11 solar proposal red flags, and the one question that exposes each

The most expensive solar proposal red flags aren’t hidden in fine print. They sit in plain sight, in the assumptions behind the savings chart. A proposal can quote honest equipment at a fair price and still be a poor deal because it counts a tax credit you can’t claim or values your exported power at a rate your utility doesn’t pay.

The fix is usually one direct question. Below are the 11 red flags we flag most often in Kentucky proposals in 2026, each with the question that exposes it. You’ll find a printable version in our free Proposal Red-Flag Checklist.

As of November 1, 2026: the tax rules and tariff figures referenced here are current as of this date. Check the sources below for updates.

Why proposals go wrong

The frosting on a proposal is the monthly payment. The cake is the escalator, the term and the assumptions. Most sales documents lead with “save $40 a month” or “25-year savings.” Those numbers are outputs. Each one depends on a handful of inputs. Change two of them and the headline can drop by most of its value.

The 11 red flags

1. A federal tax credit you can’t claim

The residential clean energy credit (Section 25D) ended for expenditures after December 31, 2025. The IRS counts the expenditure as made when installation is completed. A proposal for a system you’ll own that still subtracts 30% from the price is working from last year’s rules.

Ask: “Which tax credit is in this number, who claims it, and under which section of the tax code?”

2. Exports valued at the retail rate

For LG&E and KU systems that began service on or after September 24, 2021, exported kWh earn a fixed NMS-2 credit: 7.534¢ at KU and 7.089¢ at LG&E. The residential energy charge this fall is about 11.4¢ to 11.5¢. A savings model that treats every kWh you produce as worth the retail rate overstates the value of everything you export. Our Kentucky net metering explainer covers the other utilities.

Ask: “Which net metering rider will this system be on, what does it pay per exported kWh, and how many kWh do you expect me to export?”

For a lease, add one more. Kentucky’s statute defines a net metering customer as one who owns and operates the system. Ask: “How does this lease qualify for my utility’s net metering rider?” Get the answer in writing.

3. A loan larger than the cash price

The Consumer Financial Protection Bureau found that solar lenders’ dealer fees typically run 10% to 30% of the cash price, sometimes more, and are rolled into the loan principal. That’s how a lender can advertise a low rate. A 3.99% loan on a $30,000 balance for a $24,000 system costs about the same as a 6.24% loan on the real price.

Ask: “What is the cash price, and what is the loan amount? Please put both in writing.”

4. A payment that depends on a lump sum at month 18 or 19

Many solar loans assume you’ll prepay about 30% of the principal, the old tax credit, around month 18. If you don’t, the payment resets higher. In our example, a payment of $110.73 a month on a $30,000 loan at 3.99% jumps to about $162.99, up 47%. With no homeowner credit in 2026, where would that prepayment come from?

Ask: “What is my monthly payment if I never make a prepayment?”

5. An escalator you have to hunt for

Leases and some contracts raise the payment every year. At 2.9%, the year-25 payment is about 1.99 times the first. The proposal summary may show only year one.

Ask: “What is my payment in year 10, year 20 and the final year?”

6. Rate inflation doing the heavy lifting

If the savings chart assumes your utility rates rise 4% or 5% a year, and applies that to every kWh including exports, it front-loads optimism. The NMS-2 export credit didn’t rise in the 2026 rate cases. Our rate stress-test article shows how to check this.

Ask: “Can you rerun the savings with a 2% rate increase and the export credit held flat?”

7. A production estimate with no method behind it

Every savings figure starts with kWh per year. If one bid promises far more kWh per installed kW than the others on the same roof, someone’s assumptions differ. Common causes include ignoring shade, ignoring losses or modeling a better orientation than you have.

Ask: “What model produced this estimate, what shading and loss assumptions did you use, and what kWh per kW does it come to?” If the contract includes a production guarantee, ask exactly what it pays if output falls short.

8. A system sized for export, or beyond the limit

Because exports earn less than retail, panels beyond what you use mostly add low-value credits. Those credits never pay out in cash, even when you close the account. Kentucky net metering also stops at 45 kW of rated capacity.

Ask: “What share of this system’s output will I use at home, and what’s the smallest system that captures most of the value?”

9. No answer about the roof

Panels last decades. Shingles may not. Removing and reinstalling an array to reroof costs real money, and it belongs in the comparison.

Ask: “How many years of life does my roof have, and what would you charge to remove and reinstall the system if I reroof?”

10. “Or equivalent” equipment and blurred warranties

A proposal that lists “Tier 1 panels or equivalent” lets the installer substitute later. Warranties also come in two kinds. Manufacturers cover their products; workmanship is covered by the installer, and that coverage ends if the installer closes. Our guide on what to do when an installer goes out of business explains why this matters.

Ask: “What are the exact make and model of the panels, inverters and racking, and who honors each warranty if your company closes?”

11. Pressure to sign today

The Federal Trade Commission lists pressure to decide quickly, demands to sign before you’ve reviewed the contract, and requests to pay in cash as warning signs. A “today only” price on a 25-year commitment protects the seller, not you.

Ask: “Can I take the full contract home for a week?” If the answer is no, that’s your answer.

What a clean proposal includes

Red flags are easier to spot when you know what a complete proposal looks like. Before you compare prices, check that each bid gives you:

• The cash price, the price per watt of DC capacity, and every financing option priced from that same cash figure
• The exact equipment list, with make, model and quantity for panels, inverters, racking and any monitoring hardware
• A year-one production estimate in kWh, the method used, and the shading and loss assumptions behind it
• Your expected self-consumption and export, valued at your utility’s current tariff, with the rider named
• Every escalator, fee and prepayment assumption, shown as a year-by-year payment table
• Who handles the permit, the interconnection application and the final utility approval, and what happens if approval is delayed
• Workmanship and manufacturer warranty terms, including who you call in year 12 if something fails

A bid that is missing two or three of these isn’t necessarily dishonest. It is incomplete, and incomplete is where the expensive surprises live. Ask for the missing pieces before you compare it with anything else.

A worked example: four corrections, one proposal

Here’s how far the assumptions can move the result. This is an illustrative 8 kW proposal for a KU home at $24,000, producing 10,000 kWh in year one. All figures are nominal 25-year totals.

Step	25-year bill value	Your cost	25-year net savings
Proposal as presented: 30% credit, every kWh at retail, 4% rate increases, no degradation	$47,460	$16,800	$30,660
Remove the homeowner credit that ended in 2025	$47,460	$24,000	$23,460
Value the 60% that’s exported at the flat 7.534¢ NMS-2 credit	$30,285	$24,000	$6,285
Use 2.5% rate increases instead of 4%	$26,871	$24,000	$2,871
Add 0.5% a year of panel degradation	$25,226	$24,000	$1,226

Nothing in the proposal was invented. Each assumption was just a little generous, and together they made a thin deal look like a $30,000 one. Discounted at 5% a year, the corrected version costs more than it saves.

What we’d do

• Ask all 11 questions in writing and keep the answers with the proposal.
• Get at least three bids and line them up on the same assumptions. For larger or multi-bid projects, our Installer RFP & Bid Leveling service does this formally.
• Rebuild the savings yourself with your utility’s current tariff, flat export credits and a modest rate escalator.
• Compare financing options by total cost and net present value, as in our lease, PPA, loan and cash comparison.
• Have an attorney read the contract before you sign. We flag terms to raise; we don’t interpret them.

If you’d like an independent review, our Proposal Second Opinion delivers a written report in five business days, with every assumption corrected and explained. We don’t sell panels, and no installer or lender pays us.

This article is general information, not legal advice or tax advice.