Solar panel scams: 7 solar red flags and how to avoid them

Adding solar panels to your home can be one of the best decisions you can make. Solar is currently helping millions of Americans save money on their energy bills, and incentives like the federal solar tax credit are making solar more affordable than ever.

Unfortunately, the same things that attract homeowners to solar have also attracted dodgy opportunists out to make a quick buck. With empty promises, misinformation, and shady sales tactics, these hucksters push people into solar deals that don’t work for them.

In the worst cases, homeowners have been left making payments on overpriced systems that don’t work, with little to no support from the installation company that put the panels on their roof.

To avoid getting scammed, you need to know what to look out for and when to walk away. Here’s our guide to spotting solar panel scams and finding a great installer.

Red flags and signs of a solar panel scam

There are several steps in the process of getting solar panels for your home, and there are different red flags you could encounter along the way:

• Watch out for ads that make wild promises like “free solar panels” and “special programs ending soon”.

• When talking with salespeople and getting quotes, make sure you’re not getting misled about things like your eligibility for incentives or “limited-time deals” from installers.

• When comparing quotes, beware of companies with bad customer reviews and those that provide incomplete information and won’t answer all your questions to your satisfaction.

Now, let’s dig a little deeper. Watch out for these red flags:

1. Ads that say solar panels are free

If you’ve been looking for home solar at all, you’ve almost certainly seen the ads on Facebook or YouTube that promise “free solar panels.” Marketers love targeting people using these phrases because they can get a lot of attention, but are solar panels ever really free? In nearly every case, the answer is no.

So, how can marketers get away with saying that? There is a thin slice of truth cheese in the center of this lie sandwich. 

What those marketers are talking about is called “third-party ownership.” As the name suggests, this is a business arrangement where a homeowner agrees to let a solar panel company install solar panels on their roof, and they then pay a monthly lease payment or agree to purchase the energy the solar panels make every month. The installation is “free,” but the solar company still gets your money and potentially a lot of incentives, as well.

No wonder these companies are willing to install “free” solar panels on your roof.

Solar leases and PPAs are a good choice for some people, but you have to be very careful when vetting a company that offers these methods of third-party ownership. The contracts often last for 20 years or more, and some companies include “escalator clauses” that increase the payments by a small percentage each year. 

Do your homework: Learn more about solar leases and PPAs before you sign anything.

As far as actual free solar panels go, there are some small programs in places, like the Solar for All program in Washington D.C., geared toward low-income households that offer modestly-sized solar panel systems for free. Very few homeowners will be able to qualify for these low-income solar programs.

2. Claims that there are “special programs ending soon”

This is a major tactic scammy solar salespeople use to make you think you are running out of time to sign a contract. The fact is, there are very few government incentives with an expiration date anytime soon.

The biggest solar incentive is the federal solar tax credit, which was extended in 2022 and is worth 30% of installation costs through the end of 2032 before phasing out to slightly lower levels in 2033 and 2034.

We’ve seen many ads online that still claim the tax credit is “going away soon.” The people who produced these ads seem to have conveniently “forgotten” to update with new information, creating a false sense of urgency. Don’t believe them.

In general, you shouldn't believe a pushy salesperson who tells you that special programs are ending soon. Still, there are some state and local solar incentive programs that have limited funding that only become available once a year. A reputable salesperson will be able to tell you the exact name of the program and point you to the page about it on the website of your local or state government or utility company.

3. Salespeople pretending to be from the utility company

It is a sad fact of the solar industry that some salespeople travel through neighborhoods knocking on doors dressed in a way or using certain words and phrases that make them seem like official representatives of the utility company.

If a salesperson comes to your door and says something like, “I’m out here working with (insert utility company name here) on making people aware of a program they’re offering to help homeowners go solar,” be wary.

4. Offers of a “limited-time deal” that goes away if you don’t sign immediately

Similar to the imaginary “special programs” discussed above, some salespeople try to tell homeowners that a “limited-time deal” is only available if the customer signs that day.

This is possibly the worst tactic listed here and is almost certainly a sign that you’re dealing with someone who doesn’t have your best interests in mind and will overcharge you.

The absolute most important thing to remember when considering solar panels for your home is to get multiple quotes and take time comparing the numbers and companies to each other. You certainly shouldn’t always look for the cheapest price, but you should absolutely take your time and consider all the variables to make a good decision.

5. Misleading information about the federal solar tax credit

Remember how we mentioned above that the biggest solar incentive is the 30% federal solar tax credit? It’s also one of the most misunderstood, and that has a lot to do with solar marketers and salespeople.

Here are a few important things to know about the tax credit:

• It is a tax credit, not a rebate, deduction, or refund.

• It is non-refundable, meaning you can only claim an amount up to what you would have paid in taxes during the year (i.e., you have to have income and owe tax on that income to claim it).

• You can roll over unused portions of the tax credit to future tax years if you can’t claim the full amount in the first year.

• You can only claim the tax credit based on the amount of money you spend on solar panels and related installation costs (including home batteries with or without solar). You cannot claim the credit based on the cost to re-roof your home to make it solar-ready.

Many unscrupulous salespeople have said things like, “You’ll get a huge check from the government.” You’ll only get a check if you have already sent money to the government via estimated tax payments or regular payroll deductions.

They will sometimes say, “You can do whatever you want with the money,” which is often not true regarding solar loan balloon payments. If you take a loan to pay for the solar panels, most loan providers require you to pay the full tax credit amount toward the loan within 18 months.

To protect yourself, gather information about how the federal solar tax credit works, and speak with trusted financial advisors before proceeding. Make sure you fully understand your expected tax liability and whether you’ll be responsible for making the lump sum solar loan payment described above.

6. Overestimating future increases in electricity prices

One of the things that makes home solar such a good investment is the fact that electricity prices are always increasing. In nearly every place across the country, electricity is much more expensive now than it was 25 years ago. So why not go solar now and protect yourself from future price increases?

The only problem is that some solar companies use the wrong estimates for annual electricity price increases. Solar quotes almost always come with projected savings over 25 to 30 years. If a solar installer estimates an annual increase of more than 3% per year, they better have some very good data to back that up. Otherwise, they’re showing you savings you’ll probably never reach just to get you to sign the contract.

When you’re gathering solar quotes, keep an eye out for this number hidden among all the other numbers in the proposal (and be especially wary if the installer doesn’t explicitly call it out). Be prepared to ask why the installer chose the number they did and compare it to our list of the average annual electricity price increases by state.

7. Missing information in quotes

This isn’t so much the sign of a scam as it is a word of caution and advice: solar installers should give you a lot of information when providing a quote, including things like model numbers of the solar panels they plan to use.

For example, some quotes we’ve seen just say things like “Qcells panels” or “REC panels”. A quote should have model numbers there (such as Q.PEAK DUO BLK ML-G10+ 400 or REC Alpha Pure Black REC400AA), so that you can read reviews and know what to expect regarding energy production and longevity.

Note that model numbers can change before final installation, but once you sign a contract, the company should essentially have a certain group of panels set aside for you.

If there ever is a need to switch to a different model, the installer will be able to compare the performance and warranty of the updated model with the one written in your quote. In that case, they will either show you how the new model is better or offer you a discount for accepting panels that aren’t up to what they originally proposed.

How to protect yourself

Now that you know a little more about red flags to look out for, here’s a guide to preparing yourself for the solar sales process:

Learn about solar before getting quotes

If you’re new to solar, there is so much to learn. Start with our beginner guide to home solar panels to get the basics, and navigate through our site to read articles on topics like how many solar panels you need, how long it takes to pay back their cost, and how solar loans work.

Once you’ve learned about solar panels in general, you can use our solar panel calculator to estimate the cost, savings, and available incentives on a solar system for your home. This is just a ballpark estimate to give you an idea of your specific needs, but once you’re armed with this information, it’s time to gather solar quotes from installers in your area.

Get multiple quotes from competing companies

After arming yourself with knowledge about how solar works, the very best way to avoid a bad deal is to get multiple solar quotes and compare them.

Use what you’ve learned to compare the solar quotes, and also use the information each company gives you. You might find that one installer will include information that another does not. 

You can use the following information from the quotes to compare:

• Total system size in kilowatts

• Expected annual energy production in kilowatt-hours and expected savings based on your electric rate plan and its expected rate of increase

• A list of proposed equipment brands and model numbers (panels and inverters) 

• A satellite or drone photo of your roof with the proposed system on it

• The total solar system cost in dollars (which should divide out to around $2.50 and $3.50 per watt of system size)

• A list of any incentives you may qualify for

• Any proposed financing arrangement

• Information on the installer’s workmanship warranty and manufacturer warranties

When you’ve gotten all the information from multiple companies, you can use it to compare and choose the best. Also, be sure to ask the right questions about each quote you get.

Check the company’s online reviews and certifications

Don’t sign a contract without getting to know the company based on reviews from its past clients. Look up solar companies on our website to see their review history. Check other sites and the BBB, too.

You should also look into companies’ certifications with state licensing boards. Verify that the company has installers that are certified by the North American Board of Certified Energy Practitioners (NABCEP).

Understand all your financial options and consult with trusted advisors

Home solar panels are one of the best things in the world, but whether to get them and how to pay are not decisions to make lightly. This is a big, expensive home improvement project that should last for decades; you should be sure you understand the variables and your options completely before making a final choice.

Unless you’re 100% certain of your abilities to perform a thorough financial analysis, you should consult with a tax professional to understand your ability to claim the federal tax credit and any state credits you qualify for. Also, consider speaking to an investment advisor who can advise you about whether solar represents a net positive over your next best option.

Report bad behavior

If you encounter any of the scammy behavior described above, you should consider reporting it to various authorities. Not all bad behavior is illegal, but there are experts whose job it is to deal with problems created by unscrupulous companies.

Here are some of the actions you can take:

• Report fraud, scams, and bad business practices to the Federal Trade Commission (FTC)

• Report ads that seem to violate Facebook’s guidelines

• Contact your state’s attorney general if you think a company has violated its contract with you 

Final thoughts

There are hundreds of great solar companies in the United States that do right by their customers, work to provide great service at excellent prices, and keep their business running for the long haul. Unfortunately, there are also people out there looking to make a quick buck who will say just about anything to make a sale and get a commission without considering the needs of the people they sell to. 

We hope the details in this guide will help you spot bad actors and their misleading statements and instead find a great company that will help you join the millions of other happy home solar customers across the country.