Solar Scams and Sales Red Flags: How to Protect Yourself in 2026

Most solar scams in 2026 are not fake companies. They are real sales pitches built on false promises: "free" panels, an expired federal tax credit, a low payment that hides a large fee, or pressure to sign tonight. Learn the red flags below and you can stop nearly all of them at the door.

What are the most common solar scams right now?

The most common solar scams are fake "free solar" programs, pitches that still promise the 30% federal tax credit, loans with hidden dealer fees, and high-pressure door-to-door or phone sales. Some are outright fraud. Many are legal contracts sold with misleading claims, which can cost you just as much over 20 to 25 years.

The Federal Trade Commission's August 2024 consumer alert on solar scams (opens in a new tab) is blunt: "free" or "no cost" solar panel offers are scams, and "the federal government does not install solar systems in homes for free." The FTC adds that scammers may say they are from your utility or the government when they are not.

Here is how the main patterns compare.

Is "free solar" ever real?

"Free solar" is not real for a typical homeowner. A "$0 down" lease, power purchase agreement (PPA) or loan has no upfront cost, but you pay monthly for 20 to 25 years. Some state and utility programs do pay for solar for income-qualified households, but you apply to them directly. They do not knock on your door.

The FTC's Solar Power for Your Home guide (opens in a new tab) explains the three real ways to pay: buy with cash, take a loan, or sign a lease or PPA where a company owns the panels. Every one of them costs money. The question is never "is it free" but "do my bill savings beat what I pay."

If a pitch includes the words "government program," ask three questions:

1. What is the name of the program, and which agency runs it?
2. Who will own the panels on my roof?
3. What is the total I will pay over the full contract?

A real program has a public web page on a .gov site or your utility's site. If the answer is a company name, it is a sales offer, not a program.

Why is the 30% tax credit pitch a red flag in 2026?

The 30% Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under Public Law 119-21. As of October 2026, a homeowner who buys a system completed this year cannot claim it, so a pitch promising "30% back" is outdated or misleading.

The timing rule matters. The IRS FAQ issued August 21, 2025 (FS-2025-05) (opens in a new tab) says an expenditure is treated as made "when the original installation of the item is completed." Paying a deposit in 2025 does not help if the installation finished in 2026. Systems completed in 2025 are claimed on the 2025 return with Form 5695, per the IRS credit page (opens in a new tab).

Leases and PPAs are different. The company that owns the panels may still claim a business credit (Section 48E), subject to construction deadlines and sourcing rules. You, the homeowner, do not claim it. Our guide to the federal solar tax credit in 2026 walks through who qualifies.

Worked example: the paydown trap

Here is a loan of the type the Consumer Financial Protection Bureau has warned about, computed with our solar loan calculator. The cash price is $21,000, the loan is advertised at 3.99% for 25 years, and a 20% dealer fee is built in. That makes the loan balance $26,250.

• The pitch assumes you pay down $6,300 (30% of the cash price) at month 18. After that paydown, the payment is about $104 a month.
• Without the paydown, the payment stays about $138 a month, roughly a third higher, for the remaining 23.5 years.
• In 2026 there is no 25D credit to fund that $6,300 for a system you own.

If a quote shows you only the lower number, ask for the payment with no paydown, in writing.

How do hidden dealer fees work?

A dealer fee is money the lender keeps so it can advertise a very low rate. It is added to what you borrow. In an August 7, 2024 report (opens in a new tab), the CFPB found these markups often raise loan costs by 30% or more above the cash price and are often left out of the stated APR.

The CFPB also reported that 58% of solar projects in 2023 were paid for with loans, so this is not a rare product. The fix is simple: always ask for the cash price first.

Worked example: what a 1.99% loan really costs

We ran two loans through the site's loan math for a system with a $21,000 cash price.

The 1.99% loan is not a bad deal in every case; its total here is lower because of the low rate. But you are borrowing $28,000 for a $21,000 system. Measured against the real cash price, that $118.54 payment works out to an effective rate of about 4.65%, not 1.99%. If you sell the house in year five and pay the loan off, the $7,000 fee is already baked into your balance.

You can test any offer in the solar loan calculator by entering the dealer fee and a planned paydown. For a fuller walk-through of loan structures, see how solar loans work.

What pressure tactics should make you walk away?

Walk away when a seller pushes you to sign the same day, asks for cash, discourages you from reading the contract, or claims a price or program "ends tonight." The FTC lists pressure for a quick decision and requests to pay in cash as warning signs. Solar is a 20 to 25 year decision; a fair offer will still be there next week.

Common scripts include:

• "Your neighbors all signed." It does not matter. Their roof, usage and utility plan differ from yours.
• "Just sign to hold your spot; it's not a contract." Anything you sign on a tablet may be a binding contract. Ask for a printed or emailed copy of every page first.
• "Rates are going up 10% a year." Nobody can promise future utility rates, and the FTC warns that savings claims based on them are hard to predict. Ask what the savings look like at 2% or 3%.
• "You'll never pay an electric bill again." Most utilities keep a monthly customer charge, and many now credit exports at less than the retail rate. Ask how your utility credits the power you send back.

How do you check a solar contract before signing?

Check that the contract matches every promise the salesperson made: system size, equipment brands, total price, payment amounts, escalators, production guarantees and who fixes the roof. The FTC advises comparing detailed written bids and looking for early termination fees, renewal costs and what happens when you sell the house.

Use this order when you review a contract:

1. Owner. Confirm whether you own the panels (cash or loan) or a company does (lease or PPA).
2. Price. Find the cash price, the amount financed, the APR and the total of payments.
3. Escalator. For a lease or PPA, note the yearly increase. A 2.9% escalator raises a $110 payment to about $218 by year 25.
4. Production. Check the estimated first-year kWh and whether any guarantee pays you if output falls short.
5. Warranties. List the panel, inverter, workmanship and roof-penetration warranties and who honors each.
6. Home sale. Read how the contract transfers to a buyer, and whether a lien or fixture filing is recorded.
7. Cancellation. Find the cancellation notice and the deadline.

To compare offers fairly, enter each one into our solar cost per watt calculator. For example, a 7 kW system quoted at $21,000 is $3.00 per watt. A second 7 kW quote at $30,800 is $4.40 per watt. With a Texas-like yield of 1,400 kWh per kW, the first works out to about 9.1¢ per kWh over 25 years and the second to about 13.3¢. That gap of more than 4¢ per kWh is worth an explanation.

Our checklist for choosing a solar installer covers licenses, insurance and references in more detail.

Can you cancel a solar contract after signing?

Usually yes, if you act fast. The FTC's Cooling-Off Rule (16 CFR Part 429 (opens in a new tab)) gives you until midnight of the third business day to cancel most sales of $25 or more made at your home. The seller must give you a cancellation form. Many states add longer windows, especially for older buyers.

Some practical steps:

• Send the cancellation in writing, by a method that proves delivery, and keep a copy.
• If the sale was financed, contact the lender too and ask it to confirm the loan is canceled.
• If the installer starts work before the window ends, that does not cancel your right to cancel.
• If the deadline has passed, check the contract for a later cancellation option, and contact your state attorney general if you believe you were misled.

If a lender takes a security interest in your home, federal Truth in Lending rules can also give a separate three-day right to cancel. Ask the lender in writing whether that applies.

How do you vet an installer and report a scam?

Vet an installer by checking its state contractor license, insurance, permit history and complaint record before you sign. Report a scam to the FTC at ReportFraud.ftc.gov and to your state attorney general, and to the CFPB if a loan is involved. Keep every document and message.

A quick vetting list:

• License. Search your state contractor board for the company and the electrician who will pull the permit.
• Complaints. Search the company name plus "complaints" and check your attorney general's consumer site, as the FTC recommends.
• Insurance. Ask for a certificate of liability and workers' comp insurance.
• Local presence. Ask who will answer a warranty call in year 10 and where that office is.
• Subcontractors. Many sales companies hand installation to a subcontractor. Get the installer's name in the contract.

The Department of Energy's Homeowner's Guide to Going Solar (opens in a new tab) is a good neutral reference for questions to ask any company. If you are comparing ownership types, our lease vs PPA vs loan guide explains which protections differ.

To report a problem, file at ReportFraud.ftc.gov (opens in a new tab), contact your state attorney general, and for a loan, file a complaint with the CFPB. Reports help regulators spot patterns even if they cannot resolve your individual case.

What does a fair solar offer look like?

A fair offer gives you a written cash price, a clear price per watt, named equipment, a realistic production estimate for your roof, the real export rules of your utility, and time to think. It does not depend on a tax credit you cannot claim or a payment that only works after a lump sum.

Before you sign anything, you should be able to answer yes to each of these:

• I know who owns the system and what I pay in total.
• I have the cash price and at least two other quotes.
• The savings estimate uses my utility's current rate plan, not a guess about future rates.
• Every promise the salesperson made is written in the contract.
• I know how many days I have to cancel and how to do it.

If you can, run the numbers yourself in the cost per watt calculator and the loan calculator before your next sales visit. A good installer will welcome the questions.