Updated 1 week ago
Can You Get Solar Panels for Free in New Jersey?
Written by
Jamie Smith
Use our solar calcualtor to see how much solar panels really save in New Jersey
Electricity rates in New Jersey are set to increase by over 17% this year, which some solar companies are using as an opportunity to advertise “free solar panels”. Slapping the word ‘free’ in front of anything will raise a few eyebrows, and it’s important to know the truth of these ads before jumping to sign a contract.
Bottom line: You can’t get solar panels for free in New Jersey, and these ads are usually talking about solar leases and power purchase agreements.
But it is true that solar panels can save you money and help protect you from future rate hikes. Let’s break down what solar companies mean when they talk about “free solar panels” and how you can protect yourself from signing a contract that isn’t right for you.
Key takeaways
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There are no free solar panel programs offered through the New Jersey or federal governments.
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Most solar companies that advertise free solar panels are talking about solar leases or power purchase agreements (PPAs).
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While solar leases and PPAs have no upfront costs, they do require monthly payments and often result in lower long-term electricity bill savings than other solar financing options.
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Don't fall for a free solar panels pitch — always get more than one solar quote, look at other financing options, and read through the contract's fine print before signing.
Are solar panels free in New Jersey?
No, solar panels are not free in New Jersey. Solar companies often mention the term ‘free solar panels’ as a marketing tactic to lure in customers to finance their solar system through a solar lease or power purchase agreement (PPA).
While you technically don’t have to pay any money upfront using a lease or PPA, you will have to make payments each month to the solar company.
We usually recommend steering clear of companies that make claims of free solar panels. While it isn’t technically untrue, it can be misleading, so we consider it to be a solar red flag.
What are solar companies really talking about when they advertise free solar panels?
When solar companies try to sell you free solar panels, they’re probably talking about third-party financing options like solar leases and solar power purchase agreements (PPAs).
With solar leases and PPAs, solar panels are installed on your roof at no upfront cost to you, and you get to use the power they generate to lower your electricity bills in exchange for a monthly payment to the solar company. Essentially, you swap your electricity bill for a lower solar bill.
There are a few key things to note about third-party solar financing contracts:
You don’t own the solar panels: As the homeowner, the solar panels are not yours. They actually belong to the solar company, which is why you have to pay them each month to use them.
You don’t get incentives: New Jersey has some of the best solar incentives in the country, but since you don’t own the panels, you don’t get to use them. The federal solar tax credit and any Solar Renewable Energy Credits (SRECs) the system generates go to the company.
You can still get an electric bill: Sometimes, solar panels don’t produce enough electricity to cover all of your home’s energy usage, meaning you could get stuck with an electric bill and a solar bill. Also, your utility might have minimum monthly charges that solar can’t cover, which you are responsible for paying.
Your monthly payments will probably increase: Most lease and PPA contracts include an escalator clause that outlines how much your payments will increase each year. Make sure this rate doesn’t exceed the average rate of electricity increases in your area, or else you could end up paying more for solar than you would for grid power!
Maintenance isn’t your responsibility: As the owner of the system, the solar company is responsible for any solar system repairs or solar panel maintenance you may need.
It can be difficult to sell your home: A lot of solar companies will tell you that you can transfer the lease or PPA contract to a new homeowner if you move, and while that is true, it can be difficult. Many home buyers will be resistant to taking on a contract they didn’t initiate, and it can lengthen the process of selling a solar home.
What’s the difference between a solar lease and a PPA?
Solar leases and PPAs are very similar, but there is a key difference in how your monthly payment is calculated.
With a solar lease, you pay a flat, predetermined amount each month. It’ll be outlined in your contract, and no matter how much energy your system produces, you’ll pay that amount to the company.
With a solar PPA, you pay for each kilowatt-hour (kWh) of solar energy the system produces. The rate you pay per kWh is usually lower than the rate your utility company charges.
With both options, you do not own the solar panels and cannot take advantage of incentives like the solar tax credit or SRECs through the state’s SuSI program.
Why are third-party-owned solar systems popular in New Jersey?
According to Ohm Analytics, 56.9% of solar systems in New Jersey are third-party owned. Why? Because solar companies can make a lot of money off them.
As mentioned earlier, the solar company that leases your system to you gets to reap the benefits of incentives. New Jersey has great incentives, such as Solar Renewable Energy Credits (SRECs) generated through the SuSI program. These incentive programs, combined with New Jersey’s high cost of living, give installers plenty of reason to promote ‘free’ solar panel offers.
How much money can I save with third-party-owned solar panels in New Jersey?
While it’s hard to predict exact savings for your specific New Jersey home, factors like system size, utility rates, and average energy production suggest that a third-party-owned system could save between $2,400 and $5,600 over a 20-year period in New Jersey.
While any savings are good, you can save substantially more when you purchase the solar panels with cash or a solar loan. In fact, the cumulative savings are over $41,000 over 20 years for a cash-purchased system, thanks to the state’s net metering law, high electric rates, SuSI program, and the solar tax credit.
Choosing a ‘free solar panel’ option typically results in lower savings compared to owning the system because you can never pay the solar panels off, and you don’t get to use the available solar incentives.
Alternative options to “free solar panels” in New Jersey
A solar lease or PPA isn’t your only option when it comes to reaping the benefits of solar in New Jersey. Alternative options to third-party-owned solar in New Jersey are:
Solar loans: With a solar loan, you can finance your solar panels through your company’s financing partner, or a solar-specific loaning company you seek out yourself. Solar loans work like other loans, where you borrow the amount of the system, and pay off the rest in monthly installments plus interest.
Home Equity Line of Credit (HELOC) or personal loan: A HELOC allows homeowners to pay for solar over time and still take in all incentives available to them by turning their home’s equity into a line of credit. You can also seek out a personal loan from the lender of your choice.
Community solar: This option is an excellent way for those who can't install solar panels (such as renters, multifamily households, or low-income households) to energy renewable energy. Multiple parties or ‘subscribers’ share in the power and financial benefits of a centrally located solar farm.
Home Equity Line of Credit (HELOC): A HELOC allows homeowners to pay for solar over time and still take in all incentives available to them by turning their home’s value into a revolving line of credit.
Should you go solar using “free solar panel” options in New Jersey?
Ultimately, how you choose to pay for your solar installation is up to you. While free solar options like solar leases and PPAs don’t provide the best long-term savings, they could be the best way for you to get solar if:
You don’t have taxable income and can’t take advantage of the 30% federal solar tax credit.
You don’t have the money up front for a cash purchase
You don’t want to take on debt through a solar loan
It makes the most sense for your budget
We recommend reading through the contract you receive carefully to determine if a solar lease or PPA is truly the best way for you to go solar in New Jersey. It’s best to get quotes from multiple companies, and even ask for quotes for different financing options! Not only will doing a comprehensive comparison get you the best deal, it’ll help you get the best quality installation, too.
Free solar panels in New Jersey: FAQs
Jamie is a Content Writer and researcher at SolarReviews. A recent graduate of La Salle University in Philadelphia, Jamie earned her B.S. in communications with a concentration in journalism, mass media, and public relations. Jamie has previously worked at a marketing company where she had the opportunity to highlight and promote small business owners through long-form stories and interviews. With a deep-rooted passion for creativity, Jamie stri...
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