Are free solar panels really free

Are "free solar panels" really free?

If you've been on the hunt for a solar panel system, chances are you've heard companies talking about "free solar panels." Sounds great, doesn't it? But let me be real with you – it's not as amazing as it sounds.

Just like there's no such thing as a free lunch, there's no true freebie when it comes to solar panels. Opting for a company offering "free solar" might not be the smartest move. It could end up lowering the overall benefits you get from your solar panels in the long run and, even worse, leave you with a sour taste about clean energy.

These "no-cost solar" deals often involve solar leases or power purchase agreements (PPAs). Sure, you get solar panels on your roof without shelling out any cash upfront, but here's the kicker – you won't actually own the system, and you might miss out on many of the cool incentives that come with going solar. If you're not up for spending money upfront, your safest bet is to go for a $0-down solar loan. It lets you own the system without the complications of the "free solar" offers.

What's the Deal with Companies Offering 'Free Solar Panels'?

So, when companies throw around terms like 'free solar panels' or 'no-cost solar programs,' they're usually talking about solar leases or solar PPAs. In plain English, these are ways for a solar company to set up a solar panel system on your roof without charging you anything upfront – no installation fees, no enrollment costs, and no maintenance charges. Sounds pretty sweet, right? You get to run your home on clean energy, and you can proudly point to those solar panels on your roof.

Here's the catch, though – you don't exactly own the system. With solar leases, the company keeps ownership, and you pay them for the electricity the panels generate. It's like having a mini power plant on your roof, and you're essentially buying electricity from them, just like you would from any other utility company.

While these offers can cut down your energy bills, it's usually not as much as if you owned the system. If you're not careful with the nitty-gritty details, you might end up paying more for electricity than you do now.

Ways To Go Solar with No Upfront Costs

If you're thinking about getting solar panels without shelling out a bunch of money upfront, you've got some good choices – like checking out solar leases, solar loans, or community solar. Now, even though solar is all about being green, don't forget it's still a business. Whether you're all about saving the planet or saving some cash, it's a smart idea to look into different options and find the deal that fits you best.

Sign a solar lease

Picture signing up for a solar lease as subscribing to electricity but at a more pocket-friendly rate than your typical utility charges. In the past, big players like SolarCity were leading the charge in solar leases. Fast forward to today, with SolarCity out of the picture, a bunch of new players have stepped in, giving you a range of choices. The beauty of it lies in your ability to choose – different companies offer different deals, letting you pick the one that suits your needs.

What makes solar leases stand out is their game-changing impact on making solar energy accessible to nearly everyone with a roof, regardless of whether they have the cash to buy a solar system upfront. Back when solar systems were crazy expensive, these leases played a vital role in tearing down financial barriers, making solar power a realistic option for a broader audience.

Get a solar loan with no upfront costs

A lot has changed since solar leases first came about. Solar systems are now cheaper, and there are various ways to finance them. One standout option is the solar loan, blending the "zero-down" feature of solar leases with the advantages of owning the system. Keep in mind, though, that solar loans might have higher interest rates, but they come with the potential for much bigger savings compared to leases.

Join a community solar farm

Becoming part of a community solar farm usually ensures a 5-20% reduction in your electricity bills. Signing up is usually free, and you can cancel without any charges. You only pay for the electricity produced by your share of the solar farm, but at a cheaper rate than what your regular utility company charges. While the savings may not be as high as owning or leasing your own system, this option is great for renters as you won't need to set up any equipment on your property.

Cash Purchase, Loan, Or Lease: Which Is Best for You?

Why go solar? It's about saving money, cutting utility costs, and reducing your environmental effect. When it comes to the environment, the benefits of solar are very constant, regardless of who installs your system. This is why it is critical to focus on financial issues.

Solar financing does not work the same way for everyone. Paying in cash gets you the most value for your money, whilst leasing provides peace of mind and no upfront charges. A loan? That might be a sweet spot, offering the best of both worlds. Let's break it down and see how they compare.

Cash purchase

Installing rooftop solar panels with cash is a long-term, sensible choice. Even while the initial cost can seem high, you will receive a return on investment over the course of your system's 25–30-year lifespan. You may use the complete range of financial advantages and savings linked with solar energy, such as tax credits, rebates, and more if you decide to buy your solar system fully.

The added benefit is that having a solar system may increase the value of your house in addition to allowing you to enjoy lower energy costs. Using solar energy not only helps you save money, but it also raises the value of your house overall. This is a win-win situation that will benefit for many years to come.

Personal loan

The next best thing to do for a return on investment is to apply for a solar loan. Often, there is no upfront fee, but until you pay back the loan, interest will gradually reduce the energy savings you had. Generally speaking, the payback time lasts seven or eight years, although it ultimately depends on the size of your system, the cost of power, and interest rates. You keep all of the money you save on energy when you reach financial equilibrium.

Solar leasing and PPA

Solar leases or PPAs will result in the lowest solar energy savings. Most agreements are designed to substantially benefit the solar installation, allowing them to claim incentives and collect a portion of your savings in monthly payments. By the conclusion of your lease, you will have paid them anything from one-third to more than half of your potential savings.

The lack of upfront costs and ongoing maintenance fees is the key benefit of a lease or PPA. However, since solar panel systems usually require little maintenance, choosing a lease over a $0 down solar loan could not provide much of a benefit. Be careful of escalators as well, since they have the ability to reduce your overall savings by increasing your monthly payment at a fixed rate for the duration of your contract.

Can You Get Free Solar Panels from The Government?

Although the government does not provide free solar panels, it does provide a lot of excellent incentives to lower the cost of these panels. The owner of the solar panel system receives the majority of government incentives, such as the Federal Solar Investment Tax Credit (ITC). The most important thing to remember about "no-cost" solar programs or PPAs is that the installers are the ones who own the solar panel system on your roof. Here are some of the best solar incentives the government offers right now:

Solar Investment Tax Credit

If you've been debating whether or not to go solar, the ITC (the best solar incentive) might be the deciding factor. As of 2024, you can claim 30% of your equipment and installation expenditures as a tax credit on your federal income tax return. The tax credit amount is applicable to systems built and operational by December 31, 2032.

As previously stated, if you select a "no-cost" solar program or PPA, your installer will receive this credit instead of you. For instance, if the system on your roof costs $10,000, the ITC will pay $3,000 to the owner. Because the installer technically owns the machine, they would receive the payment. You'd miss out on one of the most significant financial benefits of investing in renewable energy.

SRECs, performance-based incentives

Other initiatives include solar renewable energy credits (SRECs) and performance-based incentives. Some jurisdictions have solar carve-outs that require a certain percentage of power to be generated only from solar sources. These states' SREC marketplaces make it easier to sell solar certificates. Every megawatt-hour (MWh) generated by your system earns you one SREC. An aggregator or broker, such as SRECTrade or SolSystems, can assist you in selling your SRECs for cash.

Performance-based incentives provide reward for solar energy production over a predetermined threshold. For instance, your utility might compensate you for producing a certain amount of power from your solar system, regardless of whether you consume it or feed it back into the grid, if you qualify for performance-based incentives.

State and local incentives

Tax credits are one type of incentive program that several states offer, albeit they differ from state to state. You could also be eligible for state net metering programs, where your utility provider pays you for any surplus kilowatt-hours (kWh) of power you create and deliver to the grid. These programs vary depending on where you reside. To assist with the initial costs of installing solar panels, a few nearby counties and localities also provide direct subsidies.

How To Avoid Solar Scams

Understanding the cost of solar panels before you are approached with a price that seems (and is) too good to be true is one of the greatest methods to avoid falling for solar scams. In this manner, you will be more equipped to recognize outliers and have a feel of what a fair market pricing is.

When conducting your research on solar, be careful to compare estimates from many nearby solar contractors. When you compare prices for solar panels, you can find out more about the installers, read reviews, and assess the features and capacity of the systems they suggest.

To make sure you understand the conditions of your solar contract, pricing, and, if applicable, solar loan, you should double-check a few points and make sure your solar installer is reputable.

The Bottom Line

While solar panels are not free, Forme Solar can provide you with free, unique estimates from pre-vetted solar contractors. Comparing estimates helps you to consider additional possibilities and, ultimately, obtain a great value on your solar panel installation. Contact us now to obtain a quick estimate of how much you'll save with solar, whether you pay upfront, utilize a zero-down loan, or opt for a solar lease/PPA!