Solar Scams and Red Flags: 12 Warning Signs Before You Sign

Solar is a high-ticket, high-commission, technically opaque purchase sold largely at the kitchen table. That combination attracts bad actors. Almost none of what follows is exotic fraud — it is aggressive sales practice that is legal, common, and expensive.

The twelve red flags

1. “It’s free” or “the government pays for it”

There is no program that gives homeowners free solar. “No upfront cost” means a lease or PPA — a 20–25 year contract where someone else owns the equipment and sells you the output. That product has legitimate uses, but it is not free, you get no tax credit, and it complicates selling the house.

2. Manufactured urgency

“The program ends Friday.” “Only three homes in this ZIP code qualify.” “This price is today only.”

The federal tax credit is set by statute and does not expire on a Friday. Utility programs that genuinely have deadlines are published on the utility’s website — go and check. Any real deal survives 48 hours of thought.

3. Same-day signature pressure

The single most reliable warning sign. A reputable installer expects you to compare quotes. Anyone who will not leave a written proposal behind is not selling you a system, they are closing you.

Note also that most states give you a cooling-off period — often three business days — to cancel a home-solicited contract. Know yours.

4. A hidden dealer fee

This is the most costly item on the list, and it is invisible unless you ask.

To advertise a 2.99% loan, the lender charges the installer a dealer fee of typically 15–30% of the system price. The installer adds it to your price. A $24,000 cash system becomes a $30,000 financed system, and the “low rate” is paid for by a 25% higher principal.

The question that exposes it: “What is your cash price for this exact system, and what is the financed price?” A gap of thousands is your dealer fee. Then compare against a credit union HELOC or personal loan at the cash price. See solar financing options.

5. Savings estimates built on absurd escalation

A proposal showing $180,000 of 25-year savings is usually assuming electricity prices rise 5–6% a year forever. The long-run US average is nearer 2–3%. Ask what escalation rate the proposal uses, and ask to see it at 2.5%.

6. Production estimates with no shade analysis

Any credible proposal includes a modelled production estimate based on a site-specific shade study, and states the assumptions. A round number with no methodology is marketing.

7. Quoting only monthly payments, never total cost

“$99 a month” tells you nothing. Ask for: total system price, price per watt, system size in kW, loan APR, loan term, total of payments, and whether the payment steps up if you do not apply the tax credit to the principal.

That last one catches people. Many solar loans are structured with a balloon re-amortisation at month 18: if you do not pay down roughly the tax-credit amount by then, your monthly payment jumps permanently. If you cannot use the full credit — because your tax liability is too small — you get the higher payment. See how to claim the solar tax credit.

8. Guaranteeing your tax credit

Salespeople are not tax advisers. The credit is nonrefundable — it offsets tax liability, and if you owe little, you cannot use it all in one year. Anyone promising “you’ll get $9,000 back” without asking a single question about your tax situation is guessing with your money.

9. Price per watt far outside the local range

Compute it: total price ÷ system watts. Most US installs land at $2.50–$3.50 per watt before incentives. At $5.00/W ask hard questions. At $1.80/W ask different hard questions — about equipment, permits and warranty. See solar panel cost per watt.

10. The company on the contract is not the company at your door

Sales agencies subcontract installation, and installers subcontract service. Ask: who holds the workmanship warranty, who performs the install, and who I call in year seven. Get the names in writing. See warranties explained.

11. Vague or unlicensed contractor details

Get the licence number, verify it with the state board, and confirm the classification covers electrical work. Check the attorney general and BBB for complaints. Ask for three local references installed at least three years ago — recent references cannot tell you about service.

12. Anything signed on the salesperson’s tablet

You should receive a complete copy of every document, immediately, in a form you can read offline. If the contract only exists on their screen, you have no idea what you signed. Insist on PDFs by email before you sign, not after.

A short defensive checklist

• Get three quotes, at least one from a locally owned installer.
• Compare on price per watt, not monthly payment.
• Ask every company for the cash price.
• Read the whole contract overnight, at home, alone.
• Verify licence, insurance and complaints independently.
• Confirm who holds the workmanship warranty and for how long.
• Run your own numbers first with the Solar Savings Calculator so you know what plausible looks like.

If you have already signed

Check the contract date against your state’s right of rescission — commonly three business days for door-to-door sales, sometimes longer. Send cancellation in writing, by a method that creates a record, within the window. After the window, your options narrow to the contract’s own terms, your state consumer protection agency, and the attorney general.

Bottom line

The defence is boring and it works: three quotes, price per watt, cash price, and a night to read the contract. Almost every solar horror story starts with skipping one of those four.

General consumer guidance, not legal advice. Rules on contracts and rescission vary by state.