Free Solar Panels? The Truth Behind the Ads for Free Solar
We’ve all seen ads claiming you can get free solar panels from the government or a local installer.
If free solar panels sound too good to be true, it’s because they are. These ads are typically for solar leases and are at best misleading and at worst a scam.
In this article, we’ll pull back the curtain on free solar panel claims by comparing solar leases with solar purchase options.
Are “free solar panels” really free?
The short answer is no, “free solar panels” are not really free.
If a company is advertising free solar panels on Facebook, YouTube, or even at your doorstep, they are most likely offering a solar lease or a power purchase agreement (PPA).
Solar leases and PPAs
Solar leases and PPAs are arrangements in which a company installs solar panels on your roof for no upfront cost and then charges you a monthly rate that is typically lower than your utility rate. In a solar lease you pay a flat monthly fee for the electricity, whereas in a PPA you pay per kWh of electricity generated.
Both arrangements typically include a price escalator that raises the monthly payment between 1% and 5% each year. It’s also important to note that the installation company owns and maintains the panels, so the solar system doesn’t add to your home value and can complicate the sale of the home.
Technically, you don’t pay for the solar panels in either arrangement – but that’s because you don’t own them. However, you do pay for the electricity they produce, which can add up to more than the cost of a solar system over time.
And just for comparison, you can also buy solar panels with a zero money down using a solar loan, but that doesn’t mean they’re free.
If you don’t own it, is it really free?
Imagine this: An exercise equipment company advertises a free rowing machine. You claim the offer and they set up the rowing machine (which they still own) in your home at no cost. But when you turn it on, it costs 2 cents per stroke to use it.
Would you really consider that a free rowing machine?
Now, we’re not saying that all solar leases and PPAs are scams, but we certainly disagree with the marketing choice of advertising free solar panels that aren’t really free.
Free solar panels from the government?
Another slippery marketing tactic you’ll see is claims that the government is giving away free solar panels or paying people to go solar.
Again, if this seems too good to be true, it’s because it is.
At best, this is a misrepresentation of state and federal solar incentives like the 30% federal solar tax credit, which is a reduction in your tax liability, not a cash payment for going solar. At worst, bad actors are using the ruse of free solar panels from the government to convince homeowners to sign up for a solar lease or PPA.
A good rule of thumb is to be very skeptical of any company that advertises free or no-cost solar panels.
Owning vs leasing solar panels
Even though there’s no such thing as free solar panels, going solar is still a great way to reduce your energy costs.
Leases and PPAs were more prominent in the past when the cost of going solar was much higher. But the cost of solar panels has come down substantially in the last 10 years, making ownership much more affordable and accessible.
Here are some things to consider when deciding whether to buy or lease your solar panels.
Pros and cons of solar leases/PPAs
|No upfront costs||Much less savings potential than owning|
|Same environmental benefits as owning||Price escalator constantly increases monthly payment|
|Installers responsible for maintenance and monitoring||Solar system does not add to your property value|
|Predictable monthly payments||Lease can complicate selling your home|
|Lower energy costs||Cannot use state and federal solar incentives|
Maximum savings potential
If your primary goal is maximum savings, then owning is the way to go – especially if you buy with cash.
The chart below shows the cumulative cost of owning and leasing the same 8 kW solar over 25 years.
Leasing may be the cheapest option early on, but it becomes more expensive than buying with cash in year 12 and a solar loan in year 15.
By year 25, the solar lease is nearly $24,000 more expensive than buying in cash and around $18,000 more expensive than a 12-year solar loan.
There’s two reasons leasing solar panels is more expensive than owning in the long run:
- The payments endure for the life of the lease
- The escalator increases the payments each year
With the 2.5% escalator we used in our example the monthly payment increased from $100 per month to $180 per month over the life of the lease.
To be clear: All three solar options are cheaper and cleaner than grid electricity, but owning your solar panels – especially if you pay in cash – substantially increases your return on investment.
In addition to electricity savings, solar panels increase the value of your home by up to $4.10 per watt. That amounts to $32,800 for an 8 kW system, but you only accrue this value if you own your solar system.
In a solar lease, the installation company owns the system. Not only do you miss out on the increased home value, having a leased solar system can complicate your home sale if you decide to move.
Basically, if you decide to move before your solar lease is up, you have three options:
- Ask the buyer to take over the lease
- Buy the system outright
- Make the remaining payments and termination charges
The first option relies on finding a buyer that is willing and able to take over the lease. The second and third options rely on you making a lump sum payment for the solar system – which is exactly what you tried to avoid by leasing.
Government solar incentives
In August 2022, the Inflation Reduction Act increased the federal solar tax credit from 26% to 30%, where it will remain until 2032.
That means if you purchase a solar system, you can lower your federal tax liability by 30% of the installed cost of the system. So if an 8 kW system cost $24,285.71 upfront, the 30% tax credit would be worth $7,285.71 and bring the net cost to $17,000.
There are also state and local solar incentives that can be used in addition to the federal tax credit to bring the cost down even further.
These incentives make going solar more accessible and increase your overall savings, but they only apply if you purchase the system instead of leasing it. In a solar lease, the installer claims the incentives and may or may not pass the savings on to you.
No such thing as free solar panels
If you’re reading this article, then your Spidey Senses were spot on. There is no such thing as free solar panels despite what the online ads and door-knockers try to tell you.
More often than not, marketers using the ruse of free solar panels are trying to get you to sign a solar lease or power purchase agreement. Although these solar financing arrangements can increase your energy costs, they offer far less savings potential than solar ownership, and certainly shouldn’t be considered free.
“Free Solar Panels” FAQs
Is the US government giving away free solar panels?
No, the US government isn’t giving away free solar panels. This marketing tactic is, at best, a misrepresentation of the 30% federal solar tax credit and other state incentives.
There are very few government programs – perhaps only California’s Low-Income Weatherization Program (LIWP) – that cover the entire cost of a solar system. But these are very niche programs that apply to very small groups of people.
If you see an ad for free solar panels from the government, be very skeptical about that company and program.
Are solar panels really free?
No, solar panels are not free and advertisers using the prospect of free solar panels are typically offering a solar lease or power purchase agreement (PPA).
In these arrangements, a company installs solar panels on your house for no upfront cost and charges you a monthly rate for the power they generate. You do not own the panels and therefore they shouldn’t be considered free.
Solar leases and PPAs can reduce your electricity costs, but over time they end up being more expensive than buying and owning a solar system. Plus, a leased solar system doesn’t add to your home value and can complicate your home sale.
How can I get solar panels for zero money down?
There are two ways to get solar panels for zero money down: solar leases and solar loans.
In a solar lease, a company installs solar panels on your house for no upfront cost and you pay a monthly rate for the energy they produce. You do not own the solar panels and the monthly rate tends to increase by 1% to 5% per year and last for the entire life of the lease.
In a zero-down solar loan, you purchase the panels for no upfront cost and make fixed monthly payments to the lender. Once the loan is paid off, the system is yours and the payments end.
Over the 25-year life of a solar system, the savings is much greater in a solar loan than a solar lease.