Homeowners are getting burned by solar panel scammers

While rooftop solar panels are becoming increasingly ubiquitous in homes throughout the United States, the industry also has a more sinister side: a seemingly widespread problem of fraudulent business practices that has cast a shadow over many solar panel companies.

Dissatisfaction with the solar panel industry has been growing steadily over the last half-decade, statistics show. One-star reviews on the industry website Solar Reviews have increased more than 1,000% since 2018, according to NPR. Many companies allegedly participate in fraudulent practices in an attempt to scam homeowners out of their money.

Despite this issue, the solar industry is continuing to broaden its reach. There are estimated to be between 105 and 126 million individual solar panels on U.S. residential rooftops, according to solar insurance company SolarInsure, and that number is expected to grow substantially by the 2030s. As a result, victims are now teaming with federal agencies to try and stem the flow of scammers — and help the environment at the same time.

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How do solar panel scams work?

Throughout the U.S., prosecutors are now "investigating high-pressure sales tactics and misleading financing arrangements," said NPR. Many "larger companies with more of a profit motive have introduced questionable sales and financing practices that are hurting the industry's reputation."

There have "been a lot of shady business practices in residential solar" that are "hurting the market," Micah Gold-Markel, the founder of the solar panel company Solar States, said to NPR. As solar energy has boomed over the years, some companies "have preyed on consumers by offering predatory and costly loans," and many of them "are engaging in overly aggressive sales tactics or are outright scamming consumers," said CNET. This involves practices such as "not giving shoppers access to their solar-installation contracts, promising incentives that the homeowners doesn't [sic] qualify for or offering a loan rate that will shoot up over time."

Many of the scams are a result of financial obligations started years ago. Since "solar was more expensive in the 2010s, many entered into leases with solar companies to defray upfront costs, and many were left in the lurch when those companies went out of business," said Time. Many times, these leases "were packaged and sold, alongside thousands of others, to private equity companies and other investors who were not incentivized to ensure, years into the leases, that service was good or that panels even worked."

The companies in question range in size. Dozens of customers "filed complaints against a company called Pink Energy, which abruptly went out of business in September 2022 and filed for bankruptcy after allegedly selling defunct solar panels and misleading customers about their benefits," said Time. But some of the bigger solar companies in the country, including SunRun, Tesla and SunPower, have also "faced legal complaints about the sales practices, solar panels and financing options at their companies or companies they've acquired."

Beyond loan-related scams, other common scamming practices include "creating a fake company and 'selling' solar panel systems without any intention of ever installing them," said MarketWatch. Some of these fake companies may then go about "using your personal information to steal your identity" after you sign up for their services.

Many of these scamming interactions happen as a result of walk-up sales pitches. In 2022, Philadelphia resident Emanuel Minto reported that a "door-to-door salesman approached him about a government program to help senior citizens save on their electric bills," said NPR. Minto was supposedly told by the salesman that the program would cost $20,000 out-of-pocket, but would cut his electric bill in half. But "there was no such government program, and the monthly payments ended up being four times what Minto says he was promised," NPR said. Minto "will die before I could pay this off,” the Jamaican immigrant said to the outlet.

How widespread are these scams?

They will never be fully quantified, but there have been efforts to break down some of the numbers. There were "5,331 complaints containing the words 'solar panels' submitted on reportfraud.ftc.gov between Jan. 1 and Sept. 19 of 2023," according to a Freedom of Information Act analysis from Time. This is up 31% from the entire year of 2022 and up 746% since 2018 — the first year in which the Federal Trade Commission (FTC) began tracking solar fraud data.

And while the aforementioned data focuses on the United States, solar panel fraud is a global issue. It is especially prevalent in Canada, where in the city of Calgary alone, the amount of applications for rooftop solar panels "has increased by nearly 600% since 2020," said the CBC. But as the "number of solar panels on rooftops in the Western province has blossomed, so have consumer complaints." Solar panel scams are widespread in Europe as well; in France, "up to a third of people who have had solar panels installed on their house" have "been affected by a scam," according to French news outlet The Connexion.

How can these solar scams be avoided?

While "there are still many honest and reliable solar panel companies on the market, it can be hard to differentiate the good guys from the rest," said Forbes. But there are ways in which consumers can work to identify solar panel scams. This is especially true when it comes to door-to-door sales, which are "innately pushy, and an aggressive salesperson is always a bad sign in business." People should "resist the urge to go solar right then and there, and do some research on your own so that you can get your solar power from someone upstanding."

Given the ubiquity of solar panels, many salespeople "will claim to potential customers that the federal solar tax credit will soon be eradicated," said Forbes, urging consumers to take advantage of deals quickly. However, this is not true, as the "federal solar tax credit currently sits at 30% and will remain as such until 2032. The current plan is for the tax credit to drop to 26% in 2033 and again to 22% in 2034, as part of the Federal Inflation Reduction Act."

There is also a "new federal program, called Solar for All," that "offers solar to low-income households," said NPR. To avoid scammers, the Environmental Protection Agency "plans to fund efforts to create lists of reputable solar installers who participate in the program." The trade group Solar Energy Industries Association (SEIA) is also working to create accredited training and standards for solar companies. The group wants to "make sure that there are no exploitative or unfair sales practices happening in our industry," SEIA President and CEO Abigail Ross Hopper said to NPR.

The FTC also gives pointers to solar companies that want to steer clear of problems themselves. Companies that sell solar panels should "be transparent about what you're offering," the agency said. "Disclose the total cost for your product or service, be clear about financing options and don't overpromise cost savings." These businesses should "help consumers make informed decisions about whether powering with solar or clean energy is right for them."