In the United States, about a third of residential solar contracts are canceled, which raises installers’ pre-installation costs by about 25%, according to a 2022 study conducted by the National Renewable Energy Laboratory (NREL). Unless contracts come with cancellation penalties, those additional soft costs are usually passed on to consumers.
Some of those cancellations can be avoided by accelerating the timeline between contract signing and actual installation. In New Jersey, for example, delays in permitting are estimated to lead to the cancellation of 22% of the state’s rooftop solar projects.
Permitting delays have led hundreds of municipalities to adopt SolarApp+, which automates the permitting process. California law requires most municipalities to adopt SolarApp+ or similar permitting software, while New Jersey has proposed similar legislation. SolarApp+ is also now integrated into OpenSolar, the widely used solar project management tool.
Yet the period between contract signing and the permitting process is the most vulnerable period for installers. NREL estimates that nearly three-quarters (73%) of contract cancellations occur before permit submissions even occur. While the NREL study found “no single driver of PV contract cancellations,” a 2021 study by Cook et al. ranked changes in customers’ financial situation as the main cause for cancellations. Those changing situations are often beyond the control of any installer, but buyer’s remorse can happen when potential consumers don’t have a full grasp of the financial commitments they are making.
A number of states have passed or are considering legislation to require better disclosure to consumers of the terms of a solar sale or lease, and a penalty-free cooling-off period allowing consumers to withdraw from any contract they have signed.
Washington State’s solar consumer protection law, signed in March 2024, requires a printed copy of a signed contract to include full terms of the contract, such as financing arrangements, warranty information, and production projections, among other items. The contract is required to be in the language in which the sales process was conducted.
Other states have followed suit. Utah’s legislature recently passed similar legislation, including adopting Washington State’s requirement that solar retailers be W2 employees of a state-licensed installer. (As of this writing, the bill sits on the Governor’s desk for signing.)
Legislation introduced in Texas this month requires similar disclosures. That bill also includes a provision requiring solar salespeople to be registered with the state and requires the state’s licensing commission to establish a continuing education requirement for solar salespeople, under the principle that it takes educated salespeople to educate consumers.
pv magazine USA spoke with Mike Kruger, outgoing CEO of the Colorado Solar and Storage Association (COSSA) about legislation under development in his state. The COSSA proposes requiring that consumers be provided with a printed or digital copy of the contract, as well as a recorded call by either the finance company or the installation company spelling out the basic terms of the contract, including financing, project timelines, and what the adoption of solar will mean for the customer’s utility bill.
Asked about requiring solar salespeople to be W2 employees of a solar installer in Colorado, Kruger stated that there’s a place for independent, national sales-only companies, especially in states with a sales season shortened by weather conditions, where numerous smaller shops in rural areas cannot afford a year-round sales staff.
Read installation company reviews and you’ll discover that negative reviews frequently complain about a lack of clarity about financial arrangements. While disclosure provisions add one more layer of paperwork to an already burdened solar installation business, Kruger notes that solar associations he has spoken with have welcomed the arrangement. Educating consumers about the agreement they are entering into can not only reduce the number of cancellations, but also save a company’s reputation.
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