Do I need to know scales in order to solo?

You don’t need to know scales to play lead guitar, or for that matter, any instrument. A lot of the old blues players claim that they don’t know any scales or theory whatsoever. All you need is an ear to tell you if the notes sound good. Knowing scales does however, allows you to be able to improvise smoothly and coherently without sounding like a train wreck. Theory is great, but feel is just as important. Developing both is the tricky part. That said, learn your scales. It will help.

Scales and lead patterns and modes and all that stuff is organized that way in music because it sounds good. I guess that’s why I said that you don’t really have to know scales to play lead. You do have to know patterns. But theory definitely helps. The cool thing about the CAGED system is that it maps out the whole fretboard for you so you aren’t locked into one position. When you play in different positions, you play with more variety and are more flexible  It makes improvisation great because once you find the tonal center of the song, you can run the neck, and develop different phrasing in different positions.