What are the rules about deposits when buying solar power systems?
This post is going to be light on words, but the topic is worth covering. It arose from a couple of questions SolarQuotes founder Finn Peacock asked me to research: what’s a “normal” start-work deposit to offer a solar PV installer, and is there deposit protection for consumers?
The request came after Finn was contacted by someone who had lost over $5,000. They paid a 50% deposit to a solar installation company that went into administration before the installation took place.
So, let’s start with a state-by-state handy table for maximum deposits payable according to state legislation.
“Small Jobs”
| State | Small job classed as: | Max Deposit |
| QLD | $3,300 to $19,999 | 10% |
| NSW | All work | 10% |
| VIC | up to $19,999 | 10% |
| SA | $12,000 to $20,000 | 10% |
| WA | $7,500 to $500,000 | 6.5% |
| TAS | N/A | N/A |
“Large Jobs”
| State | Large job classed as: | Max Deposit |
| QLD | over $20,000 | 5% |
| NSW | N/A | N/A |
| VIC | over $20,000 | 5% |
| SA | over $20,000 | 5% |
| WA | N/A | N/A |
| TAS | N/A | N/A |
Certainly, then, a tradie asking for a 50% deposit is going over the top.
Builders Warranty Insurance
Builders warranty insurance goes by many names around the country, but where it applies it provides protection for buyers in case, as is explained in this post by insurer QBE, “loss of deposit, failure to start or finish a job and defective work on a completed job”.
However, it doesn’t apply to small jobs. Here are the minimum job costs in various states for a project to qualify for builders warranty insurance.
Minimum Job Value For Builders Warranty Insurance
| State | minimum value |
| QLD | $3,300* |
| NSW | $20,000 |
| VIC | $20,000 |
| SA | $12,000 |
| WA | $20,000 |
| TAS | No scheme |
| NT | No scheme |
| ACT | $12,000 |
Even if solar installations are eligible for warranty protection, it’s likely a great many installations are too small to qualify, unless you’re in Queensland where projects over $3,300 need warranty insurance.
In its Q1 2019 snapshot, the Australian Energy Council said the average new system size today is 8.1kW (the report PDF is here). Typical residential solar systems start at 6.6kW. As Finn wrote here, 8.1kW puts the system cost somewhere between $7,500 and $11,000, so only in Queensland would an “average” system qualify for warranty insurance.
It’s also important to understand builders warranty insurance coverage for solar power is not consistent from state to state.
We contacted the responsible bodies in each state that has a compulsory scheme, and at the time of writing, had received the replies below:
- Queensland – the Home Warranty Insurance scheme only covers solar PV installations that are part of a new construction. Retro-fitted solar PV installations are not covered.
- Western Australia – yes, the Home Indemnity Insurance scheme covers solar PV installations.
- NSW – yes, according to this link provided by the Department of Fair Trading: “Home building compensation cover (formerly known as home warranty insurance) is required for residential building work when the value of the work including labour, materials and GST exceeds $20,000. The contractor must give the home owner proof that home building compensation cover has been taken out, before starting work or receiving any payment (including a deposit).”
- South Australia has a more complex set of requirements, detailed below.
South Australia provided this information for its Building Indemnity Insurance (BII) Scheme, which I decided was too detailed for a dot-point:
“All of these factors must be met for BII to be required. For example:
The installation of a $13,000 PV system on a house, by a builder or electrical contractor, where the installation does not require Council approval does not require BII.
The installation of a $13,000 PV system on a house, mounted on tilt racks, by a builder, which does require Council approval does require BII.
The installation of a $10,000 PV system on a house does not require BII, irrespective of whether Council approval is required.
The installation of a $13,000 PV system on a commercial property does not need BII, irrespective of whether Council approval is required.
Further information on licensing and other requirements for solar panel installers is here.”
We are awaiting responses from the ACT, and Victoria; the Northern Territory and Tasmania do not have mandatory schemes.
Update: Victoria responds
We have since received a response from Consumer Affairs Victoria, which is below.
“The installation of a solar electricity system is subject to consumer guarantees that apply under the Australian Consumer Law, regardless of the cost or type of contract entered into between the homeowner and supplier or installer.
“Advice for consumers who wish to install solar products is available on the Consumer Affairs Victoria website here.
“This includes advice about what to check for before signing a solar installation contract, for example, what warranties or repair policies apply.
“Solar installation works might be considered to be domestic building work (and thus, subject to warranties and requirements under the Domestic Building Contracts Act 1995) if the contract includes other types of building works such as plumbing or roofing works.
“The Victorian Building Authority’s Practice Note provides further information on the installation of solar panels and possible associated building works, it can be found in this PDF.”
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I disagree with the view here for Victorian deposits. The 10% and 5% limit are for staged building work and the stages are defined in the act. Consumer Affairs Victoria has a good overview. Basically Victoria has no minimum or maximums for deposit amounts for the install of single items such as solar. https://www.consumer.vic.gov.au/housing/building-and-renovating/plan-and-manage-your-building-project/deposits-and-payments
Hi, i paid $500 up front, and now they want the fuld amound 7 days before they come and install , $ 10,000, i am getting a bit consernt
Since the buyer has to sign a contract, there is no legal requirement for a deposit. I think it’s more of a deterrent to keep customers from cancelling after signing. I reckon if the solar company wants a deposit, then they should give a cooling off period, otherwise it’s just one way traffic for the company.
The other point is that they require payment in full either when they arrive to instal or immediately after instal. I don’t entertain the former in any circumstances, as they can leave without completing the work and there is no incentive for them to return and finish the instal. But in any event, both situations are on the nose, because if the system doesn’t work as expected, it can be a drawn out process to get the installers back because they’re contractors and work all over the countryside, squeezing in repairs between system instals. By way of comparison, wWhen a trade does any work they generally remit a seven day account. It beats me why the solar industry thinks they can demand cash on the barrel head. Parasites!
Agree with Malcolm’s points. I paid no deposit on my 9kw system in QLD and those installers that required it were rejected.
Here in SA I paid my installer a 10% deposit as they requested then the job date was set once they confirmed a date with SA Power Networks to install the new Meter on the same day.
I had no problems with that. Balance was paid by Internet EFT at the end of the installation day which would have taken a day or two to show up in their account. As contract states property belongs to the installer until the final final payment is made.
Not to sure what would happen if I changed my mind during the cooling off period after paying the deposit but my thinking is once done so you have already made up your mind to proceed but the law may state otherwise but it was not and issue for me.
https://www.fairtrading.nsw.gov.au/trades-and-businesses/construction-and-trade-essentials/green-energy-installers/installing-solar-panels
The above link taken from Fair Trading NSW. Excerpts are below:
Compulsory home building compensation cover
Home building compensation cover (formerly known as home warranty insurance) is required for residential building work when the value of the work including labour, materials and GST exceeds $20,000. The contractor must give the home owner proof that home building compensation cover has been taken out, before starting work or receiving any payment (including a deposit).
More information about home building compensation is available from the State Insurance Regulatory Authority website.
Contracts
You must provide a written contract for all residential building work over $5,000. Before asking for any money for the supply and installation of solar panels, or commencing any installation work the consumer must be provided with:
a written contract
a copy of the Fair Trading publication Consumer building guide if the work is worth more than $5,000.
a certificate of cover under the Home Building Compensation Scheme when the contract price is over $20,000 including GST or, if the contract price is not known, the reasonable market cost of the labour and materials involved is over $20,000.
Deposits:
The Home Building Act 1989 states that the maximum amount of deposit a customer can be asked to pay is 10 percent of the contract price.
If I can Toot my own horn here,
I am happy to say that Tindo Solar has a policy of fully refunding all deposits if the install does not go ahead.
And you can secure your solar for as little as a $100 deposit.
What is the point of the deposit if it is refundable? Just don’t take a deposit and make the experience for the customer so much better.
One payment when the job is complete.
A small deposit locks in your price and starts the process, and it stops a lot of time wasters as well,
Technically speaking any business that does not provide a service is not entitled to any money. You have to have received something from them for any business to be entitled to any monetary payment.
Although my company or our partners do not take deposits for on grid solar installations. It is a service to line up inventory and do planning etc. So a deposit is quite legitimate. However as a consumer you can shop around for lower deposits or no deposit at all.
A deposit is an free loan – cost of doing business would be in the price of the product/service being sold and most business would have at least a 30 day account with their supplier – so no outlay for 30 days and in the case of solar panels the solar rebate goes to the business. Wow I want to start a solar business too!
Each business is funded differently and may have different trading terms. Some of our supplies ie for Off Grid installations must be prepaid as do purchases of high end solar panels. Other balance equipment etc is on account and yes we have a short window to repay. The solar rebate money comes later. Good luck if you decide to start one. Hundreds and hundreds of solar businesses are no longer. Like I said for on-grid solar jobs we don’t ask for a deposit and I think that’s a good model but it’s not the only acceptable one.
Most business will get charged a “Restocking Fee” from their supplier if they want to return stock (about 10%). Network approvals also incur fee’s. So yes, there are cost’s incurred by the Company if you cancel at the last minute. If your going to cancel, give plenty of notice, then the stock and labour can be re-allocated to another job. If you sign a Contract and Pay a small deposit (no more than 10%), and then cancel because you got a cheaper price, don’t expect your deposit back. Do your research on the Companies you are talking to. Don’t sign contracts without intending to follow through in good faith. Try signing a Telco Contract and then try to get out of it the next day, see how that goes. If you sign a Contract, YOU are legally bound to follow it through.
Peter, technically, your not entirely correct. If you sign a Contract for works or services to be provided to you, and you decide to “Renege” on that Contract, you are very likely to be liable for “damages” or “compensation” to the company you signed the contract with. Especially, if they sustained cost’s in relation to that contract. Depending on how much notice you gave to cancel and of course the reasons, it may be a little or it might be a lot. Never Sign a Contract that you think you might want to get out of.
the Problem is they ask for $500 up front, and then they send yuo all the rules
Hi again! natural solar, ask me for $500 deposit, and then they send me all the paperwork, they don,t want come before i paid them 7 days in front, $ 10.967. And if i not pay them ,i will lose my $500 . I am not happy, i know i was stupid, but i think i have got abad treatment. Best Regards Henning Bruhn
Henning – I believe they are a Clean Energy Council Approved Solar Retailer. I’m pretty confident this kind of behaviour would violate that Code of Conduct – you can report violations here:
https://cleanenergycouncil.secure.force.com/ComplaintForm
Thank you Finn, i will pay , but not before the Batterie is is installed and working. See what the next step is. Thanks
Country Solar in NT (referred by SolarQuotes) charged us a $5000 deposit, “non refundable” (yeah right), and the wait until install was “10 to 12 weeks”. At 2 installs per day, that’s a $500,000 – $600,000 of customers’ money sitting in their account at any one time.
Nice Bahamas fund for somebody should anything go wrong I guess, and earning $20-60k in interest per year depending on where it’s sitting.
Nothing went wrong but it’s a huge risk and rort alright! At the very least should be in an escrow account!
My installer (Sparkin Energy) asked for no deposit and asked for no payment until the job was complete.
Almost any significant purchase comes with an up-front deposit, even if the only purpose is to reassure the seller that the buyer is serious. Unless you are just buying goods and paying in full immediately, ie transaction is completed within minutes (akin to shopping) then I would expect to pay a token deposit. 50% is a rip off.
My Energy installed our new Solar System today.
No deposit was required – we have 3 days from installation to pay our invoice which was emailed to us with all required required details !!
win Win – great company to deal with