Attorney General Tong, DCP Commissioner Seagull Urge Caution in Reviewing Residential Solar Contracts
(Hartford, CT) – Attorney General William Tong and Department of Consumer Protection Commissioner Michelle Seagull today advised homeowners interested in residential solar panels to do careful research and be wary of misleading marketing and high-pressure sales tactics by solar companies.
The Office of the Attorney General has received a number of complaints from consumers and has active investigations into multiple solar companies regarding sales and marketing practices.
“Residential solar may help reduce electric bills and dependence on fossil fuels to power our electric grid, but consumers must proceed with caution. We have received numerous complaints regarding misleading marketing and high-pressure sales tactics by solar companies, and we have several active investigations. Solar power purchase agreements or lease agreements are often long-term, complex, and can be expensive. Any electric bill savings varies per household depending on many factors,” said Attorney General William Tong. “While electric rates are high and we are all looking for ways to save money, consumers should never feel pressured into a solar contract or any other major home project.”
“Solar power can be an attractive option for people looking to reduce their utility costs and carbon footprint, but we are hearing from a number of consumers that the deal they were offered proved to be too good to be true,” said DCP Commissioner Michelle H. Seagull. “Consumers should be cautious when entering into a solar contract – do extensive research, compare costs, understand if your home is suitable for rooftop solar, and don’t allow yourself to fall victim to high pressure sales tactics.”
Attorney General Tong and Commissioner Seagull warned consumers to pay particular attention to: whether their home gets adequate sun exposure to justify the solar panel investment, whether their current roof will need replacement during the projected life of the solar panels, how tax credits and refunds work, the effect solar panels may have on their home’s value, and how selling their home would be affected if leasing solar panels. Consumers, and in particular seniors, also need to be aware of potential high-pressure sales tactics to sign them up for expensive long-term solar contracts.
What must I know about rooftop solar?
• Not all homes are equally suited for solar. The size of the roof, orientation of the home, amount of sun exposure, and the home’s energy demands are all important factors to consider. Solar companies may ask about removing trees to increase sun exposure, which is an additional expense.
• Some roofs require reinforcement or replacement before solar installation. This is a separate cost that solar companies typically will not pay for. And, if roof work is required during the useful life of the system, the homeowner may have to pay to remove the panels.
• Compare reviews and prices. As with any major purchase, you should compare other consumers’ reviews of solar companies and shop around to be sure you’re getting a fair deal.
• Know who you are doing business with, and ensure they are properly licensed in Connecticut. Many solar companies contract out their marketing and installations to third parties, so you might be asked to sign a contract with a different company than you thought.
• Never sign any agreement with a solar company under pressure. The Attorney General’s Office and the Department of Consumer Protection have received complaints of high-pressure sales tactics by solar companies. Even if a salesperson suggests you sign to “get the process going” or to “get more information,” do not sign unless you are fully comfortable committing to the solar transaction. You should never feel pressured to read a contract quickly, let alone on the spot on a salesperson’s tablet or computer. And you may ask a visiting salesperson to leave your home at any time.
• Under Connecticut law, you may cancel your contract any time before midnight the third business day after a transaction.
Here are some frequently asked questions about residential solar systems:
What is a solar panel system?
A solar system consists of rooftop panels and an inverter which converts sunlight into electricity. Installing solar panels can be an intensive process: the system must be professionally designed and installed, permitted and inspected by local officials, and approved by the electric utility. Roof reinforcement or replacement may be required before installing a solar system, at additional cost to the homeowner.
The same consumer protection provisions apply to solar installers and salespeople as other home improvement contractors and salespeople. For more information, visit the Department of Consumer Protection’s website.
Is residential solar cost-effective?
The benefits and costs vary. Consumers should be wary of solar companies that promise that solar makes sense for them before carefully analyzing their situation. Never make a decision based on online calculations or estimates, which may be based on data from other parts of the country.
Salespeople will emphasize that the cost of electricity is high and increases every year. While electricity costs do increase, consumers should beware of promises by solar companies that a solar system can guarantee a certain level of savings. You can find historical electrical costs for your utility here.
Can I get a solar system at no cost?
No. There is no such thing as a no-cost solar system. While some solar installations may have no up-front cost, those options require monthly payments and may not be wise in the long run.
What about tax credits or other incentives?
There is a 26% federal tax credit on the cost of solar systems installed through the end of 2022. The credit drops to 22% in 2023 and expires in 2024 unless renewed by Congress. Only the purchaser of a solar system may take the tax credit, not lessees or PPA customers, and purchasers will only benefit if they owe federal income tax. While solar companies may advertise low cost or even “no cost” solar programs, these involve the solar company, not the homeowner, receiving any tax credit.
Who pays for the solar system?
• Purchase. Consumers can buy solar panels using cash or obtain financing. The consumer owns the system and generally is responsible for maintaining and repairing it. Only a purchaser can benefit from any applicable tax credits.
• Lease. Consumers can lease solar panels by paying a fixed monthly payment in exchange for the use of the solar panels for a set term. Much like a leased car, the consumer can buy the panels at the end of the term, give back the panels, or renew the lease. There is no guarantee that the lease payments will be less than the electricity bill would have been without panels. And, if the system does not generate enough to cover the home’s full energy use, there is still an electric bill.
• Power purchase agreement (PPA). Under a PPA, consumers do not own or lease their systems, but pay a monthly payment based on how much electricity they use. The cost per kWh is generally less than electric rates, but increases over time. As with a lease, there is no guarantee that the monthly payments will be less than the electricity bill would have been, and, if the system does not generate enough to cover the home’s full energy use, there is still an electric bill.
Will I still need to pay for power from the electric utility?
Homes with solar panels are still connected to the power grid. This means the homeowner pays for power from the electric utility unless their system produces enough to cover their energy needs. A residential solar system can send energy back onto the grid and, depending on the arrangement the homeowner selects with the electric utility, the utility will provide a credit if the home generates more power than it uses. More information about credits for solar generation is available here.
Does a solar system affect my home’s value?
Solar companies often claim that solar panels increase the value of your home. There is currently not good data to support this claim. Many home buyers do not see solar panels as a benefit. Also, homeowners with leased panels or PPAs may have difficulty selling their home since the new buyer and the company need to agree to transfer the lease or PPA.
Connecticut consumers who believe they have been harmed by a solar company’s practices should file a complaint with the Office of the Attorney General here: https://www.dir.ct.gov/ag/complaint/ or with the Department of Consumer Protection here: https://portal.ct.gov/DCP/Complaint-Center/Consumers---Complaint-Center.