How To Avoid Solar Panel Scams | Ask This Old House

In this video, This Old House home technology expert Ross Trethewey teaches host Kevin O’Connor what he needs to know about solar installation plans, financing, and rebates to ensure homeowners get the most for their investment.

Why Solar is So Popular
Everyone’s phones and internet browsers are full of solar panel ads, and there are now door-to-door salesmen walking through neighborhoods attempting to sell systems. Why is solar so popular right now?

Ways to Finance Solar Installation
There are essentially four ways to pay for solar installation. Those ways include the homeowner paying for the solar system themselves out of pocket, using a third-party lender to secure a loan for the system and installation, leasing the system from a solar company, and a power purchase agreement. The benefits of these options vary.

Cash
When a homeowner pays for their own installation, they own the system. This means they can take full advantage of the solar rebates offered by federal and local governments. While they do have to come up with a lot of money (typically north of $13,000), they don’t have to pay interest. They might also be able to obtain a discount for full payment.

Loan
Some homeowners may choose to secure a third-party loan to pay for their solar panel system. In this scenario, the homeowner still owns the panels, and they retain all of the tax rebate benefits, but they’ll have to pay back the loan amount plus interest.

Leasing Agreement
Homeowners who want solar but don’t want to pay out of pocket or secure a loan may choose to lease their system from a solar company. When this is the case, the homeowner benefits from lower electricity bills, but the leasing company retains all of the tax benefits and rebates, and owns the system.

Power Purchase Agreement
Similar to a leasing agreement, homeowners who enter into power purchase agreements will pay less each month for electricity. They agree to purchase their electricity from the solar company in exchange for the solar company installing the panels on the homeowner’s roof. Again, in this scenario, the solar company retains the right to rebates and tax benefits.

How to Choose a Solar Company
With the ability to finance solar panel systems, get paid for them, and retain tax benefits, there are a lot of solar companies sprouting up. Not all of these solar panel companies are reputable, however. Some are simply in it for revenue generation, and once they land the agreement, there is very little incentive to return and service the system.

Instead of choosing the first solar panel installer that knocks on the door, do a bit of research. Ask friends and family who they used for their solar panel systems. Also, for each potential contractor, find out where they’re from. It’s better to work with a locally owned company than one run by a conglomerate 3,000 miles away.

It’s also important to know how long a company has been in business. Ten years of experience looks better than 6 months. And while a new company isn’t necessarily a bad company, the homeowner should simply do more research to verify that the company is legitimate.

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From the makers of This Old House, America’s first and most trusted home improvement show, Ask This Old House answers the steady stream of home improvement questions asked by viewers across the United States. Covering topics from landscaping to electrical to HVAC and plumbing to painting and more. Ask This Old House features the experts from This Old House, including general contractor Tom Silva, plumbing and heating expert Richard Trethewey, landscape contractor Jenn Nawada, master carpenter Norm Abram, and host Kevin O’Connor. ASK This Old House helps you protect and preserve your greatest investment—your home.

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How To Avoid Solar Panel Scams | Ask This Old House

[mpoulin]

My brother is a real estate agent and has seen many sales fall through because of solar leases. New buyers often don't want to take the leases over and just move on.

[thecappy]

It really is a shame that it feels like dealing with a used car salesman when talking to these people.

[TJO]

The lenghts banks go to screw the single person is amazing.

[Kerrsartisticgifts]

I answered an ad that said this solar company would rent my roof to install solar. When they came they said they didn't want to rent my roof but they could put $60, 000 worth of panels in my yard and arrange financing. According to them after 20 yrs the panels would have paid for themselves and I could buy them for $1
So, for 20 years I'd have their panels on my property, with a lien on my property for the $60, 000 financing loan and everyone makes money except me, the guy with the roof.

[LouienDottie]

We need more electricians that are qualified for and willing to install homeowners systems. It’s so much cheaper buying the equipment yourself nowadays and have a qualified and licensed electrician install it, it’s almost plug and play nowadays.

[Krazie-Ivan]

As this program is for the DIY crowd, it'd be great to have a few episodes dedicated to the best value home efficiency prep work & self-install of a modern PV+battery system. There's whole youtube channels dedicated to these, but TOH has production means & reach to make great contributions in a time where it's only becoming more valuable & important to manage energy wisely.

[gizmobowen]

So many people are getting scammed by solar installers right now, it's amazing. This information needs to be spread to every person thinking about solar. I've had to talk so many friends and family out of horrible solar deals because there was no way it was ever going to be financially viable. I got solar when my state had incentives, but the budget was allocated in the first year and there haven't been state incentives yet. Without the incentives, the cost of the system will take way too long, given the relatively low cost of energy, where I live. I know the cost continues to decrease, but without state and federal incentives, the ROI is just not reasonable for many. I wish more people were able to understand the economics before making the leap and this video does a good job of explaining that. Thanks Ross.

[lolitajones]

The thing that gets under my skin is that some people encourage me to get solar panels installed but when I ask those people (including my own sister) how much their electricity actually costs them per month, they are rather invasive. They will tell me that they receive a very low electric bill for example like $8, $12, $15 (whatever), but what they won't tell me is how much they pay to rent the panels. However, that is very important. For instance, if your bill is $8.00 but you are renting the panels for $250 per month - in actuality you are paying $258 a month for electricity - not $8!!! I get the impression that they won't disclose that rental amount because they feel foolish or ripped off but don't want to admit it.

[rayRay-pwgz]

Many UNKNOWNS: 1) not all homeowners insurance will cover homes with solar panels . 2) You need to insure the system in case of storm damage. 3) your roof needs to be fairly new. 4) states have different rules governing the system. 5) the amount of payment for energy you generated is much less than what the provider charges . 6) all solar panels and related equipment are not equal.

[georgew]

I think TOH could do a whole hour long show on solar, you touched on a couple good topics, like the 20 year lease program, which I have read articles from reputable solar installers, they typically recommend to stay away from. Also the inverter does each panel have a micro inverter or a single inverter for the whole system and what happens if the inverter fails. Then there is the whole discussion about batteries and what types are available, such as Teslas power wall or Generics version etc. We plan in 2 years to build our retirement home, smaller, with solar so as to give us options other than for the grid and potential downtimes.

[colinleslie]

We have recently installed solar and went with what you basically called your second option which is financing solar through a loan. However, there is a variant in this scenario that you didn't mention. When getting quotes from solar companies many companies will work with finance companies that offer 20 to 25-year loans at sometimes even less than 1% interest rates. They are often able to advertise low monthly payments. This is true, but the way that they do this is by tacking on upfront fees, rather than interest, to the total cost of the installation. They don't call it fees. In fact all the quotes we got didn't really call it anything other than "the financed cost of the system." We had one company that flat out refused to tell us the actual cash value of the system they were quoting us.

This means that the interest that you will pay on the life of a 20 to 25-year loan is small, possibly only a couple thousand dollars, relative to the principal. By doing this, they are able to ensure that even if you sell the house long before the lifetime of the loan, they will have essentially made the same amount of money on the loan by adding these fees into the principal up front. Many people when they sell a house with solar installed, but with a separate solar loan, simply pay off the loan with the sale of the house, as the value of the solar is rolled into the house sale.

We ended up going with a regular installment loan at moderate interest rates. This has ensured that the principal for our solar is equivalent to the actual cash value of the solar installation. If we decide to sell our house before the end of the loan, all we have to pay off is, the remaining principle on the loan. I suspect low in companies have taken this approach of rolling these up front fees into the principal because they know that many people will end up selling their house before the loan term is up for a 20 or 25 years solar loan. We also ended up going with a local credit union that had special rates specifically for home energy improvement. Just something to know if you are getting quotes or offers that include extremely low interest rates. You might want to at least ask about the cash price of the solar installation to be able to more easily compare apples to apples cost of the system.

[cheeseisgreat]

Solar Leases are pretty much almost never worth it, if you own your home and have a decent roof and location, it is *always* a better idea to just buy it upfront with cash or a loan. With an average payback period of 5-8 years and an increase on your property’s value to boot, it’s just a smarter move.

Also worthy to note is installing a whole-home battery to be able to take advantage of the fact that you’ll be generating the most energy when your house doesn’t usually need it as much, and if your power provider doesn’t do Net Metering that’s another way to avoid losses to that inefficiency.

[PicardManeuver]

Literally got a scam ad for solar panels on this video. Unbelievable.

[JohnsTrainVideos]

My house came with a PPA through Vivint and it was a total scam. With Vivint PPA I was paying MORE for electricity than just getting it off the grid. They've been sued by many states because their contracts are so bad. I wish my real estate lawyer had warned me when I was signing papers :/

[ByrdNick]

I have been waiting years for a video like this. Thank you!

(Also, the add that ran after this video was for one of the solar lease schemes. Good chance to apply what I learned!)

[randyhaun]

The issue I have with the Federal solar tax credit is how the solar companies are taking advantage of it. They use it as a sales pitch indicating that you can receive a credit up to 30% of the installation cost (depending on your specific tax situation), but they artificially inflate the installation cost so that they wind up getting this money. So, you aren't really getting 30% of your money back you are just transferring that 30% tax credit to the solar company. The problem is that all the solar companies are doing the same thing, so there's no way around it.

[R_J]

The ad before this video was for nothing-down solar roof installs.😮

[MackenzieHorn]

Please, more follow up on this. My concern after recent research is installers may want to use less expensive panels from a less reputable brand. The warranty doesn't matter when the company is gone.

[Off-Grid]

Just buy and install yourself. I did, works great.

[dankellen]

We live in the Charlotte, NC, area. In 2022 we installed a solar system sized to fully replace our energy use, as well as a little extra for the anticipated electric vehicle use. We selected an installer recommended by our utility - Renu Energy recommended by Duke Energy. They were be far the most professional solar company I’ve dealt with on our journey, and continue to be my go-to company as we install EV chargers, and contemplate home batteries etc. Highly recommend checking with your current utility to see if they have solar supplier/installer recommendations!