Social media ads proclaiming “see if you qualify for free solar!” and high-pressure door-to-door sales pitches are becoming more common, so we regularly need to provide clarification or combat misinformation about how solar works.
Solar is a big investment! Our goal is for our customers to be fully informed and ready to make educated decisions about what’s best for their family or business—without the gimmicks or gotchas.
We’ve put together a list of the top claims and “special offers” we’ve seen and heard which raise either red flags or caution signs for us, to help you separate fact from fiction:
- “See if you qualify for Washington’s no cost solar program”
- “If you’re a Washington homeowner, 2022 is your last chance to go solar” and “the federal solar tax credit is expiring at the end of the year!”
- “If you need to re-roof before installing solar, you can claim your new roof cost as part of your 26% solar tax credit”
- Installer-specific rebates after your system is installed
- In-house financing that “covers your first 12 months of payments”
- “Your electric company will pay you for generating excess solar!”
- “Net metering is going away! Act now!”
- “There’s no difference between ‘economy’ and ‘premium’ solar panels”
- “You don’t really need to worry about warranties”
- “Sign within X days in order to receive special discounts”
Buckle up—this is going to be a long one.
As a reminder: we’re solar experts, not tax experts. If you have any concerns about the validity of tax-related claims, we always recommend confirming with a licensed tax professional. Below you’ll find direct references and links to the IRS website and IRS resources.
1. “See if you qualify for Washington’s no cost solar program”
Misleading. There’s no such thing as a free lunch. Headlines like this heavily imply that Washington has a state-run no-cost solar program. Let us be absolutely clear: it unfortunately does not. There are credit unions that offer 0% down financing over ten- to twenty-year terms and some utilities offer on-bill financing. In addition to the federal tax credit, Washington does have a sales tax exemption and—in limited circumstances— there are some federal or private grant opportunities for rural businesses, public buildings and facilities, and nonprofits which can substantially reduce the total cost of solar. For residential installations, you should expect to pay for 74% or more of the cost of the system (after tax credits) either up front or through financing. So while you may opt to put no money down by financing, any claims that you can install solar at “no cost” are grossly misleading.
2. “If you’re a Washington homeowner, 2022 is your last chance to go solar” and “the federal solar tax credit is expiring at the end of the year!”
False. The tax credit is reducing at the end of the year, but not expiring—yet. Installations completed in 2022 are eligible for a 26% tax credit, with a 22% credit for systems installed in 2023. Unless Congress renews it, the tax credit expires for residential installs starting in 2024, while the commercial credit drops to 10% going forward. (Sources: IRS.gov & Energy.gov Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics)
Do the math. If you’re trying to decide whether it is financially more beneficial to install with one contractor this year or another contractor next year, you need to compare the system costs after the respective 26% or 22% federal tax credit. Some companies who still have installation capacity in 2022 are charging huge premiums for their systems, which could mean you are actually worse off financially, even though you’re getting a larger tax credit. We recommend getting bids from local installers—even if they’re scheduling into next year—to make sure that you are not being price gouged. A great place to start is with the list of installers who are members of the Washington Solar Energy Industries Association (WASEIA), the primary solar trade association in our state. All members of WASEIA have to abide by an ethics standard designed to protect Washington homeowners. You may find our 6 Tips for Choosing a Solar Installer article useful as you navigate the bidding process.
UPDATE: In August 2022, the Solar Investment Tax Credit was raised to 30% for systems installed from 2022 through 2032.
3. “If you need to re-roof before installing solar, you can claim your new roof cost as part of your 26% solar tax credit”
False. This is one of the most common questions that pops up and we’ve talked about it before. Here’s what the IRS has to say about whether a roof is eligible for the 26% Residential Energy Efficiency Credit:
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)
Now, there is a different credit available for qualified energy efficiency improvements under the Nonbusiness Energy Property Credit, which has a total combined credit limit of $500 and can apply to:
…metal roof with the appropriate pigmented coatings or an asphalt roof with the appropriate cooling granules that are specifically and primarily designed to reduce the heat gain of your home, and the roof meets or exceeds the Energy Star program requirements in effect at the time of purchase or installation. (Source: IRS Instructions for Form 5695)
4. Installer-specific rebates after your system is installed
Use caution. Your tax credit is based on the final cost of the system. If an installer offers you a rebate after 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)
5. In-house financing that “covers your first 12 months of payments”
Use caution. 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 section 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.
Consider independent financing. Washington State is home to several credit unions who offer solar financing completely independent of your installer. Puget Sound Cooperative Credit Union (PSCCU) is based in Bellevue and has a well-established SustainableSolar loan program which is commonly used by both our customers and staff alike.
PSCCU’s SustainableSolar Loan details:
- No down payment required and 90 days with 0% interest and no payments*
- Fixed rates ranging from 3.24% – 9.84% APR** for the life of the loan for up to 20 years**
- Easy online application and signing process, and fast approval times (same or next business day)
- Loan can include EV charging station and Battery Back-up, and Energy Efficiency measures, such as a heat pump
- Up to 25% of the loan can go towards roof repair/replacement
- No prepayment penalties, principal payments can be made at any time
- Loan can be re-amortized once during the life of the loan at no cost to you
Western Solar is an authorized contractor as part of the SustainableSolar program. This means we have been vetted by PSCCU and allows our customers access to lower rates on their solar loans. We do not have any stake in nor receive any benefits/referrals from our customers’ use of this program.
6. “Your electric company will pay you for generating excess solar!”
Misleading. Under Washington State law (RCW 80.60), electric utility companies are required to allow you to send excess electricity back onto the grid and credit your account for the excess generation (in kilowatt-hours) at the utility’s retail rate; this is called net metering. While you are credited at retail rate, you are generally not issued a check for excess production. This kWh credit remains on your account until you use it, but does reset each year on March 31st. Any credit remaining at that time is zeroed out and the cycle starts again. This is why we aim to size your system to meet but not exceed your annual electrical usage. Very few utilities offer monetary compensation for excess production on an annual basis, so if an installer makes this claim, verify with your utility whether or not this is the case.
It’s also important to make the distinction between solar net metering offsetting your electric usage as opposed to replacing your utility bill. Net metering cannot offset minimum monthly charges for grid connection or other utility charges such as natural gas, if applicable. (Source: Leslie Moynihan, Product Manager, Consumer Connected Renewables, Puget Sound Energy)
Washington used to have a production incentive program which closed to new applicants in June 2019 due to hitting its funding cap. Systems installed and certified as part of this program do continue to receive an annual incentive payment based on the system’s total production for eight years or until cumulative incentive payments are equal to 50% of the total system price. These checks are issued by the State via the customer’s electric utility company, and are separate from net metering. (Source: WSU Energy Program)
7. “Net metering is going away! Act now!”
Misleading. As mentioned above, Washington’s net metering law (RCW 80.60) requires utilities to offer net metering “until the earlier of either: (i) June 30, 2029; or (ii) the first date upon which the cumulative generating capacity of net metering systems equals four percent of the utility’s peak demand during 1996.” Utilities that reach this cap have the option to continue to offer net metering at current retail rates or to develop a different rate structure for new systems. For utilities we most frequently work with, the WSU Energy Program reported current progress as of July 31, 2022:
- City of Blaine: 15%
- Orcas Power & Light Co: 198%
- Puget Sound Energy: 67%
- Snohomish County PUD: 45%
8. “There’s no difference between ‘economy’ and ‘premium’ solar panels”
Potentially misleading. There is a range of quality when it comes to solar panels, inverters, and mounting/racking solutions, and there are products that deserve the description “premium” due to their performance characteristics, build quality, and warranty coverage. However, it is important not to simply take the installer’s word that their proposed system uses premium products.
Typically, premium solar system components will carry 25-year warranties from the manufacturer (both parts and labor). In addition, premium solar panels are typically guaranteed to still be producing over 92% of their day-one output at the end of 25 years. So, if the solar panels you are being sold do not carry a 25-year warranty on parts and labor, and do not have a production guarantee of 92% or more at the end of 25 years, they probably aren’t a premium product.
Sometimes an installer will compensate for lower product warranties by offering their own 25-year warranty. That’s great, but it doesn’t change the quality of the components they are offering and it means that warranty is only in effect while the installer is in business. To verify equipment quality, you really need to look at the product datasheets from the manufacturer.
Additional considerations. Other important factors to include when considering the quality of equipment manufacturers:
- Does the company have a long history in the market?
- Are they financially stable and likely to be around to honor their warranty?
- Does the proposed equipment feature proprietary components which would complicate a system expansion or replacement should the manufacturer go out of business?
- Are they likely to be impacted by potential tariffs and related supply chain restrictions that could make it hard for them to continue supporting the U.S. market?
9. “You don’t really need to worry about warranties”
Misleading. All warranties are not created equal. The majority of solar panels carry a 25-year production warranty. This is the standard length of time that a production warranty is measured over. The important part of a production warranty is how much production is guaranteed at the end of 25 years (e.g. 80%-92%). While most products carry a workmanship warranty, not all solar panels have accompanying labor warranties which cover labor costs in the event of a service call. We’ve also seen installer contracts which offer a no-leak warranty, but only cover up to $1,000 of damage and stipulate that it must be reported within 24 hours of the original weather event that caused the leak, a requirement that’s often impossible to meet.
Clarify warranty terms and conditions. Ask for a copy of the warranty documentation for the specific equipment being installed. This needs to include detailed information about the following warranties:
- Production warranty
- Workmanship warranty
- Labor warranty
Verify the installer’s workmanship, labor, and roof penetration warranties in writing. If it’s not in the contract, it doesn’t exist; if it is, read the fine print.
10. “Sign within X days in order to receive special discounts”
High pressure. This sales tactic is as old as dirt (and about as useful). Any “limited time promotions” in the construction trade are a red flag that you are in a high-pressure sales meeting. You can always ask for time to think about a decision this big.
Washington State also has a 72-hour cancellation policy for door-to-door sales over $25:
A Federal Trade Commission Regulation gives you the right to a three-business-day “cooling off period” on door-to-door sales of more than $25 (16 CFR 429). This rule also applies to sales made away from the seller’s usual place of business. These include: sales at a “home show” or other exposition; at a seminar held in a hotel banquet room; or at a “sales party” in someone’s home. (Source: WA Office of the Attorney General)
Sleep on it. As we discussed in our 6 Tips for Choosing a Solar Installer article, you should never feel pressured to sign a contract at the table during the sales meeting. You need a chance to process what you’ve been told, compare bids, and ask clarifying questions in order to make an informed decision.
A system designer needs to perform a site assessment before they put together your final bid in order to verify that the panels will fit, account for any roof vents, measure the current on-site shading and solar resource, confirm that the roof has enough life left in it to install over, and that there is adequate capacity in your electrical panel for the solar system. If no one has checked these things, then the savings estimate, roof layout, and price probably aren’t accurate. Be wary of any sales rep coming out with a final contract drawn up before the site visit.