Thanks to President Barack Obama, the solar and wind industries are expanding rapidly. He provided tax credits and subsidies for renewable energy (part of the American Recovery and Reinvestment Act of 2009). Despite the stunning failure of the solar company Solyndra, which left taxpayers liable for its $535 million collapse, our nation’s capacity for solar and wind boomed under President Obama, with the cost of rooftop solar dropping by 54 percent during that administration, and with the number of US households with solar panels exceeding a million households by 2016. Just this month, California has passed legislation requiring that all new homes use solar power, an amazing boost to the industry! And the United Nations announced that solar attracted more investment in 2017 than any other power source, clean or dirty.
For all the support President Obama offered the solar industry, his administration didn’t offer consumers enough protection against unscrupulous solar panel sales persons. Thus, consumer advocates have had to be aggressive in protecting consumers from illegitimate business practices in the solar industry. A year ago, three members of Congress wrote to the Consumer Financial Protection Bureau asking that these shady business practices be investigated. I wrote a column about the flawed practices and had the opportunity to meet with Abby Hopper, President of Solar Energy Industries Association (SEIA). The organization says it is working to increase pro consumer policies around the country, and has a Consumer Protection Committee, a set of free tools to help consumers understand solar agreements, and projects to include underserved communities in the solar industry, including a supplier diversity program. Some of the members of the industry group are also involved in community colleges, STEM programs, and employment training.
So why did Hector Balderas, Attorney General of New Mexico, recently file a 17-count civil complaint against Vivint, a Utah-based rooftop solar company, accusing them of fraud, racketeering and unfair business practices. Balderas says Vivint employed "high-pressure sales techniques and procedures designed to mislead consumers" and lock their customers into contracts lasting 20 years, with rates that increase "by over 72 percent,” as the agreement matures. Vivint is not a minor player in the rooftop solar industry. In fact, they are one of the largest companies, selling solar panels to consumers across the United States. Still, SEIA has no comment on the Vivint situation in New Mexico on their website, which shouldn’t be too surprising, since Vivint is a member of SEIA.
To be sure, the website says all the right things. It highlights its consumer protection work, mentions diversity and inclusion, speaks of environmental awareness, and provides updates on public policy. Beneath a sunny exterior, though, there is a problem with unscrupulous solar companies. When rooftop solar companies lose money, as SolarCity did, losing more than $800 million in FY 2016, they get extremely aggressive, desperate to keep growing, and seek out new customers, taking advantage of those who are less sophisticated. That’s what New Mexico says Vivint did, and they aren’t the only ones.
Another major player in the rooftop solar industry is Sunrun, which has had its own ethical concerns. Last year, the Wall Street Journal reported that the Securities and Exchange Commission (SEC) is investigating whether Sunrun (and SolarCity) misled investors. In the Journal piece, the reporter cites Freedom of Information Act requests, which found, according to the Journal: “Hundreds of complaints have been filed against solar companies in Texas, Oregon, California and Florida, with customers saying they are paying more on their utility bills, not less as they were promised, and have been sold expensive systems they cannot afford.”
What also strikes me as odd, is that in their latest filing with the SEC, the CEO of Sunrun, asserts that the cost of maintaining the electrical grid – such as transformers, power stations and transmission lines – over the next few decades does not make financial sense, and that we should instead be encouraging Americans to install solar panels.
I am supportive of renewable energy, and believe that allowing the utilities to totally dominate the electric market is problematic. But, I am also extremely leery of the government mandating more rooftop solar because the industry is seemingly rife with bad actors, who prey upon unsuspecting consumers. If we were to employ policies at the state and federal levels, that would divest from our electric grid and instead invest in rooftop solar, why should we believe that companies like Vivint would suddenly behave themselves? We shouldn’t, which is why I agree with the Consumer Federation of California’s call for government to “create a framework of consumer protections.”
Solar companies love to highlight the immense investment that is needed to modernize our existing electricity grid. The companies are right that work needs to be done and they are also right in the unfortunate conclusion that these investments are likely to result in higher rates for customers. However, the solar companies conveniently ignore the fact that as more and more well-off households spend thousands of dollars to install solar panels, the cost to sustain and modernize the grid will be shifted to the poorer Americans without solar panels. No matter how much we support renewable energy, we cannot ignore this unfair reality and we need to make sure that government subsidies don’t accelerate this regressive cost shift.
The need for renewable energy has led the federal government, and many states, to provide subsidies for solar energy. We also need to provide protection for the consumers who are being ripped off by those unscrupulous actors in the solar industry!
Julianne Malveaux is an author and economist. Her latest book “Are We Better Off? Race, Obama and Public Policy” is available via www.amazon.com for booking, wholesale inquiries or for more info visit www.juliannemalveaux.com