solar ppa lease savings

Does Free Solar Really Exist?

The moment you started shopping for solar, I’m sure that you’ve seen at least one advertisement claiming how you may be eligible for “free solar.” Just like there is no such thing as a free lunch. There is no such thing as free solar. You’re paying for it somehow. 

“Free Solar” is Used to Advertise $0 Down Solar Programs.

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Historically, the term “Free Solar” was commonly used to describe the PACE (Property Assessed Clean Energy) financing. Predatory contractors would tell homeowners that the cost of their new roof and solar would be free through this government program. Various government authorities set up the PACE programs to offer loans that are paid back as a line item on a homeowner's property tax bill.

PACE loan eligibility was largely based on home equity. With no required credit checks, to help to verify whether an applicant had the income to repay the loans. These home improvement loans are repaid over a set amount of time through your property tax bill. But oftentimes the homeowner did not realize all of the conditions of the loan.

PACE funding provides benefits in that it helped homes and business owners from paying for the upfront costs of adopting energy-efficient upgrades, like solar panels. This allows homeowners to begin saving on their electricity costs without having to pay any money down. Interest rates for PACE programs are usually around 3-4% higher than most traditional mortgage loans and typically higher dealer fees. But they are better alternatives than using a credit card, and won’t impact credit lines.

Because the PACE financing program helps home and business owners avoid upfront costs, it enables property owners to begin saving on energy costs while they pay for their solar panels through their property taxes. This typically means that property owners see net gains even with the higher property taxes. 

How You Pay for “Free Solar” with PACE Financing The cost comes from an increase in your property taxes.

Today, "Free Solar" is Used to Describe $0 Down Solar

Today, free solar is a term that is often used by some solar companies to advertise a solar PPA (power purchase agreement) or a solar lease. While with both programs, you don’t have to pay a cent to go solar, it does come with costs.

The cost of “Free Solar” with a Solar PPA or Lease

"Free Solar" with a Solar PPA: 

A solar company will put solar panels on your roof for no money up-front. And you agree to pay the solar company for the power that the panels on your roof produce. But you don’t own the panels, which also means that you aren’t eligible for the Federal Investment Tax Credit. 

The benefit of a solar PPA is that the solar company will install your system free of charge. And you pay a predictable low monthly bill. 

Typically the company will guarantee that your system will work for the lifetime of your power purchase agreement. That means that they will: 

  • Monitor the system daily to ensure it runs properly
  • Will repair the solar energy system at no cost if it stops working
  • Will get a credit paid back if the system doesn’t produce 95% of their estimate

How You Pay for Free Solar via a Solar PPA? Like a car lease, you pay a monthly fee to the solar company. But you don’t own the panels. 

"Free Solar" with a Solar Lease

A solar lease is another common way for homes and businesses to go solar and avoid upfront costs. A solar lease can be viewed as a car lease vs. purchase. Just like a car lease vs. purchase, you can lease solar and pay a small monthly fee. Under a solar lease, a solar company will put solar panels on your roof at no upfront cost.

But you will be paying a small bill to lease the solar panel system for a set amount of time. This lease allows you to gain the benefits of solar without the headache of owning the system. But with a solar lease, since you don’t technically own the system, you aren’t able to take advantage of the Federal ITC (Investment Tax Credit). Commonly known as the Solar Tax Credit. 

Providers of solar leases allow you to lease your solar energy system for a monthly cost. One that is typically 30% - 50% smaller than your electricity bill. Historically, solar companies like SolarCity dominated the solar lease industry. But after Tesla’s acquisition, numerous other solar companies have emerged as a provider of solar leases. 

How You Pay for Free Solar via a Solar Lease? Like a car lease and a solar PPA, you pay a monthly fee to the solar leasing company. But you don’t own the panels. 

Can “free solar” save you money?

asian biting dollar sign money solar savings

There are numerous reasons for going solar. But the primary motivator is how much solar can save compared to your current utility company. Our utility bill is a cost that we must pay each month. With a solar PPA or solar lease, you can swap your more expensive electricity bill with a smaller, predictable monthly payment. By paying $0 down, you can start saving on your electricity costs immediately. Imagine if Time Warner Internet gave you a 30% discount on your bill for the next 20 years. Would you consider it?

Are you looking to maximize your ROI? Consider solar financing vs. free solar.

Solar Leases and Solar PPAs were a revolutionary way to remove the historically high entry barrier to purchase a solar energy system. But solar energy systems are now more affordable than ever. And solar financing is even easier to access than ever before. Which has allowed solar financing to be a viable option for homes and businesses interested in owning the system vs. a solar lease and solar PPA. With solar financing, you can benefit from owning the system, like being eligible for the Federal ITC of 26% in 2021. 

itc federal solar tax credit commercial

Before you consider the next “Free Solar” advertisement

Before deciding whether you’re interested in “Free Solar,” make sure that you are fully aware of the true meaning of “free solar panels.” The is no such thing as “free solar.” It comes with a cost but typically means you can go solar with $0 down initially. 

There is no such thing as “Free Solar. “It is Used to Describe No Upfront Cost Solar. 

Consider Forme Solar Electric

We are dedicated to staying on the cutting edge of the solar profession. Forme Solar Electric School was created to ensure this happens. This relentless training is the reason we’re the top solar company in Los Angeles, Orange County, San Diego, Riverside, and San Bernardino. On average, we hire 1 out of every 10 solar installers in Los Angeles who apply to join our solar installation and repair services team.

In other words, we don’t hire amateurs or inexperienced solar installers. Because of our intensive training program, each solar installer becomes proficient in carrying out solar installation and repair services to the utmost satisfaction of our customers. Background checks are performed on all personnel, and all Forme Solar employees are drug-free and wear photo identification. So where do the 90% that we don’t hire go? Somewhere else.