In this article we will explain most scams used by solar companies or solar salesman in today’s market, from the obvious, harmful and plain criminal, to the harmless but annoying tactics. The intend here is to help potential solar customers and expose the bad actors in the industry.
Solar can be thought as a scam and that may be because there are too many traps to fall into and be taken advantage of by a few dishonest actors. On the other hand, there are thousands of homeowners in Texas which are happy with their solar energy system.
The best protection against these kinds of scams is to become a well-informed consumer. Let’s examine common solar scams starting from the most destructive.
1. The disappearing company
These scams start with a knock on the door or email and it is carried out by a con artist who will pose as a solar salesman representing a “reputable company”. It is all a disguise. He or she will say whatever sounds good to convince you to sign up with them and also to start the project with a big down payment of 50% to 90% of the project total cost. Potential customers would sign and transfer the funds without checking references, history of the company, checking online reviews, asking for company documents, or securing competitive offers. Once the funds are transferred the salesman is never reachable again and the homeowner has lost those funds.
This is the most destructive and terrifying scan that anyone can fall for. Its typical victim are immigrants with little ability to speak English, people with limited access to online tools or internet skills; also, people with limited education or the elderly. …back to the list
2. Solar leases and PPA
Solar leases and Power Purchase Agreements (PPA) are a legitime form of using solar panels in one’s property. The issue with these contracts is that people don’t really understand the contract or disregard the long-term consequences of it. In today’s market with the cost of equipment and financing options it makes little sense to enter in a solar lease or PPA for most consumers. This type of agreements are good in very few cases, for example, if the homeowner is retired, in disability or under some other condition in which they do not pay federal income taxes, then they would not benefit from the federal tax credit of 30%. Another case would be to keep a low monthly solar lease payment while planning to stay in the current home until the end of the contract or death.
The scam comes from intentionally withholding important information from the consumer or disguising a solar lease/PPA as a solar purchase contract. The defense here is in the homeowner’s understanding of what they are signing and the long-term consequences of it.
With solar leases and PPAs, the system is owned by the leasing company, therefore, they can claim the federal tax credit. Since the contracts are impossible to revoke, the future sale of the home is complicated; basically, forcing the home purchaser to assume the solar lease/PPA terms for the remaining of the contract. This type of contracts can carry scaling up payments where the monthly payments increase every few years and, lastly, they do not add value to a home like a purchased solar system does in most cases. …back to the list
3. Broken promises
This scam is typically carried out by a sales rep who memorized a script and has no idea what he or she is selling. There are also a few that would knowingly lie to secure a sale. Here are some of the common lies:
- The government is paying customers to go solar
- You will receive a check from the government
- You will not have an electric bill
- You will receive a check from the electric company for your extra power
- You will have power when the grid is down even without home batteries
A different but equally hurtful broken promise is to talk about a modest solar monthly payment but, when the dust settles and the first or second payments are due the customer realized that the payment is much higher that originally agreed. Dealers fee, interest rates, length of contract and other factors play a role in calculating the monthly payment. Check out the “Solar financing – things to know” article for more information.
Unlike the following two scams of “Bad design” and “Installed but not working” there is little that can be done after the fact about broken promises. The best protection from this scam is making sure that everything is in writing and that customers understand every line item before signing. The “Truth in lending Act” is a federal law requiring lending companies to disclose the details of the loan, including the monthly payment, to borrowers before they sign for the loan, get familiar with it. …Back to the list
4. Solar installed but not working
This type of scam is mostly carried out by a young company or novice installer. In most cases it can be corrected. For those who have never being in this situation, I’ll tell you, it is extremely frustrating to make monthly payments to the solar lender for a system that is not producing during the several months that it may take the original installer, or a new one, to correct the issue and get the system online. The reasons for a system not producing power vary, some of the common ones are:
- Lack of permits: The installer overlooked securing city, county or HOA permits before starting the project.
- Lack of PTO: Permission to Operate (PTO) is the final step in the solar installation. It is given by the electric company to the homeowner once all the requirements are met. It is responsibility of the installer to secure PTO.
- Shoddy workmanship: This could be blocking the PTO. It can also be reducing the system production, for example if some panels were left disconnected or incorrect parts were used.
- Problems with parts: In a few cases there are parts missing or faulty that need to be replaced but in backorder.
- Installer is out of business: This is typical of the lowest bidder or new company which goes out of business before completing the project. The homeowner here needs to contract a new installer to finish the project incurring in an additional cost.
The best defense against these kinds of scams is doing your homework and checking references, apart from staying away from the lowest bid for the same project. The lowest bid installer usually doesn’t have enough profit in the project to stay in business for long or to weather unexpected events. And lastly, always hold the last milestone payment until after the system is operational. These funds are leverage against the current installer or can be used to hire a different installer to complete the job. …Back to the list
5. Bad system design
This scam can be carried out by a novice installer but more often by an unscrupulous company. The ill-intentioned installer’s main goal is to sell and install the biggest system they can, and get paid for it. Why sell you a system that fits the site conditions when they can sell you something bigger even if it produces the same amount of energy.
Solar is not for every house, sometimes the roof area is shaded by an adjacent structure, maybe there is a mature tree blocking the south side of the roof, which has the highest production potential. Maybe the roof has too many cuts and gables leaving only the north facing side of the roof available for solar, which is the least producing area. Another bad design is under sizing the inverters in relation to the solar array, for example a customer could have a 10KW rooftop solar array connected to a 7KW inverter. In other words, this customer purchased a 10KW but is only getting 7KW worth of solar.
The scam here is about purchasing more than what is realistically possible and about getting a subpart system instead of what was agreed. This scam can lead to broken promises which we talked about earlier.
The best defense against this scam is securing multiple estimates and getting familiar with the technology. Customers don’t have to be experts in solar, they just need to be cautious about what seems too good to be true. Panels facing north or trees on top of panels are red flags. …Back to the list
6. Sales pressure
This is another scam typical of door knockers and it could be a big red flag from anyone selling solar systems. They will say things like:
- The incentives are available for limited time, they are going away soon
- This price is available today only
- You will have no electric bill
- It is no cost to you
Some other red flags are big discounts in the project, in the thousands of dollars; or the cost of the project keeps going down. It makes you wonder if the project was overpriced from the beginning. It poses a credibility problem for the salesman. What other things has he or she said that are not completely accurate? Another red flag is a lack of a proper site survey and power consumption analysis before arriving the project cost.
One pressure sales technique used by dishonest sales people is the refusal to leave a home for hours after they have been told that customers want to take time to investigate and compare quotes. They won’t leave a home until getting a signature, specially if they are selling solar leases or PPAs. The well intentioned and polite homeowner eventually concedes and sign for something just to get the person out of their home. It is sickening how kind hearted people are abused by these con artists.
The best protection against it is to recognize these techniques and stop all negotiations. Ask for more time. If the opportunity will not be there in the future, then it is not an opportunity for you, after all, we are talking about thousands of your hard-earned dollars. Any well-intentioned sales person will allow, and recommend, that you do your research. A well-informed customer is a happy customer. …Back to the list
7. Lead generation bait
Door knockers and online surveys
Finally, we get to the least damaging of the solar scams. Some people wouldn’t even consider it a scam but it is, by all means, misleading. Here you encounter a door knocker asking for a few minutes of your time to answer a few “random questions”. It could also be an email or Facebook post which takes you to a website so you can enter your information. In either case, door knocker or online survey, your information becomes the product. You didn’t pay for anything, so there is no harm, correct? Let’s examine it.
The door knocker then enters all the answers you provided into a system, probably the same system that the online survey stored all your information. Then the company behind the survey bundles your information together with that of your neighbors and offers it to solar companies as “solar leads”. Some solar salespeople buy these lists and start contacting you and your neighbors over and over attempting to sell you a solar system. Since the same list is sold multiple times then, multiple sales people contact you in their attempts to sell you solar. Answering all those calls can be time consuming and really annoying, so what you didn’t pay in cash you are paying in other ways.
You have seen online ads with one of the following statements:
- Get paid to go solar
- Free solar panels
- No cost solar
- Get free Tesla power wall
- New government program for homeowners in your area
- There are government grants available to homeowners in your zip code.
Followed by “check here to see if you qualify for these programs”. You have to get to the end of all the questions to find out if you qualify but, at the end of the questions you get a message that says “One of our representatives will contact you soon” and that is it.
The best way to avoid these kinds of scams is for potential solar customers to do their own research. Find three companies and contact them directly instead of them contacting you, in that way you know who is calling you back and you are in control of who has your information. …Back to the list
Conclusion
As you can see, there are many ways to fall for solar scams but, there are also simple ways to get a high level of protection against them. The number one is to become a savvy consumer, get informed. By requesting two or more estimates from different companies, you will also get exposed to different sales people with different levels of knowledge of the industry and of your specific project. You will learn more with every meeting and quote. Then, make sure you understand all documents before signing. Check the company’s background and online reviews. Visit your local BBB site and make sure there aren’t any open investigations or pending complains against the installer you want to use.
