While that’s not evidence that solar panel fraud is widespread (customer satisfaction data isn’t widely available), dishonesty does happen.
How to Avoid Solar Panel Scams
Depending on your source, you’ll find different definitions of what constitutes solar panel fraud. For the purposes of this article, we’ll focus on making sure you get what you expect. While this means we’re dealing with a spectrum of dishonest deals, the principles of finding a good solar deal apply to everyone.
Before we dive into the details, there is one precaution you should always take, says Melanie McGovern, director of public relations at the International Association of Better Business Bureaus.
“You want to get three quotes. You want to compare prices,” she said.
Not only will you be able to filter out anything that is extremely expensive, but you will also have plenty of opportunities to ask questions and learn along the way. A little education can go a long way in getting the best deal for your situation, and reputable solar companies should have no problem answering all of your questions.
What you need to know before you start buying solar panels
There is a bright competition in the residential solar energy sector. Solar companies use different sales strategies, from in-house sales teams to outside companies. Tesla’s solar business relies heavily on online requests. While there are consumer protection guidelinesTactics vary from company to company and, as the Detroit report showed, can border on dishonesty. Starting with a good understanding of a few key solar topics will help you spot when a seller is violating these guidelines.
The Federal Solar Tax Deduction
Sellers will likely tout the federal tax deduction for solar energy. When you install solar panels (and certain other related technology), you get a portion of the cost back on your taxes. For 2024, the portion you get back is 30% and will remain that way through 2032, as outlined in the Inflation Reduction Act.
The tax deduction is not a check that the government sends you, or a rebate. Instead, it is a tax credit that you can subtract from the taxes you pay each year. To take full advantage of it, you must pay federal income taxes and pay enough of it to cover 30% of the cost of your system.
Look at this: New solar panels you may not even notice
The effect of solar energy on your energy bill
If a salesperson tells you that installing solar panels will eliminate your electric bill and you can kick your utility out the door, that could be an exaggeration. Your bill will vary depending on your net metering agreement with your utility, your electricity usage, and the base rate that utilities pay to maintain the grid infrastructure. Properly installed and operating solar panels reduce electricity usage and can save you a lot of money, but the impact on your bill will vary.
Before you go solar, make sure you know how your utility will compensate you for the electricity you produce. These rates aren’t necessarily set in stone. In California, regulators recently changed the state’s net metering system. Typically, there’s a hard deadline for any major net metering change, and if you get your system installed before that date, you’ll receive the older (and often richer) terms.
What Free Solar Panels Really Mean
If you see ads that say you can put solar panels on your home for free, make sure you understand what “free” means. It likely means that the product being advertised is a power purchase agreement (PPA) or a solar lease. While this means you’re not paying a large upfront cost for the panels, you are making monthly payments to the company that owns them. These are legitimate services and one of the reasons residential solar has exploded in the last decade. You’ll likely save more money by purchasing them than you would with a solar lease or PPA. However, the low upfront costs of these two options can make solar more available and still save you money in the long run, even if solar isn’t exactly free.
With leases and PPAs, you save money if the amount you pay does not increase faster than your utility’s electricity costs.
Is your home suitable for solar energy?
Installing solar panels on your roof is another potential problem. In the Northern Hemisphere, panels produce the most electricity facing southalthough east and west facing panels will work as well. West facing panels can be useful in areas with time-of-use rates, where solar production in the afternoon and evening can offset more expensive electricity.
If a tree is in the shade of your solar panels, they will produce less electricity.
“That’s one of the biggest questions when someone is considering solar: Is this something that’s right for your home?” said McGovern, who added that a solar company approached her about installing solar panels on her fully shaded roof.
If your roof is shaded, make sure an installer has a plan to address this. For solar to work properly, you may need to cut down trees or install panels in a location other than your roof. Your roof also needs to be in good condition. Removing panels to repair the roof will likely incur additional costs. It is important to address these issues before signing a contract and installing panels on your roof.
For all of these issues, any installer should give you clear answers. An installer who pressures you to sign before you have read a contract or answered all of your questions is a red flag. If you sign something you later regret, you are legally three days to cancel most door-to-door salesaccording to the US Federal Trade Commission.
Solar Sales Warning Signs to Avoid
A pushy salesperson is not only rude, but also a sign that his sales pitch won’t stand up to scrutiny.
“Legitimate companies will answer your questions,” McGovern said.
Here is a short list, of Solar energy United NeighborsThe United States Ministry 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 deduction was increased and extended in 2022. It now stands at 30% through 2032 and is expected to decline to 26% in 2033 and 22% in 2034.
- “There is a special program that will end soon.” Some utilities are moving away from net metering and government programs are being terminated. Make sure you know the details and understand what program is being discussed.
- “You only have one choice of equipment.” Most solar panel installers have regular suppliers for their equipment, but can also take into account the preferences of their customers.
- “Your utility company is going to raise electricity prices by XX% every year.” Electricity prices may be rising (and have been particularly volatile lately), but you can check historical electricity costs for your area and see if a company’s estimate passes the smell test.
- “You can save up to 70% on your energy bill.” Seventy percent sounds great, but that “up to” can be a lot of work. Do most people save 70% or do most people save a lot less? Just ask.
- “Have solar panels installed on your roof for free!” This almost certainly does not mean free, but rather no down payment. You still have a monthly payment after that.
- “You can say that your house runs on green energy.” This is only legally true if you are allowed to keep the renewable solar certificates. In a PPA, you can transfer these to the solar energy supplier, who can then claim the environmental benefits.
Resources to Get a Fair Deal on Solar Energy
There are numerous organizations, including industry associations and governments, that are committed to helping people benefit as much as possible from the switch to solar energy.
- The Ministry of Energy: The DOE has a guide to switching to solar energy that a long list of things to consider before choosing an installer.
- State offices: Many states have consumer protection offices with state-specific advice, sometimes especially for solar energy.
- The Federal Trade Commission: The FTC also offers advice on how to get a good solar deal.
- Interest groups: Groups such as Solar energy United Neighbors And GRID alternatives help people go solar. If you qualify for their programs, you can get an expert guide through the process.
- Doing business better Desk: The BBB rates businesses based on their responsiveness to complaints. It also has a accreditation process companies can pass. It is a good idea to check a company through the Better Business Bureau, if possible.
- Certification signs: You can find certified installers by contacting the North American Council of Certified Energy Practitioners.
- Your neighbors: If you have friends, family or neighbors who recently had solar panels installed, ask them about their experiences with the installer.
Since many people are new to solar energy, selecting an installer can seem like a daunting task. It is possible to go solar and save money on your energy costs. The Solar Energy Industries Association predicts there will be 10 million residential solar systems by 2030 in the US. If you plan to increase that number, with a little work you can make it a positive experience.
Correction: An earlier version of this article misstated how companies receive ratings from the Better Business Bureau. They receive ratings regardless of whether they have paid to go through the bureau’s accreditation process.
