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The Hidden Costs of Solar Your Customers Should Know About

Posted to Questline in the Clean Power Professionals Group
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Brian Olsen's picture
Senior Energy Analyst Questline Inc

Former DOE Industrial and Commercial Energy Project Manager, DSM advocate, solar power and air/land/water pollution control post secondary instructor.

  • Member since 2022
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  • Feb 24, 2022
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As the solar industry penetrates more areas of the country, customers are discovering some additional and unanticipated costs (including inconveniences) during the process. Some of those expenses are explained here to help your customers ask the right questions and learn more prior to obtaining an agreement that best fits their needs.

The first things to consider are the contract terms and conditions currently offered by many solar companies and their financing partners. The process usually starts with an in-home appointment with a sales representative (most companies will not provide an estimate without a visit). They will arrive and take some photos and perform calculations to determine the size of the system best suited for the customer’s budget and energy needs, presented as an estimate for their consideration. In the interest of closing the deal that day, the associate may redirect some questions regarding tax credits or financing to a financial advisor or accountant while still insisting they sign immediately. Encourage the customer to talk to a trusted friend or sleep on it so as not to be rushed into signing. Many companies also have a cancellation period of a week or longer, but the odds of cancellation after the initial signature are typically low.

In most solar contracts, there will be a federal tax credit of 26% of the total. It is important to understand what this means and how it applies. This tax credit is not a deduction, but a genuine claim against final calculated taxes owed for up to 3 years following the purchase. It is important to note that if someone is on disability, social security, or a fixed income, they may not be able to take full advantage of it. This is relevant because this money will most likely go to the solar or financing company and is often due within 18 months of the sale, so on a $25,000 solar installation, $6,500 will become due at that time. If a roof and/or batteries are added, that number may rise to $15,000-20,000, so they should know up front whether they will be able to either take advantage of the credit before signing, or have the resources to pay this amount even in the event that they cannot qualify for the full amount of the tax credit. Failure to do so will increase monthly payments, but usually not more than a couple hundred dollars per month.   

Finally, in many cases with long-term financing, the solar company will no longer be involved in the contract once installation is completed, and a financing company such as Sunnova or Loanpal will take over. If the contract specifies free removals and reinstallations (for roof repairs or replacements), this company will control both who will do the work and when. This timeframe may be weeks or even months after the roof replacement is needed, and the system may remain off of the roof and inoperable during that entire time.

In the end, it may be smarter to purchase the system and pay it off immediately or finance it themselves, and then have control over both the tax credit and the timing of repairs, which are often covered by homeowner’s insurance minus your deductible.

Armed with the above knowledge, hopefully your customers can feel a little more confident in selecting the right system and financing, as well as being able to plan for and anticipate even more of the hidden costs of solar.

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Thank Brian for the Post!
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