"Free" Solar Panels: Is Free Solar a Scam? [Guide 2023] (2023)

You've probably seen ads from solar companies offering "free" solar panels. While these offers are not necessarily scams, they can be misleading. Although the company does not ask for money upfrontSolar panels for your home, you must agree to pay a monthly fee for using their solar panels. In other words, you lease them instead of buying them.

Here we will discuss what companies really mean when they offer solar panels for free. There are other ways to lower the initial cost of a solar panel installation that result in greater savings over the long term. For example, you can apply for clean energy funding programs or finance your project with a low-interest loan.

If you are interested in financing, you can click below to meet with a solar installer recommended by the Guides Home team.

The phrase "free solar panels" is a misleading marketing tactic used by some companies. There are no companies or government programs that offer free solar panels. When you see the phrase "free solar panels," it can mean any of the following:

• Solar lease
• Power Purchase Agreement (PPA)
• Government program for low-income households

If the offer doesn't fit into any of the above categories, it may be a scam.

What is solar leasing?

A solar lease is exactly what its name suggests. The provider installs solar panels with no upfront cost, and you sign a contract agreeing to rent the system for a period of time (typically 10 to 15 years).

This arrangement makes sense when the solar lease price is lower than your monthly utility bills, but you can actually lose money if the rental price is higher.

What is a Power Purchase Agreement (PPA)?

You may be offered a solar power purchase agreement or PPA. With this type of agreement, the solar panels will still be installed on your roof for free. However, instead of paying a fixed monthly fee like with a lease, you are billed for the electricity generated by the solar panels during the billing period.

To make the deal attractive, solar PPA providers will charge a kilowatt-hour price slightly below local electricity rates. Read the agreement carefully - some PPA contracts may try to charge you more.

What are government solar programs?

Government-subsidized solar programs exist, but they are rare and only available to low-income households. These programs are typically administered by government agencies, regulated utilities, or not-for-profit organizations. Private companies can participate as approved installers, but are subject to strict guidelines.

In summary, offers for “free” solar panels are not always scams, but they are misleading. Many companies are more transparent in their sales pitch: They will clearly state that the upfront payment is zero, but you must sign a solar lease agreement, or PPA, and make ongoing payments to the solar company.

In general, you cannot get free solar panels from the government. Some government agencies have created programs that subsidize solar panels, but they are only available to low-income households that meet certain requirements.

The agency responsible for the program will filter applications by income level and hire qualified contractors to install solar energy systems. Other government programs may offer you a discount on your energy bills.

TheDisadvantaged Communities Program for Single Family Solar Homes(DAC-SASH) in California is an example of a government program that offers an incentive of $3 per watt of solar capacity. According to theCenter for Sustainable Energy, the average home solar system price in the US is $3 to $5 per watt, meaning this program could potentially cover 100% of system costs.

There are many ways to reduce the initial cost of a rooftop solar system without having to sign a lease or PPA. Financial incentives for solar panels in the US include:

• State and Federal Tax Credits
• Sales Tax and Property Tax Exemptions
• Solar discount program
• Solar Renewable Energy Certificates (SRECs)

These solar incentives can be combined, making your photovoltaic (PV) system much more affordable. When you enter into a solar lease agreement, or PPA, all of these benefits are claimed by the company providing the service to you, as they are the legal owner of the installation. So, as a homeowner, you cannot take advantage of these incentives.

tax credits

Thesolar investment tax credit(ITC) has been a major incentive for US solar installations since 2006. Also known as the Federal Solar Tax Credit, this incentive gives you back 30% of the project cost as a tax deduction.

Depending on where your home is located, additional tax credits may be available from your state government and you can take advantage of both incentives. For example, New York offers a25% solar tax credit for homeowners, up to a maximum of $5,000. This incentive can be stacked with the federal ITC to save you even more on your system.

tax exemptions

Some states also offer tax exemptions that differ slightly from tax credits. In this case, solar panels are exempt from taxes that would normally apply to other assets.

• You can get oneSales Tax Exemption, which represents an instant discount when purchasing solar panels. It ensures you don't pay your local sales tax on solar panels and mounting accessories.
• Municipalities can also make offersProperty tax exemptionsfor solar panels, the obligation to add home value through the installation is not taxed. For example, a $500,000 home that receives a $25,000 solar panel system will still be taxed based on its $500,000 value.

discounts

Solar rebates are direct monetary incentives to install photovoltaic systems. These programs are usually managed by government agencies or local utilities. Solar rebates and tax credits can be combined, but you must first deduct the rebates and then calculate the tax credit based on the net system cost.

Other ways to reduce solar costs

Solar Renewable Energy Certificates (SRECs) are performance-based bonuses. They don't reduce the cost of your solar energy system, but they do provide additional cash flow beyond the savings on utility bills.

Each state has its own regulations regarding SRECs. Depending on where you live, you may not be eligible to earn them.

In states with SRECs, homeowners typically earn one SREC for every 1,000 kWh of solar energy their system produces. These certificates can be sold through a dedicated marketplace to energy companies and other organizations that are legally required to support the renewable energy transition in their state.

All of these incentives lower the cost of a home solar system. You can also use a low-interest solar loan to cover the net costs after deducting the subsidy. This strategy allows you to switch to solar at a low upfront cost without being tied to a lease or PPA.

There are many solar suppliers and installation companies on the market and choosing the best option can be a challenge. Ideally you are looking for a solar company that offers both quality products and professional workmanship. A solid warranty is also an important consideration as it protects your investment: any component that fails during the warranty period will be replaced free of charge, saving on your monthly electricity bills.

solar poweris one of theleading solar companiesin the USA. The company's proprietary modules are among the most efficient in the industry and are backed by a 25-year product warranty. You can also receive a 25-year labor warranty when your home solar system is installed by a SunPower-approved contractor.

There are no “free solar panels”. When you see ads offering this, they are usually related to solar PPAs or leases. While it's true that you don't pay anything upfront, you will be billed monthly payments based on the signed contract.

There are other ways to cheaply switch to solar energy. For example, some government agencies have created energy assistance programs for low-income households, and some of them are installing solar panels at no cost to homeowners. However, these plants are subsidized by the government.

TheCost of solar panels in the USaverages about $2.94 per watt, or just under $11,000 for a 5kW system. Local incentives from your state government or utility company may lower this depending on where you live.

You can use a loan to cover the net cost of your post-incentive solar project and then use a portion of your energy savings to pay back the loan. There are many solar financing options that charge lower interest rates than a typical personal loan.

Leonardo Davidis an electrical engineer, MBA, energy consultant and technical writer. His experience in energy efficiency and solar consulting spans industries such as banking, textile manufacturing, plastics processing, pharmaceuticals, education, food processing, real estate and retail. Since 2015 he has also been writing articles on energy and engineering topics.

Tori Addisonis an editor with over five years of experience in the digital marketing industry. It includes communication and marketing work in the non-profit, government and academic sectors. As a trained journalist, she began her career reporting on politics and news in New York's Hudson Valley. Her work has included reporting on local and state budgets, federal financial regulations, and public health legislation.