An economist at the American Enterprise Institute is warning Minnesotans of a solar energy scam called community solar gardens. Salespeople prey on potential customers promising them lower energy bills and a sustainable source of power. With these promises in mind, consumers sign agreements to pay $20,000 in advance or $100/month for the next 20 years. Unfortunately for customers, Minnesota’s location is not great for solar power so investors end up paying for less solar energy than it takes to power their homes; and with a contract that is nearly impossible to break, they do so for 25 years.
By Andrew Follett
A conservative economist has said buying timeshares for solar panels is just the next “scam” to fleece environmentally friendly consumers.
Mark Perry, an economist at the conservative American Enterprise Institute, railed against “community solar gardens” in Minnesota where private companies end up pocketing taxpayer subsidies for generating relatively small amounts of green energy.
“As usual, when door-to-door salespeople present you with an offer that sounds too good to be true, and start with a pitch about ‘saving you 11% every month on your electric bill by switching to solar,’ it’s highly likely that it is too good to be true,” Perry wrote in a blog post Sunday.
Solar companies heavily encourage Minnesotans to invest big sums of money into them, but they’re extremely risky and very difficult to resell in the future. These timeshares require investors to pay $20,000 up front or $100 a month for the next 20 years in exchange for slightly lower power bills.
“In reality, it’s more like getting locked into a 20-25 year “investment” that is probably extremely risky and like a vacation timeshare could be very difficult to sell in the future,” Perry wrote.
Perry notes that solar companies are going door to door in Minnesota to sell timeshares to unsuspecting environmentalists. When investors sign on, they get locked into a 25 year-long contract that doesn’t even end up powering their house. Additionally, if the investor moves out of the area, they’re still liable for the money, making exiting the agreement virtually impossible.
The scam isn’t even generating much electricity, as Minnesota isn’t a good location for solar power.
“Of course, you have to ignore the biggest reason not to go solar in Minnesota: the weather and lack of sunlight,” Perry wrote.
Minnesota has 195 policies and incentives offering government assistance to green energy, according to the Database of State Incentives for Renewables & Efficiency. That’s more than any other state with the sole exception of California, which is a sunnier environment far more naturally suited to solar power.
Perry notes that Minnesota’s government offers numerous financial incentives that cause taxpayers to bear much of the costs of installing rooftop solar panels for the scam. These include a state energy rebate, renewable energy credits, property tax exemptions and an exemption from the 7 percent state sales tax.
Most solar subsidies go to residential installations payments called net metering or a 30 percent federal tax credit. These solar subsidies were so lucrative that solar-leasing companies installed rooftop systems, which run at minimum $10,000, at no upfront cost to the consumer.
Solar and wind power get 326 and 69 times more in subsidies than coal, oil, and natural gas, according to 2013 Department of Energy data collected by Forbes. Green energy in the U.S. received $13 billion in subsidies during 2013, compared to $3.4 billion in subsidies for conventional sources of energy and $1.7 billion in subsidies for nuclear, according to data from the federal Energy Information Administration.
Solar subsidies ultimately drive up electricity prices and aren’t viable without taxpayer support, according to a 2015 study by the Massachusetts Institute of Technology.
Even proponents of solar power recognize their reliance on subsidies. Without high net metering and other subsidy payments, rooftop solar “makes no financial sense for a consumer,” Lyndon Rive, CEO of SolarCity, told The New York Times last February.