Lawsuits and investigations
Buffalo Billion
Buffalo Billion is a billion-dollar program launched by the administration of New York Governor Andrew Cuomo to revitalize Buffalo, New York. One of the main features of the program was the solar panel factory to be leased by SolarCity in the High-Tech Manufacturing Innovation Hub at RiverBend. The state appropriated $750 million in funding for the hub. According to Daily Energy Insider, "The facility will have one gigawatt of annual solar capacity when it reaches full production and is expected to produce about 10,000 solar panels per day."
On April 29, 2016, U.S. Attorney Preet Bharara (Southern District of New York) began an investigation into state construction projects and contracts, including the Buffalo Billion. SolarCity was not the subject or focus of the investigation and was not involved in the vendor selection or contracting. SolarCity said that it was cooperating with federal agents who had been in contact with the company. According to The New York Times, Buffalo Billion would benefit "a tangle of well-connected players – including developers and frequent donors to the governor–who have feasted on Buffalo Billion money". Cuomo stringently defended the project, noting that there had been a decrease in unemployment and an increase in spending around the Buffalo area.
Three executives who worked for LPCiminelli Development faced a 14-count indictment for wire fraud and bribery and alleged bid rigging of the SolarCity RiverBend construction contract. Additionally, five other people have been charged with related crimes. On May 18, 2016, the Public Authorities Control Board delayed a meeting at which it was set to approve $485 million in new funds for SolarCity. The New York state legislature planned to approve a budget in April 2017 that would give $500 million more into the Buffalo Billion program. In return, the legislature wanted the Cuomo administration to put more transparency into how the money is spent.
Oregon Attorney General investigation
On March 30, 2017, The Oregonian said that Campaign for Accountability, a D.C.-based consumer advocacy group, and other groups have asked Oregon Attorney General Ellen Rosenblum to investigate solar panel sales practices that "are designed to trick homeowners into buying or leasing solar panels" in violation of Oregon's Unlawful Trade Practices Act. According to The Oregonian, the request to Rosenblum "singled out one company: California-based SolarCity. It outlined several complaints filed against the solar giant by Oregonians who claimed they'd been misled about costs, tax credits and energy savings by the company."
The Campaign for Accountability reviewed 58 complaints that consumers filed with the Oregon Department of Justice and said that the complaints indicated "a widespread pattern of apparent fraud and abuse by solar companies." The Oregon Solar Energy Industry Association, however, said that it examined the complaints and "found the numbers to be relatively low – lower than those being cited by the Campaign for Accountability." Investigators determined that SolarCity attempted to "cheat the system" by inflating the cost of 14 commercial solar projects by more than 100% to qualify for higher state tax credits. SolarCity and its accountant were required to pay back $13 million to the state of Oregon. The investigation also found that "phony and misleading documents" were submitted for some projects, and there was a bribery scheme involving the projects' energy consultant and a state Energy Department manager. One of SolarCity's solar panel suppliers employed prisoners at the Federal Correctional Institution in Sheridan, Oregon, to keep costs down.
"Solar by Degree" project
The company is involved in a case concerning Martin Shain, the lead energy consultant in a solar power project at two Oregon universities. Shain was indicted for forgery in Marion County in August 2016. He is a consultant for BacGen Technologies in Seattle, a key player in the controversial $24 million "Solar by Degree" project and is accused of "creating a phony invoice from a fictional subcontractor that was pivotal in getting nearly $12 million in tax credits from the Oregon Department of Energy". The project began in 2013 and was sponsored by the Oregon University System; thousands of solar panels, generating millions of kilowatt hours of energy per year, were constructed on 21 acres on the campuses of Oregon State University in Corvallis and the Oregon Institute of Technology in Klamath Falls.
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The state's case revolves around two documents, which include an invoice from Solar Foundations Systems dated February 25, 2011, and a December 2011 letter signed by Ryan Davies, the former head of RedCo, a Utah-based company, which was the second developer on the project. According to KOIN-TV, "The Davies letter reported $210,000 had been spent toward the project and that construction was progressing." The Solar Foundations invoice contains details of the construction of solar arrays. The invoice was necessary to provide proof of work on the project to get tax credits from the state. The "Solar by Degree" project received the tax credits, but it was later shown that the company named on the invoice, Solar Foundations, does not exist. In addition, Davies claims he did not write nor has ever seen the RedCo letter in question and that his name was forged. Relying on this evidence, the state claims Shain forged both documents. Shain denies forging the invoice and claims it was given to him by someone else involved in the project. The tax credits involved were given to SolarCity, the third developer in the project, along with its financial backers. According to The Oregonian, "Those backers provide upfront financing for the projects in exchange for a share of the project revenues and the federal and state tax credits, which they can use to offset their own taxes." SolarCity said, "We financed and constructed the projects in accord with the requirements of the Oregon Department of Energy." The company argues that the state hired Shain, and it had no knowledge of the phony documents in question; otherwise, it would have not pursued the endeavor.
Treasury Department inquiries
In 2012, the Treasury Department began investigative interviews of solar firms regarding their fair market value calculations for constructed solar energy systems. SolarCity stated that its values were correct and complied with the Treasury Department guidelines. SolarCity received roughly $501.2 million in credits up until December 31, 2015. In 2017, SolarCity settled the investigation by agreeing to pay $29.5 million without any admission of guilt or liability.
Customer litigation
Since 2006, SolarCity has lowered the minimum FICO score required for customers to get the leasing deals. It uses the score of 650 (a "fair" credit rating) as the cutoff. However, between 2014 and 2017, SolarCity signed long-term lease agreements with at least 14 homeowner customers right before the customers defaulted on their mortgages. The company has been named in 139 lawsuits where it is the defendant in legal proceedings based on "residential foreclosure action."
In its response, SolarCity said in a statement to the New York Times, "Out of more than 305,000 installed customers, SolarCity is currently involved in 139 such proceedings. The litigation is not adversarial – being named in the foreclosure proceeding provides us with advance notice that we need to reassign a contract, and many are immediately resolved with the relevant bank."
Customer cancellation investigation
The Securities and Exchange Commission (SEC) began investigating Sunrun and SolarCity in May 2017 and were looking into whether they adequately disclosed canceled contracts. "Some customers say they canceled contracts after being strong-armed into solar-energy deals" and there have been hundreds of complaints to state attorneys general.
The federal government is investigating whether solar companies are "masking how many customers they are losing." The SEC is involved because "investors use that cancellation metric as one way to gauge the companies' health." According to the Wall Street Journal, "To generate business, solar companies have long relied on thousands of salespeople who knock on doors, make hundreds of cold calls and even trail people as they shop at retailers like Home Depot Inc., according to salespeople, executives and homeowners."
FCC receiving radio interference complaints
SolarCity installed SolarEdge inverter systems with a type of DC-DC converter called an optimizer. These systems cause radio interference as documented in April 2016 QST magazine a publication of the ARRL.
Vermont projects without approval
In June 2017, the Vermont Public Service Board discovered that SolarCity was implementing solar projects in Vermont without approval required by law. According to Vermont Public, Public Service Board Chair Anthony Roisman sent a letter to SolarCity warning the company that it needed to get regulatory approval before installing solar generation equipment and attaching it to the state's electrical grid. Roisman wrote, "Over the past few months, my office has observed a pattern of procedural issues with net-metering applications being pursued by your company." Officials at the company worked quickly to respond to the issue.
Allegations of faked sales numbers
In July 2018, three former employees filed a lawsuit against SolarCity, alleging that the corporation had approved the creation of "fake sales accounts", which resulted in an "unreasonably high valuation of SolarCity" for investors. After allegedly informing management, including CEO Elon Musk, of these incidents, the employees were allegedly fired, which they argue contravenes California's whistleblower protection laws. A Tesla spokesman denied these allegations. On June 5, 2020, the case was dismissed with prejudice.
Walmart lawsuit and Project Titan
SolarCity installed and manages solar panels on the roofs of more than 240 Walmart stores. On August 21, 2019, Walmart filed a lawsuit against Tesla, seeking reimbursement for millions of dollars in damages and release from contracts, claiming that fires on the roofs of seven of those stores since 2012 were caused by SolarCity's "negligent installation and maintenance." The suit was settled on November 5, 2019, and the terms were not disclosed. A joint statement provided by Tesla stated the companies said they were "pleased to have resolved the issues raised by Walmart" concerning the installations, and looked forward to "a safe re-energization of our sustainable energy systems." Walmart had accused Tesla of "widespread, systematic negligence" and ignoring prudent industry practices by relying on untrained and unsupervised personnel to install and maintain its panels, and prioritizing speed and profit over safety.
At around the start of the lawsuit, it was revealed that Tesla had initiated a secretive program, called Project Titan, to "replace solar-panel parts that could cause fires" as early as the previous summer. From a resource perspective, Project Titan involved "ordering supplies including ladders and tool belts and sent crews out around the United States" to approximately 50 cities as well as replacements for the specific parts believed to be causing fires: Amphenol H4 connectors and SolarEdge optimizers.
