The Inflation Reduction Act creates sweeping changes for those wanting to go solar (and those trying to sell it). I’ve seen some wrong information (most of it I heard from unscrupulous people trying to sell solar panels). Here’s a guide to the new rules and how to avoid getting ripped off.
Am I guaranteed the tax refund the solar company promises?
No
I’ve personally seen four separate salespeople overpromise the tax benefits of solar. They hide behind the asterisk of “ask your tax professional.” Remember, they are trying to make a sale, not trying to save you money. Ask a professional before you count on that significant rebate/tax credit.
What happens if I don’t get the tax refund?
The solar company will raise your monthly payments. In my experience, I’ve never seen a solar company help a customer who didn’t get the tax credit the solar installer promised.
Most loan terms are structured, so you make a lump sum payment when you get your tax credit. It’s usually the total tax credit amount and carries a 16 or 18 months deadline depending on your lender. If you fail to make that lump sum payment, your payments increase (sometimes more than your electrical savings).
Will my salesperson help me resolve issues?
Usually not.
Sales contracts generally don’t require them to help resolve installation or warranty issues. Generally speaking, their only job is to sell solar panels. If they make you a promise, get it in writing in the installation agreement. Any other commitments that are contradicted or omitted from the main contract usually aren’t going to protect you.
For some companies, the salespeople and installers don’t even have the same boss. You should ask if the installers come from in-house or a third-party contractor.
Do I need to offset 100% of my use?
You do not need to offset 100% of your use. To increase their commission, salespeople often try to sell you the biggest solar system possible. For all the clients I helped, getting a smaller system on the most efficient part of your roof made better financial sense.
A smaller system is especially true if your installation uses cheaper string inverters. Adding panels to an inefficient spot lowers the efficiency of the entire system. You may need to double the size of your solar system (and cost) only to get 30% more power.
When I help clients go solar, I calculate return on investment and usually ask for multiple quotes. The smallest quote usually has the best return on investment for the consumer.
The biggest lie I keep hearing:
Unethical salespeople claim that return on investment doesn’t matter because your monthly bills will eventually be lower. This is false.
Return on investment is something you should consider. By installing solar, you take on some inherent risk. The panels may have months where they don’t produce the expected amount of electricity; you may have extended periods where the panels aren’t functional. You might not get the total amount of the tax credit a salesperson promised.
In any of these bad outcomes, you still have to make the payment for your solar panels. Your costs could potentially increase over time.
Even in cases where your overall costs go down, better options might be available, so calculating return on investment is critical.