Buyers Beware as Sun Starts to Set on Solar Energy Tax Breaks
Five years ago, San Diego County gained fame as the solar energy capital of the United States when it became the first county in the nation to adopt an ordinance requiring the installation of solar water heaters in new homes.
Given the sunny climate and the anticipated building boom in the county’s unincorporated areas, solar energy entrepreneurs flocked to San Diego to take advantage of a seemingly ideal marketing situation.
But as 1985 comes to a close, a cloud has formed over the once-booming local solar industry. The Board of Supervisors has repealed the progressive solar ordinance under pressure from developers, and generous federal tax credits for purchasers of solar heating equipment are due to expire at the end of the year, although industry officials hope to persaude Congress to extend them for at least one more year.
With those factors--and the stabilization of natural gas prices, which is predicted to continue at least for several years--the advantages of solar heating, at least for the time being, have waned.
The result, industry representatives and consumer groups warn, is a dramatic increase in fraud by some solar heating contractors who are hustling to make sales in the final weeks before the tax credit expires or is modified. This week, the local chapter of California Public Interest Group (CalPIRG) issued a report on the increasing number of consumer complaints against solar heating firms.
CalPIRG said many companies have resorted to high-pressure sales techniques and are issuing false information about the solar industry, lying to prospective buyers about tax credits and energy savings. Many are covering their ruses by offering gifts or vacations to prospective buyers. Some are offering questionable financing arrangements that place a lien on a purchaser’s home, making it eligible for foreclosure if payments on the solar equipment are not made.
“More and more companies are using the tax credit situation to pressure people to buy, and some of the tactics they’re using are really unbelievable,” said Nancy Rader, a CalPIRG spokeswoman. “We’ve seen instances of the ultimate in deceptive sales presentations--incredible over-projections on future energy costs, one-day price offers and false information on the tax situation. The reputation of the industry is suffering, and that’s unfortunate, because it hurts the legitimate companies, and most of the firms in the county are doing business honestly.”
The result is that solar contractors are gaining a somewhat unsavory reputation, a trend the industry’s reputable firms are working hard to reverse.
“The bulk of our business is done through referrals,” said Mark Zimmerman, a contractor with Solarsmith Corp., the largest solar company in the county, and spokesman for the San Diego County chapter of the California Solar Energy Industry Assn. “When a consumer hears about a negative experience with solar energy, it makes it tough to sell our product. It gets even tougher when you’ve got a lot of inconsistent information being thrown around, as has been the case lately. There have been enough experiences of consumers who have not been treated well to sour the industry somewhat, and we’re concerned about that. It’s bad when all of us suffer because of the actions of a very few.”
Zimmerman said the problem here is not as serious as in Orange or Riverside counties, where, he said, “fraud cases have been much more rampant.” Robin Seigle, an investigator for the San Diego office of the state attorney general, agreed. An official complaint has not yet been filed by her office against a local company, but the office is investigating recent sales techniques here, she added.
“This problem has statewide significance, and it’s definitely occuring here,” Seigle said. “The concern now is that, with the tax credits running down, the companies will get really active as they try to sell their products. We’re warning people who contact us to be especially wary when these companies put the heat on for an immediate sale. If they want you to sign that day, we advise that the offer be severely questioned.”
Zimmerman said San Diego County’s reputation as a haven for solar energy convinced many solar firms to locate here and was the harbinger of problems for the industry.
“That happened because of the political leadership here (in the late ‘70s),” Zimmerman said. “Companies were drawn into the marketplace because of the image created by the county government and some of the cities as a ‘solar capital,’ and that caused a false impression of the amount of business that could be done here.
“A lot of companies who benefited in the short term did not survive, and warranties and service of the equipment were badly affected. That caused a lot of bad feelings on the parts of consumers.”
Zimmerman shared Seigle’s concern that the cycle could be repeated in the coming weeks.
“The end of the year is an especially strong time for buying solar, because of the tax situation, and that situation is magnified this year because of the uncertainty surrounding the future of the tax credit,” Zimmerman said. “Alternative energy had a very clean beginning in this county, and people, feeling almost patriotic about installing it, were very trustful. We just want consumers to be properly educated--they should watch out for the fraud, or we’ll all suffer in the end.”
