This issue is essentially common knowledge in the industry. There are reports of smaller firms marking up cost of system to levels that have not been seen in the retail market for 10 years. However, this issue does not seem to be exclusive to a few small rogue companies. It appears to be likely the practice is also being conducted by some of the largest firms in the market.
"Third party owned systems were screened out of the data sample in cases where reported installed prices were deemed likely to represent appraised values; the median installed price reported for these systems was significantly higher than for host customer owned systems (e.g., $8.0/W vs. $6.2/W, among ≤10 kW systems completed in 2011). In contrast, installed prices reported for other third party owned systems that were retained in the sample were similar to those reported for host customer owned systems."
This issue was also highlighted as a risk in the recent SolarCity S-1 Filing prior to their IPO, where they stated:
"The Office of the Inspector General of the U.S. Department of Treasury has issued subpoenas to a number of significant participants in the rooftop solar energy installation industry, including us. The subpoena we received requires us to deliver certain documents in our possession relating to our participation in the U.S. Treasury grant program. These documents will be delivered to the Office of the Inspector General of the U.S. Department of Treasury, which is investigating the administration and implementation of the U.S. Treasury grant program.In July 2012, we and other companies with significant market share, and other companies related to the solar industry, received subpoenas from the U.S. Department of Treasury’s Office of the Inspector General to deliver certain documents in our respective possession. In particular, our subpoena requested, among other things, documents dated, created, revised or referred to since January 1, 2007 that relate to our applications for U.S. Treasury grants or communications"
The question remains as to what extent the solar leasing and PPA industries, which represent as much as 80% of the California solar market, have legal exposure to this issue. It also begs the question as to how much this price inflation has helped achieve the economics that have led to this current boom.
In general this is more validation that cost based incentives are inferior to performance incentives. This is particularly evident when you compare cost of PV in Germany, where there is a Feed In Tariff vs. costs in the US where incentives are driven as a percentage of the cost of the system, not on its output.