Is Home Solar A Scam?

Solar Scam

The simple answer is no, it isn’t.

In fact, solar energy (photovoltaics) is a time tested and well proven technology benefiting thousands of consumers (myself included) each day.

Unfortunately, like all home improvements, scammers quick to make a buck have begun pushing solar on unsuspecting consumers who are looking to save money and benefit the environment.

These fraudulent contractors prey on those unfamiliar with how solar works; how much it costs; or how to compare one solar system to another.

These abuses have become far more prevalent of late with the advent of ‘$0 Down Solar’ leases and ppas (power purchase agreements) as the basis of comparison between equipment and installation is hidden or blurred by the financial instrument being pushed.

How will you know if you’re being scammed?

Consider the following:

Is solar energy right for you?

While most people believe their homes are good for solar, many are not. Before signing a contract you need to understand your location’s solar potential.

Is the location unshaded or minimally shaded? If you live in the woods or north of some tall buildings, trees, utility poles, or other shade obstructions, chances are solar is not for you.

Which direction will the array face (south is optimal while west and east are less so. North works only if you live in the Southern Hemisphere)?

Is your electric bill over $100/month? If not, you’ll pay more to go solar.

Does your utility use a tiered system to charge for electricity or a flat one? Does your solar salesman understand the difference? Can he explain the difference to you? Understanding this one fact can make or break your solar system’s return on investment (ROI). 

Have you considered all of the costs associated with going solar?

While it’s nifty to be able to give customers’ a solar layout via satellite, such tactics often mask major renovation costs associated with the system.

For example, as good as satellite imaging has become, it can’t ‘see’ into your electrical box to determine if it’s right sized for the proposed solar system or dangerously non-compliant or recalled.

Satellites also can’t determine rafter spacing, roof condition, or myriad other items that could be ‘change ordered’ later after you’ve been locked into a contract.

Do you understand all available federal, state, and local programs/incentives?

A lot of salespeople new to solar don’t understand these very well.

The most popular misrepresentation these folks will make relates to the federal tax credit. The Federal Renewable Energy Tax Credit is a 30% tax credit given to the purchaser of a qualified solar system (sorry, pool solar doesn’t count) AFTER all other incentives (including state and local rebates) have been accounted for.

The misrepresentation made by the naïve or shifty salesman is that this 30% will be mailed to you – the homeowner – as a check after the solar system is installed. Nothing could be further from the truth.

Fact is, you’ll need to file Form 5695 with the IRS when you do you taxes. If you’ve paid taxes, you’ll get ‘credited back’ the amount of taxes you’ve paid or the full 30%, whichever is less. Any credit you can’t use can be carried forward to subsequent tax years.

If you don’t pay taxes or pay very little, then the federal tax credit does you no good. If you fall into this camp, a solar lease or ppa might work better for you as the finance company can take the tax credit on your behalf and pass the savings on to you.

Is your roof capable of handling a solar energy system?

This is a biggie. This issue relates not only to the age of your roof, but also to its structural integrity.

Let’s begin with roof age. If your roof is 25 years old, it’s probably not the best idea to install solar on top of it. Chances are the waterproofing ‘felt’ or paper is old and worn out.

The shingles or tiles may be broken by the dozen and the last thing you want to do is drill dozens of holes in your roof.

In these situations, you’re asking for trouble. Leaks are guaranteed and while they may not be directly related to the solar roof penetrations, they may be related to torn paper; broken or dammed tiles; or other age related wear and tear.

The problem is, if you determine you need a new roof after the solar system is installed, be prepared to spend thousands of dollars taking it down and reinstalling it so that you can replace your roof. Word of advice, have a qualified roofer certify the condition of your roof prior to going solar and make any repairs at that time.

If replacing a roof, try to coordinate the roof replacement with the solar installation for maximum water protection.

Do you know how solar energy works?

For example, did you know that the solar panels make far less electricity in the winter than they do in the summer?

Did you know shading can dramatically affect system output depending on the equipment used and shading severity? Did you know that if the electrical grid goes down (aka blackout) your solar system is programmed to shut off (unless you have battery backup)?

Did you know that solar systems have a maximum annual output based on their size, direction, and design and that by exceeding this maximum you can still wind up paying an electrical bill? These are all important facts about solar that, if misunderstood, can lead to dissatisfaction with your solar system.

Unfortunately, there are solar companies out there selling ‘one size fits all’ solar systems while promising ‘you’ll never see another electric bill ever again’. By understanding how solar works on your home and in your specific area, you can avoid falling victim to an overpriced ‘one size fits all system’.

Do you understand how solar is priced?

Before ‘$0 down solar’ hit the scene, most educated consumers were beginning to understand what the industry calls – price per watt.

This is simply the cost of the solar system (say $30,000) divided by the number of watts (say 6,000 for a 6KW system.

If we do the math, $30,000/6,000 = $5/watt.

Knowing how to employ this one simple trick can save you tens of thousands of dollars on your solar system (regardless of whether you purchase it or lease it).

Let’s say you’re comparing system A from ABC Solar and System B from XYZ Solar. ABC Solar’s system costs $30,000 for 6,000 watts (6KW). XYZ Solar’s proposal for a 7,500 watt (7.5KW) system is $42,000.

Which is a better deal?

Well, you’ve seen the math for ABC’s already, and their system is $5/watt. While XYZ’s system is larger, it costs $5.60/watt and all things being equal is significantly more expensive.

In fact, the same system from ABC would be $37,500 (7500*$5/watt) or $4,500 cheaper!!

Now let’s take this one step further, some scammers are selling solar systems for $8, $9, even $12/watt!!

To perfect their scam, they keep their systems small (usually 2KW) so the total price is reasonable ($24,000 at $12/watt). Then they show you a tax credit of $7,200 (whether you can take the credit or not – scammers ALWAYS assume you can) and arrive at the low-low price of $16,800.

They then promise you’ll never see another electric bill as long as you live. See how this works. They rip you off by price gouging and then they rip you off again as a tax payer (by making Uncle Sam pick up 30% of their grossly overpriced system). 

Now that you understand some of the most common solar scammer sales tactics, you won’t be fooled.

In fact, you’ll have these scammers out of your house and on their way in no time flat since you’ll spot their tactics a mile away.

Armed with this knowledge, you can feel confident that you’ll make the right solar decision for your home and your family.

If you have friends, family, or neighbors looking into solar or who have recently purchased solar, please share this important information with them.