Lessons from a solar fraud case in India

Over the last few years India has emerged as a potentially huge market for solar energy. So it’s not so surprising to see that swindlers and con artists are showing up to take advantage of the sunny boom.

Just this week, news media have been busy chronicling a fraud case against two people who took money from wealthy Indians in the southern state of Kerala but never delivered the solar panel installation service they promised. This isn’t just your typical criminal case, though. It stirred up fights over political favoritism and disrupted proceedings at the state’s general assembly. It’s like a reality show about solar and greed, starring local politicians and business men.

SunEdison's solar canal project  in IndiaAt the center of the brouhaha are two alleged crooks, Biju Radhakrishnan and Saritha S. Nair, who reportedly targeted doctors with their promise to install solar panels cheaply. They then took the money, turned off their phones and tried to disappear. Police have arrested both. Some of the Kerala state officials have since been accused of helping the two.

The case is yet another reminder of how the clean energy field is open for all sorts of scams partly because it’s creating a variety of technologies that many consumers are unfamiliar with. Solar roofs aren’t common in India, or the rest of the world for that matter. A growing number of national and local governments are offering rebates and other incentives to promote solar energy production, yet they don’t necessary invest enough money and time on educating consumers about choosing the right equipment and contractors. The Indian solar market also is too young to have produced many installers with a long track record of stellar services.

The state of Kerala is also new to creating a solar energy market. It only recently published a draft solar energy policy, making the ninth state in India to do so, according to market research firm, Bridge to India. Kerala’s proposed policy is quite different from other states’ because it focuses on promoting small installations rather than large, more centralized power plant projects that sell power to utilities. Kerala is looking at adding 500MW by 2017 and 1,500 MW by 2030 under the proposed program.┬áBut before the draft policy came out, Kerala already had started a “10,000 rooftop solar power programme” to promote systems as small as 1KW.

Indiasolar2Subsidizing solar installations has shown to be an important way to promote clean energy use. The growth of the solar markets in Europe, the United States and Japan provides proof. But those investments have to come with rules to regulate installers and protect consumers from fraud. Businesses typically don’t like regulations with punitive components in them, and company executives often advocate self-regulation through their industry associations.

That’s really the minimum that the solar industry should do. It shouldn’t wait until a big scandal hits that shakes consumers’ confidence and gives ammunition to those oppose the public investments in solar energy.

Consumers aren’t always the victims, either. In California, the largest solar state in the country, regulators have had to deal with installers who tried to game the system. The state offers rebates for installing solar panels at homes and businesses, and regulators had to add a rule in 2010 that requires installers to justify the prices they charge if those prices are way above the norm.

Last year, the Public Utilities Commission banned Pacific Home Modeling from participating in its solar incentive program after finding forged signatures on rebate applications submitted by Pacific Home. The commission also found that the company charged very high prices for their services while the solar panels they sold weren’t helping their customers offset the energy they would otherwise get utilities at nearly the same rates as systems installed by other companies in the same region.