Buyer Beware On Solar Panel Scams

by Richard McCarty: Attorney General Jim Hood of Mississippi warned consumers in his state in late 2015, “While there are some exemplary companies, other solar companies are using misleading sale pitches to entice consumers into paying for overpriced [solar] system agreements or failing to disclose how various subsidies, government programs and rate making practices may affect the future cost of energy for the consumer.”

Americans for Limited Government Foundation just released a report titled, “Shedding Light on Solar Electricity,” which examined reported problems with the solar industry across the nation. The report concluded that, “Consumers have a right to know the facts before they decide to have solar panels installed on their homes. Too many times, unscrupulous solar industry employees have omitted these facts or, intentionally or unintentionally, misled potential customers.”

As the report’s author, I was surprised by the scams and problems that customers all across the nation have had to deal with after agreeing to have solar panels installed. For example, some consumers have been ripped off by contractors who collected deposits on solar panels but never installed them. A number of solar customers have not received the rebates they were due because they were stolen by the contractor. Many customers have not seen the savings on their utility bills that they were promised, while others who have signed solar leases have experienced problems with selling or refinancing their homes. Those who signed a lease for solar panels and then tried to get a reverse mortgage have learned it is not possible.

While the solar industry has thrived — largely due to government incentives — it is scandalous how many headaches it has caused for its customers, and some of the bad actors in the industry have been ripping off both their customers and taxpayers. Consumers including those in South Carolina need to be aware of these issues and do their due diligence before signing any contracts. In addition, state legislators need to strengthen consumer protection laws and bring more transparency to the solar industry.

To avoid these problems, consumers need to view the solar decision with the same scrutiny they put into buying their home by, at the least, getting multiple quotes and checking the backgrounds of the companies that furnish them. Consumers should demand that any promises be written into the contract and should carefully read the contract before signing it. If there is anything in the contract that they do not understand, they should consider consulting an attorney because a mistake can significantly diminish the value of most people’s biggest asset — their home. And if they were promised a government rebate for purchasing or leasing solar panels, consumers should consult a tax professional to ensure their eligibility.

All across the country, government officials have warned consumers about the seamy side of the solar industry which is why state legislators should enact sensible laws that require solar companies to be open and transparent with their potential customers about the advantages and disadvantages of solar panels. Even after legislators address these problems, it will still be necessary for consumers to do their own research to ensure that solar panels are the right choice for them; but until consumer protection laws are strengthened, this research will be even more vital.

The report suggests that state legislatures across the country pass legislation to reduce the number of these cases by increasing transparency and improving basic consumer protection laws. That legislation should do the following at a minimum:

• solar contractors provide customers with a written contract and disclosure form;
• contracts include the amount of any monthly payments and what, if anything, could cause them to rise;
• any promised savings must be written into the contract;
• any estimated savings guarantee must be included in the contract;
• contracts include the electricity rates which were used to compute the promised savings;
• any system performance guarantee be included in the contract;
• solar lease contracts specify who is to receive any solar incentives;
• the period for rescinding the contract be included in it.

Before consumers sign such a contract, they need to do their homework to ensure that they are making a wise choice. State governments can help by passing basic transparency requirements making that research easier. As with any major purchase, if consumers don’t understand what they are buying or the specifics are not clearly in writing, it is best to walk away until they can make an informed decision.
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Richard McCarty is a Senior Research Analyst at Americans for Limited Government. Article also on ALG Blog.

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