Solar Companies to Avoid: Red Flags to Watch

Why Choosing the Right Solar Company Matters

Going solar is one of the best financial decisions a homeowner can make, but only if you work with a reputable installer. A poorly installed system can underperform, void your roof warranty, or leave you locked into an unfavorable contract. In the worst cases, homeowners have lost thousands of dollars to companies that cut corners, made misleading promises, or went out of business before honoring their warranties.

This guide does not name specific companies to avoid because the solar industry changes rapidly: companies merge, rebrand, improve, or decline. Instead, we focus on the red flags and warning signs that apply to any solar company, giving you the tools to evaluate any installer you are considering.

Major Red Flags to Watch For

1. High-Pressure Sales Tactics

One of the most common complaints about solar companies involves aggressive, high-pressure sales tactics. Be cautious if a salesperson:

Insists you must sign today to lock in a special price

Claims the offer expires at the end of the visit

Refuses to leave written materials for you to review later

Uses scare tactics about rising electricity rates

Pressures you to sign before you have received multiple quotes

Reputable solar companies understand that solar is a major investment and give you time to compare options. A legitimate deal today will still be a legitimate deal next week.

2. Unrealistic Savings Promises

If a company promises that solar will eliminate your electric bill entirely or claims specific savings percentages without analyzing your actual energy usage, roof orientation, and local electricity rates, that is a major warning sign.

Honest solar proposals are based on:

Your actual electricity bills from the past 12 months

A site assessment of your roof's orientation, angle, and shading

Current local electricity rates and net metering policies

Realistic panel degradation rates over the system's lifetime

Be especially skeptical of claims that your system will "pay for itself in 3 years" or that you will "never pay for electricity again." While solar delivers excellent returns, the typical payback period is 6 to 10 years, and most homeowners still have a small residual electric bill.

3. No Physical Office or Local Presence

Large national solar companies and local installers each have their pros and cons, but be wary of any company that has no verifiable physical address. A company with no local office, no listed address on their website, and no presence on Google Maps is difficult to hold accountable if problems arise.

4. Missing or Inadequate Licensing

Every state has licensing requirements for solar installers, typically including an electrical contractor license and often a specific solar or general contractor license. Before signing any contract:

Ask for the company's contractor license number

Verify it with your state's licensing board

Confirm they carry general liability insurance and workers' compensation

Check that the license is active and has no disciplinary actions

An unlicensed installer puts you at risk for code violations, failed inspections, voided warranties, and personal liability if a worker is injured on your property.

5. No Workmanship Warranty

Solar panels come with manufacturer warranties (typically 25 years), but the installation itself should also be covered by a workmanship warranty from the installer. This covers issues like roof leaks caused by mounting hardware, wiring problems, and other installation defects.

Be cautious if:

The company offers no workmanship warranty

The warranty is shorter than 10 years

The warranty language is vague or full of exclusions

The company has not been in business long enough to back up a long-term warranty

The best solar installers offer 15 to 25-year workmanship warranties because they are confident in the quality of their work.

6. Poor Online Reviews and BBB Rating

While no company has perfect reviews, patterns matter. Investigate:

Google Reviews: Look for a rating of 4.0 or higher with at least 50 reviews

Better Business Bureau: Check for an A or B rating and read complaint details

Yelp and SolarReviews.com: Look for consistent themes in negative reviews

State Attorney General: Search for any formal complaints or legal actions

Pay particular attention to complaints about:

Long delays between contract signing and installation

System underperformance relative to promises

Difficulty reaching customer service after installation

Unexpected costs or contract terms

Roof damage or leaks after installation

7. Contract Terms That Favor the Company

Read every line of your solar contract before signing. Watch for:

Automatic escalation clauses in solar leases or PPAs that increase your payment by 3 percent or more annually (this can make your solar payment exceed your original electric bill within 10 to 15 years)

Transfer restrictions that make it difficult to sell your home or transfer the solar agreement to a new homeowner

Early termination penalties that cost thousands of dollars if you want to exit the agreement

Binding arbitration clauses that prevent you from filing a lawsuit if something goes wrong

Lien provisions that give the solar company a lien on your home

8. Subcontracting the Entire Installation

Some solar companies are essentially marketing firms that subcontract the actual installation to local crews. While subcontracting is not inherently bad, it can create accountability problems. Ask your company:

Will your own employees perform the installation?

If subcontractors are used, how do you vet and supervise them?

Who is responsible for warranty claims: your company or the subcontractor?

Companies that directly employ their installation crews generally deliver more consistent quality and are easier to work with for warranty issues.

Common Solar Scams

The Free Solar Panel Scam

No solar company gives away panels for free. When you see advertisements for "free solar panels," the company is almost always offering a solar lease or power purchase agreement (PPA) where they own the panels on your roof and you pay them for the electricity. This can be a legitimate arrangement, but calling it "free" is misleading.

The Government Program Scam

Scammers sometimes claim to represent a government solar program or say you have been selected for a special government incentive. While real incentives like the 30 percent federal tax credit exist, no government agency will cold-call or door-knock to offer you solar panels.

The Bait and Switch

Some companies advertise an attractively low price to get you to sign a contract, then change the equipment specifications, system size, or terms before installation. Always verify that the final contract matches the proposal you agreed to, down to the specific panel and inverter models.

The Fake Urgency Scam

"The federal tax credit is about to expire!" or "We only have 3 installation slots left this month!" are classic high-pressure tactics. The federal solar tax credit (ITC) is currently set at 30 percent through 2032, so there is no imminent deadline. And reputable companies do not manufacture false scarcity.

How to Vet a Solar Company Properly

Follow these steps before signing with any solar installer:

Step 1: Get at Least Three Quotes

This is the single most important step. Comparing multiple proposals helps you understand fair pricing, identify outliers, and negotiate better terms. Use resources like SmartEnergyUSA to find top-rated installers in your area.

Step 2: Verify Credentials

For each company you are considering:

Confirm their contractor license with your state licensing board

Verify insurance coverage (ask for a certificate of insurance)

Check for NABCEP certification (North American Board of Certified Energy Practitioners), the gold standard for solar installers

Look up their BBB rating and read complaint details

Step 3: Check Their Track Record

How many years have they been installing solar?

How many systems have they installed in your area?

Can they provide references from recent customers?

Do they have a portfolio of completed projects?

Companies with fewer than 3 years of operating history or fewer than 100 installations carry more risk.

Step 4: Read the Contract Thoroughly

Before signing, read every page of the contract. If anything is unclear, ask for an explanation in writing. Key items to verify:

Total system cost and payment terms

Exact equipment specifications (panel brand and model, inverter type)

System size in kilowatts (kW)

Estimated annual production in kilowatt-hours (kWh)

Workmanship warranty terms and duration

Timeline for permits, installation, and interconnection

What happens if the company goes out of business

Step 5: Understand Your Financing

If you are financing your system, make sure you understand:

The interest rate and total cost over the loan term

Whether the loan includes a dealer fee (this is common and can add 15 to 30 percent to the system cost)

Monthly payment amount and term length

Whether there is a prepayment penalty

Cash purchases and home equity loans typically offer the best overall value. Solar-specific loans are convenient but often carry higher effective costs due to dealer fees.

What Good Solar Companies Look Like

To balance this guide, here are the hallmarks of a trustworthy solar installer:

Transparent pricing with itemized proposals that show equipment costs, labor, permits, and any fees

Realistic production estimates based on your specific roof and location

Strong warranties including 15 to 25 years of workmanship coverage

In-house installation crews or well-supervised, vetted subcontractors

Responsive communication throughout the sales, installation, and post-installation process

NABCEP-certified installers on staff

Established track record with hundreds or thousands of installations

No pressure to sign immediately and willingness to provide references

Clear contract terms with no hidden fees or unfavorable clauses

The Bottom Line

The solar industry is overwhelmingly filled with honest, hardworking companies that deliver excellent products and service. But like any industry, there are bad actors. By knowing the red flags, doing your research, and comparing multiple quotes, you can confidently choose a solar installer that will protect your investment and deliver the savings you expect.

SmartEnergyUSA makes it easy to compare top-rated solar installers in your area. Every company in our network is vetted for licensing, insurance, and customer satisfaction. Get your free quote today and go solar with confidence.