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Identify and Avoid the Most Common Solar Energy Scams

renewable energy scams

Installing rooftop solar panels can help you reduce your electric bills with time. Renewable energy sources, such as solar, are also more environmentally friendly than fossil fuels. There are, however, many considerations you should make when installing or replacing these panels. With a vast range of solar energy scams arising in the past few years, some knowledge about the solar industry and due diligence before signing a new solar contract can save you time and money. Learn more about some of the ways that you can recognize and avoid solar panel scams.

Possible Solar Panel Scams

While there are numerous legitimate companies in the solar panel space, there are also many solar companies with questionable practices. From outright fraud to unrealistic claims and questionable sales tactics, there is more than one way that solar companies can take advantage of potential buyers.

Let’s explore some of the more common solar energy scams.

High-pressure Sales Tactics

It’s no small decision to transform your roof with a solar panel installation. You have to think about the high upfront cost and its impact on your home.

When a solar panel salesperson tries to rush you into making a decision and signing the paperwork, you could be looking at high-pressure sales tactics. This is a common solar energy scam and this tactic can include any of the following: manipulative talk, outrageous promises, inflating past performance, and other pushy behaviour.

You should never feel pressured into signing up with a solar power company. This is often a telltale sign of a solar scammer.

Unrealistic Prices or Failing to Deliver

The main benefit of having a solar panel system on your property is savings. This may come in the form of government rebates and tax credits.

With many scams, the salesperson allures the potential buyer with the offer of “free solar panels.” They can also claim unrealistically low annual fees and attribute the cost savings to a government rebate program. While low upfront programs, government rebates, and tax credits do exist, caution is required to figure out which offers are genuine and which are a scam. These benefits also have specific terms for qualification.

Homeowners often realize they have been scammed when the solar company fails to deliver on its promises. They may be slack with the installation work and become difficult to get in touch with. All the money savings promised might also be out of reach.

Impersonating a Government or Utility Representative

Many reputable solar companies market their products and services through cold-calling and door-to-door visits. Scammers have also taken advantage of this opportunity to impersonate government or utility representatives.

If someone attempts to sell you solar services, they should identify themselves clearly and conduct themselves professionally. Some of the signs that the person you are speaking to might not be from a reputable company include the following:

  • Request for payments and transfer
  • Threatening to shut off your power
  • Lack of clarity about your existing solar contract

One good indicator that the salesperson is from the government or a utility company is that they are knowledgeable about what they are talking about. If they are really hoping to convince you about the benefits of switching to solar, they should be able to give you important details about the renewable energy tax credits for your region.

Starting without a Contract

You might be tempted or coerced into installing solar panels without a contract arrangement in place. This is the starting point of many solar scams. While it might seem like a simple and inconsequential move to skip the contract step, legal experts advise against doing so.

There are quite a few benefits of having a solar installation services agreement in place. This legal contract provides clarity about payment terms and also limits your liability.

A reputable solar company tells its new and existing clients exactly what they can expect. The terms and conditions of the agreements are clearly stipulated in the contract.

No Workmanship and Short Product Life Warranty

Signing a solar installation contract is the beginning of a beneficial business arrangement. Whether or not this crucial step takes place, another common scam is for the solar installer to not provide a workmanship warranty, which protects homeowners from poor installation jobs. In the same vein, a short product life warranty also signifies that the solar company does not have your best interests at heart and may be willing to shortchange you at any point.

Cheap Replacement Offers

There are many cases of solar panel scams where the solar company offers to replace your existing panels. They might promise you better ones and increased energy savings. To top it off, this is at no cost to you.

More often than not, these replacement panels do exist, but they are not quality ones. If you agree to this “free” offer, you will likely end up with some cheap, low-quality panels in place for original ones. You may be better off sticking with the ones you already have.

Are Free Solar Panels Really Free?

The offer of free solar panels may stir up your interest, but the truth is that these are not truly free. Many solar companies include this offer as part of their sales pitch. You might find this with solar leases and power purchase agreements (PPAs), but you will ultimately have to pay for your panels in some form or another. Let’s get into what these arrangements encompass.

Solar Leases and PPA

If you’ve weighed out the benefits of going solar, the next thing to consider is how you are going to pay for the solar systems. There is the cost of the actual panels and the system they are part of together with the one-time cost of installation. The good news is that there are various ways to cover these costs.

Millions of American homes now have their own solar systems. A residential system can last as long as 25 years, so whatever you spend on the initial costs is sure to be returned to you as cost savings in your electricity bill with time.

There are three mains ways to pay for your solar panels. Some homeowners choose to pay for their solar panels upfront, which can cost a lot, depending on the system size. The advantage of this is that you don’t have to worry about any interest. Solar loans are also available as a financing option. As with all loans, you have to factor in the interest you will be charged over the years as you repay your loan.

The third option is a solar lease or PPA. A power purchase agreement or PPA is defined as a long-term agreement between two parties for the supply of electricity. The agreement defines the terms of the contract between the power supplier and the customer.

A typical scenario under this arrangement would have the solar company install solar panels on the customer’s roof at no up-front charge to the customer. Free installation is indeed one of the biggest selling points. The company would then recoup their investment and more by charging the customer for the electricity they produce and use. A solar lease follows a similar arrangement to that in a PPA. The solar lease escalator in these contracts is the implied interest rate over time.

Should you decide to sell your home, the financing option you used may affect the process. If you installed the panels with your own money, then the panels add to the value of the house. On the other hand, if you have a PPA or solar lease arrangement in place, it can be a little more complicated to sell your house. You have to inform potential buyers of the existing lease that they would need to take over.

Ownership of the Solar Panels

Unless you pay for the solar panels on your roof by paying cash upfront or through a loan, they are not legally yours. In both the lease and PPA arrangements, the solar company retains ownership of the solar panels. Although the solar system may be located on your property, you are effectively housing a mini localized solar plant for the leasing company. It is important to be clear about the terms and conditions of such a contract before entering into it.

How Do You Avoid Solar Scams?

As you have seen, there are so many types of solar panel scams around. Getting involved in any one of these could cost you a lot of money and leave you with unmet expectations as well as wasted time and effort.

Whether you have already solar installed on your roof or not, you still have to be vigilant and know how to protect yourself from scammers. While there may be incentives to switch from your current utility plan and cut down on your energy bills, you have to be aware of the many misleading claims and offers that are out there.

There are some ways you can avoid becoming a solar scam victim, so take note of these suggestions:

  • Do not enter into any new solar power arrangements without taking time to read through the contract and do some due diligence.
  • If the salesperson is extremely pushy and wants you to sign up for their offers right there and then, this could be a sign that something is amiss.
  • Only work with reputable companies.
  • Make sure that you understand the payment terms and cost benefits of the arrangement.
  • If the salesperson is suspicious or does not seem to know enough details, you can decline to discuss your solar plan with them.
  • If the costs are incredibly low or the savings seem exaggerated, ask more questions for the full details.
  • When you feel pressured to divulge personal information and share your utility bills, this could be either a sales strategy or a scammer looking for an in-road.

Many other ways can help you avoid solar panel scams, but the most important factor is having the right information. If you already have a solar arrangement, you should understand it well and be aware of what it entails. It’s also good to keep up with the news about solar energy policies and changes.

FAQs

We get a lot of questions about solar energy usage in the home. Check out some common ones below.

Are Solar Panels Bad for Your Roof?

With a professional installation of your solar panels, you should not expect any damage to your roof.
Many people are concerned about damaging their roofs when they switch to solar. Although this is an ideal location for your solar system because of the full sun coverage, there have been cases of roof damage and leakages. In such cases, the installation was likely done by a contractor who is not licensed and qualified for this work. It is also possible that the roof was in bad shape and already in need of repair and maintenance work.

Are Solar Panels a Ripoff?

Installing solar may have high upfront costs, but in the long run, they are a worthwhile investment helping you save on your utility bills.
Renewable energy is cheaper, cleaner, and easy to access. Every installation case is unique, so you must consider your current bills, the potential for solar in your region, and the tax incentives and other savings that will reduce the installation costs.
Avoiding scams, installing quality panels, and getting a good financing arrangement are a few of the ways you can make sure you get the most from solar.

What Happens If You Need to Replace Your Roof and You Have Solar Panels?

If you need to replace your roof for any reason, you are going to need a professional solar installer to temporarily remove your solar panels.
Your solar panels can be put up once more when the roofing work is complete. It’s worth noting that this will result in a disruption in the solar generation on your property, and there will be associated costs for the exercise. Depending on the leasing arrangement in place, this is something that you may need to discuss with the leasing company.

How Does the Solar Tax Credit Work If I Don’t Owe Taxes?

If you do not owe any taxes, you cannot make use of this benefit as it is different from a tax rebate.
With the solar tax credit, homeowners who have installed solar PY systems can claim a certain percentage of the cost of the system as tax credits. The exact ratio depends on when the panels were installed.

Conclusion

If you are interested in solar power, there are real benefits and incentives to look forward to. You could opt for an ownership or leasing arrangement, and free solar panel installation may even be a legitimate option under a PPA agreement. Not all solar companies are reputable, however, so you have to watch out for the many scams around.

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