Texas Cracks Down on Solar Scams: SB 1036, SB 1697, and What They Mean for Contractors and Homeowners
The Texas Legislature has sent a clear message to the residential solar industry: you couldn’t regulate yourselves, so now the state has to step in. With the passage of SB 1036 (the Residential Solar Retailer Registration and Regulation Act) and SB 1697, Texas is imposing new requirements on residential solar contractors, aiming to curb a sharp rise in consumer complaints stemming from misrepresentations, deceptive practices, and high-pressure sales tactics. These two bills, signed into law in June 2025 and which take effect in phases through 2026, represent what appears to be the most comprehensive effort in recent Texas history to regulate a rapidly growing, previously under-policed sector of the residential construction industry.
What prompted these bills? According to the San Antonio Express-News, in the past five years, complaints filed with the Texas Attorney General’s office have shot up even faster than the growth in new rooftop installations:
In more than 50% of the cases examined by the Express-News, complainants told the attorney general they were making payments on systems that were unfinished, faulty or never worked. Another 28% said their systems were generating much less power than promised and usually not enough to offset the panels’ monthly cost.
SB 1036
SB 1036, or The Residential Solar Retailer Registration and Regulation Act, creates a statewide framework governing residential solar retailers and installers. Among other things, the Act:
Directs the Public Utility Commission of Texas (“Commission”) to establish insurance requirements for solar retailers;
Directs the Commission to develop educational materials (concerning consumers’ rights and remedies related to the purchase or lease of residential solar energy systems) that must be provided to solicited persons;
Directs the Commission to regulate the form and format of an agreement for the sale or lease of a residential solar energy system;
Requires registration of solar retailers and solar salespeople, and directs the Commission to establish continuing education requirements as a prerequisite to renew a solar salesperson registration; and
Provides a cooling-off period where a homeowner can walk away from a solar purchase/installation contract without consequences.
Violations may result in administrative penalties of up to $100,000, especially when contractors target seniors.
SB 1697
Separately but relatedly, SB 1697 directs the TLDR to develop a standardized Residential Solar Consumer Guide — a document that will be published online, and directly referenced in each electricity bill issued by an electric utility, electric cooperative, municipally owned utility, and retail electric provider. It must include:
How solar financing works;
The differences between leasing and owning;
Mechanic’s lien risks;
Warranty coverage details; and
Cancellation rights.
Why This Matters for the Construction Industry
If you’re a contractor or subcontractor involved in solar installs, or a general contractor hiring solar subs, these new laws change the risk landscape in several ways. First, compliance is now a credential. While being registered and insured may be a market differentiator, it will more importantly be a regulatory requirement. Second, poor sales practices now impose more significant legal risks. While Texas law previously protected homeowners from deceptive sales and trade practices, these new laws create new enforcement mechanisms against bad actors in the solar field. Third, and especially until form contracts are developed by the Commission, your contracts and subcontracts may require meaningful updates to address the cooling-off period and other items addressed by these laws.
Looking Ahead: Enforcement and Practical Construction Advice
While registration and some enforcement mechanisms begin on September 1, 2025, do not wait to audit your compliance, train your sales teams, make sure you have adequate insurance in place, and review your subcontracts and installation agreements. Noncompliance with these laws are a litigation risk, a PR risk, and, potentially, a licensing risk if you do not stay ahead of them.
As always, if you are a contractor or subcontractor with a contract that needs to be rewritten or lien language needing clean-up, or if you need an audit of your sales and insurance programs and strategies — coffee’s on me. Likewise, if you are a homeowner who was duped into a solar contract by a bad actor, do not hesitate to reach out for help.
