The solar industry has acquired a bit of a bad reputation when it comes to sales and not without cause. As the industry boomed, some salespeople pushed deals with misleading claims and overpromised solar savings.
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One high-profile 2022 case illustrating the danger happened in the Detroit area, where customers claimed Pink Solar, then called PowerHome Solar and now out of business, made promises its solar panels couldn't deliver. It sold expensive solar panels that generated far less energy than expected. Though that isn't proof solar panel scams are widespread (customer satisfaction data isn't widely available), dishonesty happens.
Solar panels will cost you thousands of dollars but can save you thousands more over your lifetime. If you get stuck with an overpriced system that's underperforming, you're going to save much less if any.
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With the Inflation Reduction Act's much-talked-about energy efficiency, electrification and solar incentives 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 identify when a salesperson is making claims their product can't back up.
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 expect. While this means we're dealing with a spectrum of dishonest deals, the principles of finding a good solar deal apply across the board.
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.
"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, but you'll also have plenty of opportunities 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.
There's fierce competition in the 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 heavily 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.
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 2024, the portion you get back is 30% and will stay there through 2032 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.
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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.
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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.
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.
Siting solar panels on your roof is another potential issue. In the northern hemisphere, panels produce the most electricity facing south, although 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.
If a tree shades your solar panels, they'll produce less electricity.
"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.
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.
There are plenty of organizations, including industry groups and governments, aiming to help people go solar with the best possible experience.
Because many people haven't had an experience with solar energy, selecting an installer can feel like a daunting task. 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.
If you still want to purchase an extended warranty, follow these tips.
Understand the manufacturer's warranty before making a purchase. Federal law requires that you have access to the manufacturer's warranty before you decide to buy. When you read it, note how long the warranty lasts (typically 90 days or so), what it covers, and whether the company will repair or replace the item or refund your money.
Some manufacturers will also repair a product after the warranty has ended simply because it’s good customer service, so it’s worth contacting the company should a problem arise. Keep in mind that some extended warranties simply duplicate the coverage already offered by the manufacturer's plan.
Check to see whether you already have extended coverage through a credit card. If you bought the product using a credit card, check to see whether the card issuer extends the warranty. Many do for a period of one year or more. If you’re not sure whether your card provides such a perk, call customer service to find out. Or use an app like Sift, which will let you know before your make a purchase with a specific card how long the warranty will last.
Read the fine print. Extended warranty coverage may not be as comprehensive as you think. Extended warranties often include lots of exclusions that make the service less useful. For example, coverage may not include accidental damage, or companies might be able to deny a claim if you haven’t followed their routine maintenance instructions, according to the Federal Trade Commission.
The warranty may also require you to use a specific service provider or repair shop for service. “You may have to take the product to a location that isn’t convenient, especially if you don’t live in a big city,” says Richard Alderman, director of the Center for Consumer Law at the University of Houston. “You may have to ship it somewhere, even though shipping isn’t included.”
About 1 in 5 consumers who use an extended warranty is dissatisfied with the repair, and service can take a long time or require multiple tries to get it fixed. There’s also the risk that the warranty provider will go out of business.
Consider how much repairs would cost. Extended warranties cost an average of $126 for large appliances and $21 for small appliances. It costs just $26 more to repair the items without a service plan (see Consumer Reports' extended warranties buying guide). While rare, some warranties require you to hit a deductible before they’ll cover your costs or charge fees for each claim.
Repairs, however, aren't usually that expensive. Because the financial risk of needing a repair without an extended warranty is relatively small, it’s not a huge risk to go without one.
Buy higher-quality products. Research the items you’re planning to buy before making the purchase. Be sure to understand the manufacturer’s warranty that comes with it. High-quality items may cost more but they’re less likely to break, making it an easier choice to decline the extended warranty. You can learn more about a product's reliability by reviewing Consumer Reports' ratings and product reliability information online.
Also consider where you plan to purchase the product. Look for a retailer that will take returns on defective items. Stores with the most generous return policies will accept broken items, even years after the original purchase. “Not every company is out to get you,” says Bob Hunter, director of insurance for the Consumer Federation of America.
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