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. Solar panels cost money, and these ads are, at best, misleading attempts to push solar leases and, at worst, complete scams.
In this article, we’ll pull back the curtain on free solar panel claims by comparing solar leases with solar purchase options.
Free solar panel scams
Unfortunately, the solar industry naturally attracts scammers looking to prey on peoples’ desire to save reduce their energy costs. One of the most common scams are ads showing “How to get free solar panels from the government.”
While there are government incentives for solar panels, there are only a few extremely niche programs that can entirely cover the cost of going solar, such as California’s Low-Income Weatherization Program (LIWP). These programs are reserved for low-income homeowners in underserved communities and they do not advertise on Facebook or YouTube.
More recently, there have been videos circulating Facebook promising Tesla solar panels for free. In fact, they claim Elon Musk will actually pay you to test out new technology.
With a little digging, it was revealed that the videos were created by three individuals in Indonesia with the goal of collecting and selling personal information.
Finally, there has been some search traffic on google about free solar panels from Home Depot. The source of this scam has been harder to track down, but we investigated the claims anyway and found nothing close to free solar panels at Home Depot.
What is the main downside of solar energy?
One of the main downsides of residential solar are the scams that tarnish an otherwise beneficial home improvement. In addition to scammers, there are shoddy installers that perform low-quality installations and then are nowhere to be found to honor their warranties (if they even provide one). These bad actors are often the source of solar panel regrets, but, with a little vigilance, they can be easily avoided.
The way to avoid scams and fly-by-night installers is to use solar.com’s marketplace to compare quotes from our network of vetted installers. Fewer than 30% of installers that apply are accepted into our network after undergoing our rigorous vetting process.
It’s worth noting here that solar panel installation labor cost accounts for roughly 5% of the total cost of a solar project. So, going with a subpar installer in order to reduce the cost of the project is not considered a wise strategy. More often than not, it’s worth a little extra solar panel installation cost to work with a company that will be around to provide customer service and honor their warranty.
How to avoid solar scams
One of the best ways to avoid solar scams is to have an understanding of how much solar panels cost before you are approached with a quote that sounds (and is) too good to be true. That way you have a sense of a fair market price and better able to identify outliers.
There are a few ways to go about this. First, you can use a solar panel cost calculator, like the one on solar.com, to get a baseline.
Another way is to estimate based on the size of your home and the average solar panel cost per square foot using the table below. We analyzed thousands of systems sold on solar.com in 2022 to find the average cost per square foot of living space.
|Square footage of living space||Solar cost per square foot (after tax credit)|
For example, using the chart above, the average cost of solar panels for 2,500 sq ft home is around $19,900.
It’s worth noting that solar systems are sized and priced based on your electricity consumption — not square footage — so this method provides a quick-and-dirty estimate, at best. The most accurate way to find out how much solar panels cost for your home is to get binding quotes from trusted local installers.
Are leased solar panels really free?
In addition to outright scams, “free solar” claims are used to sell solar leases and power purchase agreements (PPAs) that often benefit the installer far more than the homeowner. But leasing solar panels does not make them free.
Leases and PPAs were popular in previous decades when the average cost of solar panels was much higher. But today, with substantially lower solar panel cost, owning solar panels is much more beneficial.
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.
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
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.
Here’s how the average monthly electric bill with solar panels breaks down over 25 years for the cash purchase, 12-year loan, and 25-year lease shown above.
|Agreement type||Average monthly electric bill|
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.
Do solar panels add value to a house?
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.
But if you don’t buy the solar panels, they can’t add value to your home.
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?
Although the concept of ‘free solar panels’ might seem enticing, it’s important to understand that there are no direct government programs or companies offering completely free solar panels. However, the government does provide various incentives and financial assistance programs to make solar panels more affordable and accessible for homeowners. These programs include tax credits, grants, and low-interest loans, which can significantly reduce the upfront costs of installing solar panels. By researching and taking advantage of these government initiatives, you can make the transition to solar energy more affordable and environmentally friendly.
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.