Home > Solar > Common Solar Panel Scams and How To Avoid Them

Common Solar Panel Scams and How To Avoid Them

Updated Nov 30, 2022

Updated Nov 30, 2022

Home > Solar > Common Solar Panel Scams and How To Avoid Them

With solar panels becoming more popular and affordable, many states and homeowners have begun utilizing them. When implemented properly, solar power can reduce the stress on the power grid, lower your carbon footprint, and provide sustainable, green energy.

Unfortunately, along with innovation comes scam artists and other bad actors looking to get in on this burgeoning trend. To help you avoid falling victim to these vicious scammers, we’ve compiled a comprehensive guide to the most common solar panel scams and how to evade them.

What Are Solar Panel Scams?

Solar panel technology has been relatively unattainable for many years due to its high costs. But due to incredible innovations and price reductions throughout the mid-2010s, solar panels are now more affordable than ever. In addition, many states have begun adding initiatives to stimulate the use of solar power systems. In response to the influx of homebuyers looking to get in on green energy (and cheaper electricity bills), all manner of bad actors, fraudulent installers, and outright scammers emerged.

Solar panel scams resemble a combination of old-fashioned door-to-door and more modern contracting shams. Older style door-to-door cons revolve around knocking on doors, selling lower-quality products or hard-to-unsubscribe services (like magazines), and using aggressive sales tactics to encourage purchases. Contracting scams are low-quality, or outright deceptive companies that masquerade as reputable contractors, getting hired under the pretenses of good work, then overcharging or underperforming. Solar panel scams combine aspects of both, relying on a homeowner’s lack of understanding of their solar rights and the details of this new technology.

These solar scam artists will masquerade as reputable companies. They’ll present false promises, misrepresent services and incentive programs, and utilize aggressive sales tactics to strengthen a deal. These scammers prey on those who want to get in on solar power but are not well versed enough to spot a bad deal when they see one.

How Common Are Solar Panel Scams?

Unfortunately, solar panel scams are relatively common in states with large solar markets or strong incentive programs. There is also a strong online market, particularly through social media ads and email campaigns promising “free solar panels” or “no more electricity bills.” Many reputable solar panel companies use these same mediums for advertisements, making it increasingly difficult for homeowners to differentiate scams.

What Are the Most Common Solar Panel Scams?

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Solar scams can come in various forms, some as innocuous as higher than average prices, others as nefarious as misrepresenting incentive programs. As a homeowner, you must be careful when working with any contractor, solar panel companies included. What follows are some of the most common scams plaguing solar-focused states.

Deceptive Lease Agreements

Many disreputable solar companies may try to sell you on a lease or power purchase agreement (PPA). These contracts are alternative financing options for solar power systems, often advertising “$0 down on owning solar panels” or “solar panels at no cost.” When approached honestly, leasing options and PPAs can be an excellent way to utilize solar power, especially if you don’t have cash for a down payment.

  • Power Purchase Agreement (PPA)PPAs allow solar providers to install panels onto your home and then sell you the electricity it generates. The cost of this electricity is typically far less than what you would pay from a utility company for power, and the company covers the cost of the installation, maintenance, and removal of the panels.
  • Solar lease: As the name suggests, with this contract, you lease solar panels from a company and pay a monthly fee for their usage. In this situation, homeowners pay nothing for the panels and get the ability to access the energy produced by the panels, reducing their electricity bills.

The scam element of these two types of financing options comes into play through the misconceptions surrounding ownership of the panels themselves. During the sale, a scammer may try to assure you that you’ll own the panels while also claiming you can reap valuable incentive programs or rebates, making a further profit. Neither financing option provides any form of ownership, excluding you from most federal and state incentive programs. PPAs and leases also add no value to your home and can, in the worst cases, come with hidden fees, unfavorable rates, and restrictive contracts that can be difficult (or costly) to break.

Fake Utility Representatives

This scam is reminiscent of door-to-door scams and is the most common type of solar panel scam out there. These fraudulent companies will appear as state or utility representatives and try to hook homeowners by knocking on their doors, emailing, or contacting them over the phone. When speaking to a homeowner, they’ll make any number of claims, such as:

  • There are new state or federal tax credits.
  • State or federal tax incentives are running out.
  • You can save up to 70% on your electricity bill.
  • You can eliminate your electricity bill entirely.

While many states offer incentives and rebate programs, none are known to send representatives to random homes trying to get them to sign up for solar panels. Furthermore, many of these claims are half-truths, as state and federal incentives have time limits or can change yearly. Also, many homeowners can potentially save up to 70% on their electricity bills in ideal conditions and by taking advantage of programs like SREC and net metering. Be wary of any email, phone call, or salesmen advertising deals that appear too good to be true, and always do your research on state and local incentives.

Unethical or High-Pressure Sales Tactics

Unfortunately, forceful, aggressive, or dishonest sales tactics are all too common in most contracting fields, including solar panel installations. Fraudulent companies will try to force sales at any cost, even if the specifics of the installation are detrimental to the homeowner. There are plenty of underhanded ways representatives can try to close a sale, and some are more obvious than others.

Keep an eye out for some of the following signs you’re dealing with an underhanded salesperson. They might:

  • Try to force a deal without a contract.
  • Attempt to close a deal without giving you time to consider your options.
  • Create a quote and contract without ever inspecting your property.
  • Make lofty promises, inducing impossibly low prices, free solar panels, or no upfront costs.
  • Claim to work with or are a representative of a utility company.
  • Lack or be unwilling to provide proper company identification.
  • Be unable or unwilling to provide insurance, licensing, or certification information.
  • Offer free add-ons like solar batteries or warranty programs.
  • Warn you about a future increase in utility costs.
  • Exaggerate the value of your system, pricing it far above the current market value.
  • State that a certain brand or technology is the only one available or allowed in your area.

Promising Ineligible Tax Credits

Solar tax breaks and rebate programs are complicated processes that every homeowner interested in solar should understand. For example, there is a 26% federal solar tax credit, but it only applies if you’re eligible. Some states offer additional tax credits that can, in some cases, be applied to this federal credit. Some utility companies also have programs for homeowners in specific locations or municipalities.

Frustratingly, the laws regarding these state and local incentive programs frequently change and have strict eligibility requirements or time limits. Unethical companies take advantage of these muddy waters, using promises grounded in inaccurate, out-of-date, or downright incorrect information. When purchasing a solar system, always look up all available federal, state, and local programs before shopping around.

Phishing Emails, Fake Ads, and Other Disreputable Online Marketing Scams

Online scams, in general, are a modern epidemic that just about everyone has had to deal with at one time or another. These scams utilize any rapidly growing trend, using its popularity to draw in users while impersonating legitimate companies. Ads, pop-ups, emails, banners, and social media links that promise “free solar panels,” “$0 down solar energy systems,” and “free Tesla power wall” are all almost certainly scams. We always recommend thoroughly checking local solar panel companies and going through their official channels to schedule an in-person estimate.

How to Avoid Solar Panel Scams

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Know Your State’s Average Solar Panel Cost

One of the most common ways solar panel scammers will try to take advantage of you is through higher rates. The best way to avoid this is to be educated on the going price of solar panels in your area. If you receive a quote that is either wildly above or below what is standard, it’s a clear sign that something is wrong.

Get Multiple Quotes

Another valuable way to protect yourself from price rigging scams is to shop for quotes. By comparing quotes from multiple reputable companies, you achieve two important things. One, you get a sense of the average price of solar panels in your area. A company that deviates heavily from this average may be adjusting its prices dishonestly. Second, it allows you to find the best price for your solar panel installation.

Another helpful tip when purchasing solar panels is to be open about shopping around. By mentioning that you’re comparing quotes to a company’s representative, you can gauge their response. You should be cautious of any representative that reacts negatively. Any reputable company will know that quote shopping is a normal part of the process and will be more than willing to continue to work with you.

Thoroughly Vet Companies Beforehand

One important practice for all home improvement projects, including solar installations, is to vet the companies beforehand. Start by checking online reviews through Google My Business and Better Business Bureau (BBB) pages. While checking for negative reviews and comments, be on the lookout for complaints and violations. You’ll also want to check the company’s general history – if it’s new or has large gaps in its work history, it can be a major red flag.

If you suspect a company is fraudulent, you can always check up on it through your state’s Consumer Protection Agency (CPA). CPAs typically have help centers that can advise you on the local solar market and check to see if a company has any serious complaints against it or has a record of violations.

Never Sign a Contract without a Quote

The solar panel industry is similar to the moving and contracting industry in providing comprehensive quotes for its services. A representative from your chosen company should always inspect your property, roof size, energy needs, and current utility information to determine the right type and size of solar panels for your home. Any company that wants to rush this process, or ignores it entirely, is not trustworthy. Never sign a contract without obtaining and thoroughly reviewing a comprehensive quote. Furthermore, never work with a company that does not offer quotes.

If you’re shopping for a solar company online, always be wary of any website that wants to generate a quote. Many of these quotes are, at best, rough estimates, and any reputable company will always want to inspect your property before generating a contract. Even worse, these websites requesting personal or utility information to generate free quotes are often scams designed to steal information.

Know What State and Federal Incentives You Qualify for Beforehand

One of the most important things you can do as a homeowner interested in solar is to understand your state’s incentive programs and solar access laws. Most scam artists rely on a fundamental lack of understanding of solar rights on the homeowner’s part. By educating yourself on what federal and state incentives you qualify for beforehand, you’ll be able to spot bad actors.

Final Thoughts

The solar industry has been booming since the mid-2010s. Many states have picked up on the green electricity wave and have been pushing lucrative incentives and rebate programs to encourage clean energy. Many homeowners across the country greatly reduce their energy bills by taking advantage of these renewable energy programs. Unfortunately, as with all explosive trends, scammers and shady companies are never far behind. But by following the advice in this guide, you’ll be more aware of some of the most common solar scams and know how to steer clear of them.

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