Unveiling the Hidden Perils of Rooftop Solar Energy Systems
As the world continues to embrace renewable energy, the popularity of solar panel installations has skyrocketed. However, a growing number of concerns have surfaced regarding the practice of leasing solar panels, particularly in the United States.
Risks and Complications of Leasing Solar Panels
Kneupper's consumer protection law firm, based in Southern California, has been at the forefront of addressing the financial tragedies that occur when solar companies go out of business. The firm receives between 50 to 100 calls a week from frustrated homeowners who have systems that haven't worked for months and can't obtain service.
The ripple effects of solar company bankruptcies are far-reaching, resulting in tens of thousands of delayed installations, more than 17,000 jobs lost, and a surge in bankruptcies across the industry.
When you lease solar panels, the leasing company owns the panels, meaning you do not build equity or benefit from the system’s appreciation. Additionally, most government incentives—including the federal solar tax credit—go to the leasing company rather than the homeowner, reducing potential savings.
A leased system may deter buyers who do not want to assume the lease payments, making your property harder to sell, or requiring you to pay off the lease before selling. Some lease agreements charge electricity rates higher than owning would, and early termination of the lease often involves expensive fees that negate savings.
Contractual Risks and Company Reliability
Some contracts may be complex or unfavorable, and there is a risk that the solar company could go out of business, making service and support difficult or impossible. In such cases, a breach-of-contract claim can be filed against the lender that financed the purchase or the company that bought the debt.
Additional Concerns
Some leasing models, like rent-a-roof schemes, have raised further concerns. Homeowners receive limited financial benefits, with key government payments going solely to the leasing firms.
Tax Implications and Legal Advice
Taxpayers who have acquired a solar panel system often receive incorrect information about federal and state tax benefits from salespeople. In such cases, it is advisable to seek the counsel of an attorney who handles solar matters or a debt collection defense attorney to stop aggressive or illegal debt collection activities.
Current Market Conditions
Solar companies are going out of business at a frightening rate, with more than 100 this year alone, according to Complete Solar Solutions. Given this instability, it may not be the best time to pursue installing a solar system.
It is essential to exercise due diligence when dealing with solar companies. You can check adviser records with the SEC or FINRA to ensure you are working with a reputable firm.
The Kiplinger Building Wealth program handpicks financial advisers and business owners who share retirement, estate planning, and tax strategies to preserve and grow wealth. If a lawyer accepts your case under the Holder Rule, they will be paid only if they win.
In summary, leasing solar panels in 2023 can be appealing for those lacking upfront cash but carries significant drawbacks—primarily giving up ownership benefits and exposing you to financial and contractual complications. It is crucial to carefully consider these risks before making a decision.
- In the home-and-garden sector, leasing solar panels might seem financially advantageous for homeowners with limited upfront capital, but it involves relinquishing the benefits of ownership and collectibles, such as building equity and profiting from system appreciation.
- The finance industry, particularly solar companies, is experiencing a high rate of bankruptcies during 2023, which can lead to service disruptions, delayed installations, over 17,000 job losses, and more bankruptcies within the industry.
- In the renewable-energy industry, it is essential for homeowners to be aware of complex contractual terms and the reliability of the solar company they're dealing with, as the consequences of a company collapse can result in difficulty obtaining service and potential breach-of-contract claims.
