Are free solar panels actually free?
You may have seen solar installers advertising ‘free solar panels’ for your home. This sales pitch might sound like it’s too good to be true, but some installers really do offer to install rooftop solar panels without any upfront costs.
But, there is a catch - these free solar panels won’t give you the same great electric bill savings as you would get when you pay for the system.
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What do solar installers mean when they say ‘free solar panels’?
When installers say free solar panels they are referring to one of two solar financing options:
- Solar power purchase agreements (PPA) or
- Solar leases
Once the solar panel system is installed, you get to use the clean energy it produces to power your home, all while saving big on your electricity bill!
But, there is a catch. With solar leases and PPA agreements, you do not own the solar panels on your roof. And while the solar panels are installed at no cost to you, you do have to pay the solar company for the solar energy produced on your roof each month.
Learn more: Solar leases vs. solar PPAs
Are free solar panels a scam?
No, free solar panels are not a scam. Entering a solar lease or solar PPA will still end up saving you money on your utility bills. The solar energy produced on your roof will be used to power your home and reduce your power bills through net metering, a program offered by your utility company.
However, you do have to make monthly payments to the solar company for using the solar energy. But, these monthly payments will be less than what your electric bill would have been.
For example, if your utility bill was $200 per month before installing solar panels, your solar lease payment might be somewhere around $125 per month. So, you would wind up saving $75 per month.
However, just because free solar panels will save you some money, it doesn’t mean they are the best way to finance solar panels for your home.
Free solar panels don’t save as much money as other financing options
While free solar panels definitely have some benefits, it is important to look at their drawbacks.
|Pros of free solar panels||Cons of free solar panels|
|No upfront costs||Can't get the federal tax credit or other incentives|
|Reduce energy bill||Lower long-term savings as compared to purchasing a system|
|Predictable energy pricing||Entering into a long-term contract|
|Not responsible for system maintenance/monitoring||Can be difficult to pass over agreement when trying to sell your home|
You can’t take advantage of rebates and incentives
One of the biggest drawbacks of free solar panels is that because you do not own the solar system, you cannot take advantage of the federal solar tax credit. The federal solar tax credit, also known as the investment tax credit (ITC), allows you to save 26% on the cost of a solar system.
You may also be ineligible for certain local solar incentives, such as solar renewable energy credits (SRECs) which can save you thousands of dollars per year in some places, thereby giving you an even bigger return on investment.
You save less money in the long run
Free solar panels will actually end up saving you less money in the long run than if you had purchased them. This is because when you purchase the panels, whether through cash or a loan, the system will be paid off eventually.
After the system is paid off, it generates free power that you do not have to pay for every month. This leads to substantially larger savings as opposed to using a lease or power purchasing agreement.
You will be entering into a long-term contract
In order to get free solar panels, you will have to enter into a long term-contract with the solar company, which may prevent you from doing certain home and landscaping upgrades if they could potentially impact the production of the system. Solar lease and PPA contracts usually have terms between 20 and 25 years.
You could face difficulty selling your home
If you’re looking to sell your home, the solar lease or PPA contract can be transferred to the new owner. However, this could make it harder to sell your home, as many prospective buyers will not want to enter a solar contract.
This could force you to have to pay a break fee if buyers don’t want to enter a solar lease or PPA contract.
Should you get free solar panels?
Before you decide to get free solar panels, you need to weigh all of your options. Purchasing solar panels, either with cash or a solar loan, will give you the best long-term savings.
Plus, when you own your solar system, you’re able to take advantage of various incentives, like the federal tax credit. You won’t be able to do this if you install free solar panels.
If you don’t have the cash to cover how much solar panels cost upfront, you don’t qualify for a solar loan, or don’t qualify for the federal tax credit, then free solar panels might be the right choice for you.
But, you should always consider getting multiple solar quotes from multiple installers to make the most informed decision about what is the best way for you to go solar.
- Free solar panels refer to two types of solar financing options: solar leases and solar PPAs
- With a solar lease or solar PPA, you do not own the solar panels on your roof - instead, you make monthly payments to a solar company for the energy the panels produce
- Free solar panels are not a scam, however, you get lower long-term savings with solar leases and solar PPAs than you do with other solar financing options
- You should only consider installing free solar panels if you do not have cash for an upfront purchase, do not qualify for a solar loan, or do not qualify for the federal tax credit
Author: Catherine Lane | SolarReviews Blog Author
Catherine is a researcher and content specialist at SolarReviews. She has strong interests in issues related to climate and sustainability which led her to pursue a degree in environmental science at Ramapo College of New Jersey.