Background
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A leaflet ad from Absolute Renewable Energy (UK) Ltd was titled "Solar PV Panel Systems A Few Myths and Truths". The subheading stated "There is question that electricity generation by PV panel systems make absolute economic sense for many homeowners. However, just how much sense has been confused with common myths about the technology - here are a few of the major ones explained". The ad went on to list five "myths" including "MYTH: Since the Feed in Tariffs were halved in 2011, the return on investment is just not worth the hassle. NOT TRUE While tariffs were much higher, the costs of the equipment were higher too! Gone are the days where a 4kw system was typically £17,000 to £20,000. What's more, our state of the art panels are much more effective than they were. All in all, the returns on investment are similar to the levels a few years ago with 8% - 12% per year being achieved. Installations are also quick and easy and usually complete in one day". Another example stated "MYTH: "Having solar panels fitted reduces value of the house" NOT TRUE The vast number of house hunters would pay a premium for a house already fitted with a solar panel system as the [sic] all the remaining benefits pass on to the new owner".
Issue
The complainant challenged whether the following claims were misleading and could be substantiated.
1."MYTH: Since the Feed in Tariffs were halved in 2011, the return on investment is just not worth the hassle. NOT TRUE While tariffs were much higher, the costs of the equipment were higher too! Gone are the days where a 4kw system was typically £17,000 to £20,000. What's more, our state of the art panels are much more effective than they were. All in all, the returns on investment are similar to the levels a few years ago with 8% - 12% per year being achieved. Installations are also quick and easy and usually complete in one day"; and
2. "MYTH: "Having solar panels fitted reduces value of the house" NOT TRUE The vast number of house hunters would pay a premium for a house already fitted with a solar panel system as the [sic] all the remaining benefits pass on to the new owner".
Response
1. Absolute Renewable Energy (UK) said that after the drop in the feed-in-tariffs (FiTS), companies had to reduce their margins significantly in order to bring their return on investment (ROI) to favourable levels. They said the cost of solar panels had also reduced significantly and provided a spreadsheet showing Absolute customers had paid between (approximately) £7,000 and £11,000 (depending on the kilowatt (kW) size of system). They said that all Microgeneration Certificate Scheme (MCS) registered solar panel companies were required to use a standardised methodology of calculating returns on energy saved and tariff income earned. They said that the majority of their ROI figures for their customers fell within the 8‒12% bracket whereas most other common investment vehicles did not yield such a return and provided ISAs as an example which they said were under 3% return. They believed that over the life of the product the returns were such that it was worth the perceived "hassle". They believed the process was relatively hassle free and that installation only took around one day. They provided an example table of customers which included information on the amount initially paid out (for the system) and the annual percentage ROI payment. They also provided graphs which stated the percentage increase in solar cell efficiency from 1975 to the present day.
2. They believed that investing in a solar panel was seen as an improvement because it utilised the roof and that significant benefits were passed on to the new owners. They believed these benefits were unlikely to be sold on free of charge and that buyers would be likely to pay a premium for houses with panels in lieu of later benefits. They accepted that some buyers would not find panels aesthetically pleasing but stated that most panels appeared at the back of houses or in locations where they would be unlikely to be visible from the roadside. They also said that modern panels were sleeker than their older counterparts. They referenced a 2013 press release from the Department of Energy and Climate Change which stated that energy saving improvements could add 14% value to a property. Whilst they believed that anecdotal evidence to support this position was strong, they said it was a relatively new market and accepted that it was too soon to gain a definitive view and therefore it was difficult to find specific documentary evidence. They said, however, that studies in the US suggested that there were price increases for houses with solar PV systems and included an extract from one of those studies.
Assessment
1. Upheld
The ASA accepted that the cost of solar systems had reduced over the years and that the efficiency of panels was also likely to have increased as a result of developments in technology. However, although a summary of evidence regarding the annual ROI was supplied in relation to a selection of 40 customers with panel systems of various kW sizes and costs, additional evidence was not provided to demonstrate that percentage returns were calculated taking into account FiTs and average (or actual) energy use and using the registered methodology as stated.
Furthermore, we understood that the purchase of solar panels was a capital outlay, the primary financial benefit of which was to be found in the repayments conferred by FiTS or through energy savings. Notwithstanding the fact that robust evidence was not supplied to support the referenced annual percentage returns, we considered that the meaning of the ROI term and the relevance of the percentages would not necessarily be understood by all readers. We considered that some readers were likely to understand the reference to "returns" as comparable to interest rates, and infer that the purchase of the solar panels would begin to confer net gains soon after they were installed. Because we considered that the annual repayment figures had not been substantiated and because the claims relating to the return on investment implied that consumers would experience prompt financial gains from the product when this was not the case, we concluded that the ad was misleading.
On this point the ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.11 3.11 Marketing communications must not mislead consumers by exaggerating the capability or performance of a product. (Exaggeration).
2. Upheld
Whilst we understood improvements to household energy performance certificates (EPCs) were likely to be attractive to homeowners or potential home owners (because of the energy saving potential) we understood EPC values were based on a number of factors (relating to energy efficiency and carbon savings) but did not relate to solar panels alone. Whilst we acknowledged some prospective home owners would find solar panels attractive because of the potential for FiTs payments and energy saving, because documentary evidence was not submitted to demonstrate that prospective homeowners in the UK would "pay a premium" for properties already fitted with solar panels compared to directly comparable houses without solar panels, we considered that the claim had not been substantiated. We therefore concluded that the ad was misleading.
On this point the ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.11 3.11 Marketing communications must not mislead consumers by exaggerating the capability or performance of a product. (Exaggeration).
Action
The ad should not appear again in its current form. We told Absolute Renewable Energy (UK) that when using return on investment percentages, to ensure that they were supported by robust evidence and that the ads made clear the cost of the product would need to be recovered before overall financial gains could be made. We also told Absolute Renewable Energy (UK) not to make claims about the relationship between solar panels and house prices without holding robust documentary evidence.
