Don’t Get Swindled: Signs of Misleading Solar Contractors

As with any industry, there is a spectrum of companies offering solar products and services. While most companies are reputable and good intentioned, we have heard from some people who were misinformed by inexperienced or less knowledgeable companies. Even more unfortunate is that some people have reported to us they were intentionally misled or deceived by solar scammers. Solar is an investment, so it’s important to protect yourself. Here are some tips to help you recognize the difference between the honest folks and the scoundrels just out for a fast buck.

Here are some things that a reputable solar installer wouldn’t say to you:

“We don’t need a permit for this.” 

Unless it is a remote off-grid project without a local authority that requires permits, you will almost always need a permit if you or a contractor are adding to or modifying an existing solar system. One general exception is repair of an existing system.

“You can take the 30% ITC on everything required for solar – even the re-roofing costs!” 

The ITC applies only to work that is involved with mounting, connecting, and electrifying your solar installation. Structural upgrades to your home that would have been required with or without a solar installation (like a re-roof) are not eligible. But if you are having Building Integrated Photovoltaics (BIPV) installed (where the solar panels are your actual roofing material, they may qualify. Here’s what the IRS says on the subject:

“In general, traditional roofing materials and structural components do not qualify for the credit. However, some solar roofing tiles and solar roofing shingles serve as solar electric collectors while also performing the function of traditional roofing, serving both the functions of solar electric generation and structural support and such items may qualify for the credit. Components such as a roof’s decking or rafters that serve only a roofing or structural function do not qualify for the credit. (Source: IRS.gov)”

Be sure to consult your tax professional or the IRS to know what you can claim.

Want to learn more about the Solar Investment Tax Credit? Read more.

“You will get cash back from the government for installing solar.” 

The ITC is a tax credit against the amount of taxes you owe. Any impact on your taxes owed, any tax refund you may receive, or any other effect on your federal taxes can only be determined by you or your tax professional.

“The more kWh production you have, the more benefits you receive.” 

Up to a point – but once you have reached 100% of your annual kWh usage you will most likely just be giving your utility free power. It is rare that any state or utility provides monetary compensation for excess electricity production. There are some regions of the country that have incentives based on production, but it almost never works out to be worth installing more solar than would be practical in any other situation.  Read about solar incentives.

“Going off-grid is always a good, easy solution!” 

We often say, “If it were that easy, everyone would do it!” But in all seriousness, off-grid is a wonderful solution for power-inaccessible areas. But we have never seen a case in which it made sense financially or practically to remove a grid-tied home from the grid or to not run power in from a readily available source in favor of off grid power.  And in some areas it may be prohibited or may invalidate the occupancy permit for your home. If what you’re looking for is greater independence and backup power for when the utility goes down, a grid hybrid solar system is the best of all power system worlds.

These are some common reports we have heard from clients who have interacted with less than reputable companies. Below are some other things we’ve heard about over the years. When researching and receiving bids from solar companies beware of those who:

• Use aggressive or high-pressure solar sales tactics
  • A reputable contractor will provide you with the information you need to decide if going solar is right for you. You should never feel pressured to add solar to your home.
• Use ads that claim ‘only in your area’ or limited time deals such as a special discount if you sign within X day, unless it is a Solarize or community solar campaign, or another similar reputable program.
  • This is another high-pressure tactic that some companies use to get you to sign now without comparing bids or reading the fine print.
  • Legitimate programs will never pressure you even if the timeframe to sign up is limited.
• Encourage you to “See if you qualify for Washington’s No Cost Solar Program”
  • Fact: As nice as this would be, Washington doesn’t have a state run no cost solar program. There are lenders that offer 0% down financing over 10 to 20 year terms, but that’s not a no cost program.
• Tell you they will put solar on your house for free, or that leasing a solar system makes good financial sense.
  • Solar is not free and there is always a ‘catch’ to these types of programs. When you lease a solar system the company that puts it on your roof receives all the tax credits and incentives. You may or may not have a reduced electrical bill – many leases end up costing homeowners more for their power over the life of the lease, and if you decide to sell your home most buyers are wary of taking on the terms of solar leases.
• Offer installer-specific rebates after your system is installed.
  • The solar income tax credit is based on the final cost of your system. If an installer offers a rebate after you purchase—especially after you claim your tax credit—they are artificially inflating the system cost to make your tax credit look bigger than it is. Sometimes the “rebate” is really just the installer getting you a cash out loan or other financing trick that raises the overall loan amount. Please clarify with a tax professional as to how any rebates should be handled with regard to your taxes. According to the IRS:Rebates generally represent a reduction in the purchase price or cost of property, and the taxpayer must exclude the amount of the rebate from the amount of the qualified expenditure on which the taxpayer calculates the tax credit. (Source: IRS.gov Notice 2013-70 Section 3 A-11.02)
• Offer in-house financing that covers your first 12 months of payments.
  • Some companies offer in-house solar financing and promote extra perks to incentivize you to use their services. If a company is offering to “cover” your first loan payments for a specified period, be sure to read the fine print and consider these points:
    • Are they covering your payments or simply deferring them?
    • If covered, that could be considered a rebate off the total cost of the system, which would affect your solar tax credit (see previous comment about rebates).
    • If deferred, you could still be paying interest for the period of time before payments begin.
    • Some companies also require you to apply your tax credit to the balance of your loan or risk your monthly payments increasing.
    • Make sure you understand the full terms of your financing and clarify all conditions under which payment terms could change
• Suggest installing solar on a roof that will need to be replaced in less than 10 years.
  • This will only cost you more money when your roof needs to be replaced because your array will need to be removed and reinstalled.
• Suggest installing solar on north-facing roofs.
  • If you are in the northern hemisphere, solar panels should never be installed facing north.

Now that we’ve shared some warnings, here are some ways to find a reputable solar company:

• Check for experience; the more, the better.
• Buy local. In most cases, going with a local solar contractor is best. Local solar installers are committed to their communities and have more at stake than national companies with large sales and marketing teams do. Local companies are generally more responsive and reliable, and they usually provide much more personal service.
• Look at online reviews, ask friends who’ve gone solar for referrals, and ask the contractor for references.
• If you need it, ask if they offer financing. Many small local companies don’t, but most can recommend local financers that offer great terms on solar loans.
• Is their solar contract understandable? Can they explain to you any parts of their contract that you’re unclear about?
• What is their workmanship warranty? Most products come with a warranty from the manufacturer, but the work your contractor does should be covered too.
• What additional services and support do they offer now and in the future? Grid tie solar systems are pretty much install it and forget it, but what if something goes wrong down the road or if you have questions about how your system is performing? For grid hybrid and off grid systems it is even more important to know what to do if you need help down the road. Battery-based systems are much more complex than straight grid tie systems, so be sure your contractor offers long-term technical support.

Read: Questions to Ask Before Selecting Your Solar Installer

For over 20 years Fire Mountain Solar has been committed to helping clients find the right power system solution to meet their goals. We understand that solar is an investment, and that there are many qualified contractors for you to choose from. We would be honored to have the opportunity to discuss your full service or DIY solar project with you and to work hard to earn your trust and your business.

Since 2001, we’ve helped thousands of residential and commercial clients, including: