Solar Panel Scams: How to Avoid a Bad Solar Deal

Each year more Americans get solar panels installed, and for good reason. Home solar panels can reduce energy bills, provide your home with clean energy, and (with a backup battery) provide you with emergency power through a blackout.

Even with all these benefits, some solar offers are too good to be true, promising benefits the solar panels won’t be able to deliver on.

When you’re going solar, just like any big decision about your house and finances, it pays to go in armed with knowledge. Here are some tips to finding a great solar deal, and how you can identify the bad ones.

What Are Solar Panel Scams?

The right salesperson will do a good job helping customers find the answers to their questions and teaching them about the product.

Unfortunately, not every solar salesperson has been honest. Fake companies, “free” solar panels, bogus claims about rebates or money back, and even people trying to commit identity theft are some of the dishonest practices hurting customers.

Fake solar companies

In the past, companies have popped up just long enough to sell a few solar systems and disappear with their customers' money. If you’ve never heard of a company before, research them before handing over any money.

High pressure sales tactics

There are a few red flags to look for when a solar salesperson is at your front door or in your email box. 

First, if there’s been no property survey or inspection of any type, and yet they say, “Your home is perfect for solar!” Reputable solar companies will gather information about your roof and property from you, with a visual inspection, or using satellite imagery. Not every roof is suitable for solar panels, and a salesperson who doesn’t confirm that may not care whether solar actually works out for you.

If you’re pressured for a social security number, private bank information, or other personal information to “move forward today,” this is not a reputable business or practice. This could even be an identity theft scam. 

Another high-pressure ploy of a scammy company is pushing you to commit to a contract now before you lose a deal. Having only one choice of solar panel and other system components is another warning sign. These are signs of a person more interested in selling any system than selling one that fits your needs.

Free solar panels

You should carefully examine any promise of free solar panels or solar panels you’ll be paid for. 

Leases or solar power purchase agreements (PPAs), like Palmetto’s LightReach, are legitimate options for people who can’t immediately afford the upfront cost of solar. Those types of plans usually don’t have upfront payments but include ongoing monthly payments. 

An honest company with real experts and excellent customer service should answer everything about the terms of such an agreement, including payments and timelines. This includes giving you all the time you need to understand and feel comfortable with a plan and system. 

If a salesperson says that you won’t pay anything for solar panels, either upfront or in monthly payments going forward, they might be promising more than they can deliver.

“Your utility company will pay you”

Home solar panels can deliver significant savings in many cases, but there are fewer instances where they’ll deliver significant passive income.

While some states and utility companies offer programs like solar renewable energy certificates (SRECs) and net metering, which compensate you for the electricity your panels produce, make sure you understand what this will mean financially before committing to a home solar system. In some places, net metering credits are never paid out in cash, and SREC values vary widely by state. 

With net metering or increasingly common alternatives like net billing, customers receive credits for the solar energy they send to the grid to cover the grid energy they use (most routinely at night). You can save money on your monthly utility bill, but making money from the utility company is unlikely or minimal.

“The government will pay you”

The claim that the government will pay you for solar panels or solar energy may be a lazy or deceptive way of talking about the Residential Clean Energy Credit, commonly known as the Federal Solar Tax Credit. This is not the government paying you for solar. It’s a tax credit you may qualify for after installing solar or other clean energy equipment or devices at home. If your project qualifies, you reduce your tax liability by 30% of the cost of your system. You might receive a refund for the taxes you already paid, but if you don’t have a tax liability, the IRS won’t cut you a check. 

A salesperson using the federal tax credit to rush or pressure you is wrong, too. The federal tax credit, extended now under the Inflation Reduction Act of 2022, lasts as a 30% credit until the end of 2032 and phases out at the end of 2034, so you don’t need to rush to get the tax credit.

You can report any kind of suspected fraud or scam, whether it’s from a business, an individual, in person, or via phone or online, to the Federal Trade Commission and the FTC’s reporting site. 

Misleading contracts

Part of the high-pressure rush to sell solar panels is pushing a contract immediately, maybe even on the spot. If you’re going to spend tens of thousands of dollars and commit to something for decades to come, you are right not to treat it like buying a candy bar. 

If an employee won’t patiently walk you through everything on a contract, it’s a red flag. The same goes if the salesperson won’t or is shaky about letting you take all the time you want, on your own, to read the contract. If he or she won’t answer all your questions on the contract or in general, it’s a red flag. You should also know about future maintenance responsibilities, warranties or guarantees, and your recourse if something goes wrong before committing. 

Whether talking about buying or leasing a system, you should understand the entire agreement before signing it. The National Renewable Energy Laboratory has a few good questions to ask about any contract, like these.

1. How long is the contract?

2. Who owns the solar panels?

3. What happens if I want to sell my house?

4. What happens if the panels are damaged and need repair?

5. Is there a minimum production guarantee?

6. Who gets to claim state and federal solar incentives?

Avoiding a Solar Panel Scam

Remember the old ad during Saturday morning cartoons? The More You Know! 

Ok, that’s ancient now. But in this case, the more you know and the more you partner with a company that will help you know, the better. Doing your own research and getting information from multiple sources means you’ll make a better decision. Make sure you understand the short-term and long-term financial implications before you commit to anything.

Work with a reputable company

Solar panels are often a decades-long commitment. If the first meeting or conversation with the company is sketchy or feels like you aren’t getting straight answers, what’s it going to be like 25 years into the relationship? There are plenty of resources to help you get an idea.

Better Business Bureau ratings and grades, customer reviews, and consumer news sites such as CBS Marketwatch (which just so happens to rate Palmetto as Overall Top Pick and Best for Protection Plans) provide helpful comparisons. Trusted professional resources include the Solar Energy Industries Association’s (SEIA) national solar database and the Interstate Renewable Energy Council’s (IREC) solar licensing database.

Understand the incentives available to you

Knowing the incentives you qualify for is much safer than relying on a salesperson’s promises. 

Federal, state, and local incentives may be available. Some are tax credits, such as the federal solar tax credit; some are bill credits from a utility company, and others are rebates. NC State University has a thorough searchable database of incentive programs nationwide. 

A reputable company with experience should be happy to share all that experience and help you every step of the way. That’s true before and after the panels are on your roof. What components qualify for which incentives? What forms will I need to file? By what deadline? What future additions qualify for incentives? A scammy or nonexistent company probably won’t know or find out these details.

Know your utility’s policies

No one likes reading the fine print. But going solar with an understanding of how programs like net metering will work for you can help you spot bad quotes or deals.

Net metering may vary by utility company within the same state and, like California's, policies may have changed over the years. 

The easiest way to see if your solar energy system will be eligible for net metering is to contact or visit the website of your local electric utility.

Then, it’s important to know the utility’s fees and charges you’ll pay even with solar. Even if you use no utility company electricity in a month, or if your credits pay the electricity usage down to zero, you may get a bill with some fees and charges to pay.

Know what “free” means

There are legitimate agreements, like leases and power purchase agreements, that see panels going on your property for no money down. There are incentives and rebates which bring the cost of purchases down. Neither of these are the same as “free solar panels.” 

Before agreeing to a no money down plan, make sure you understand it. Make sure you aren’t walking into a contract with monthly payments so expensive you won’t save anything. You can end up with an overpriced and underperforming solar system, plus no support of any type, for years. 

Even with a legitimate lease or PPA, it’s critical to read and understand all the terms of the agreement before signing.

Talk to friends and neighbors

It sounds so old-fashioned these days. A really valuable source of information is your friends or neighbors who have gone solar. You are likely talking to someone who had many of the same questions. Plus, they live in the same area and likely have the same utility. 

Resources for Avoiding Scams

Plenty of sites, organizations, and databases provide good information and help for consumers.

Solar Energy Industries Association: SEIA has consumer guides, model lease and PPA agreements, and other educational resources.

National Renewable Energy Laboratory: The NREL has research and data for consumers and specific solar consumer protection information. 

Interstate Renewable Energy Council: The IREC has a solar licensing database searchable by state to help you find licensed, certified professionals, plus more resources and news.

North American Board of Certified Energy Practitioners: The NABCEP has a professional directory of credentialed installers and professionals.

Database of State Incentives for Renewables and Efficiency: A searchable site for state and local solar and clean energy incentive programs.

IRS: Has information about the Residential Clean Energy Property Credits and Form 5695.

Federal Trade Commission: You can report fraud, and the information will go to the right law enforcement agency.

Solar’s Legitimate Benefits

Bad actors in the solar business don't diminish the science of solar panels and the ways you can save money. 

Understanding the up-front and long-term financial picture should be a major aspect of your decision. Knowing the long-term estimates, such as the payback period of a new residential solar system, is important before committing to any plan or installation. An honest company should walk you through how your electric bill will change, net metering programs, your estimated payback period, and more.

Solar users cut their consumption of carbon and fossil fuels, fighting climate change and helping the environment. We want to help you find if solar is a good fit for you and your family. You can start on the finances part with our solar savings calculator or reach out to us via our contact form.

Solar Panel Scam FAQs

Are solar companies ripping you off?

Home solar is expected to grow by nearly a million homes a year from now to 2030, so there are good companies and actors, and, unfortunately, some bad ones, too. Be wary of anyone pressuring you to make a major financial decision, exaggerating claims, and not giving you satisfying answers. Bad actors that sell bad solar deals to make a quick buck, hurt homeowners and reputable companies both. 

Are solar panels legitimate?

Yes. Solar panels and the electricity they generate are legitimate. They are used by millions of people around the world.

Will solar panels eliminate my electric bill?

Solar panels could, depending on multiple factors, reduce your electric bill, perhaps all the way to zero. In some cases, even if you cover your electricity use with solar and net metering, you could get a bill for fixed fees and charges from the utility company.