NOTE: As an Amazon Associate, I earn from qualifying purchases.  Learn More.

Are Solar Panels Actually Free?

Are Free Solar Panels Actually Free?

You may have seen solar installers offering free solar panels and thought, "Is this too good to believe?"

You're right; free solar panels aren't worth considering.

Installing rooftop solar panels isn't free. However, some companies offer installation services at no upfront cost. It costs money to generate power from solar panels.

We'll discuss what installers mean when they say "free solar panels," the disadvantages of installing solar this way, and whether free solar panels are worth considering.

What Do ‘Free Solar Panels' Actually Mean?

Installers may refer to either of the two solar financing programs when discussing free solar energy systems.

  • Solar Power Purchase Agreement or PPA
  • Solar Lease

Both solar lease and PPA contracts involve entering into a long-term agreement with a solar installation firm that will perform the solar installation for you at little to no expense.

The solar energy provider owns the equipment and looks after all maintenance and installa­tion expenses.

Are Free Solar Panels a Trap?

Are Solar Panels Actually Free?

Free solar panels aren't a trap. You don't pay for installing your solar panel systems, so you save money by using the free energy they generate to power your home and cut down on your electric bills.

A good sales pitch - isn't it? Solar panels aren't free. They're not yours either. You don't install the solar panels yourself; you contract the installation to a solar energy company.

Your rooftop panels convert sunlight into electricity, then power your house. By using solar energy, you reduce the number of kilowatt hours you use from your utility company.

Moreover, net metering allows you to easily get credits for excess energy production and use them to offset any remaining monthly bills.

You won't have monthly electric utility bills anymore, but instead, you'll be paying for a solar power purchase agreement (PPA) or solar lease payments. You're switching from an electric utility company to a solar energy provider.

What exactly does this mean for you in terms of savings? Your monthly solar power system payments will usually cost less each month than your electric utility bills were when you did not install solar panels.

Suppose your monthly electric bill was just $300 before installing solar power; then the cost of leasing a solar system could save you between $125 to $150 per month.

Disadvantages of Free Solar Panels

People choose to go solar because they don't need to spend hundreds of thousands of cash to switch to renewable energy.

It was great back then when solar panels cost more than today. Solar leasing and PPA programs have driven the solar industry forward.

Today, the cost of installing solar panels has dropped significantly, so buying them outright or taking out a solar lease is a viable option for homeowners. Free solar panels don't provide as much of a return as they used to.

They tend to come with more drawbacks than benefits.

Increasing Prices

Are Solar Panels Actually Free?

Solar loans usually include an escalation clause that considers the rising cost of electricity.

If the actual increase in energy prices isn't as per the rate set by your power provider in your agreement, you might end up paying more for your solar energy than you would if you'd just stayed with your local power company.

Reduced Savings in the Long Term

If you choose free solar power, you'll get the lowest long-term savings from any solar financing alternatives because you're continually making monthly payments, and the system won't ever be fully repaid.

You may be surprised to learn that the total you pay for a solar panel lease might be more than what it would have cost to buy the equipment outright.

Selling Your House Can be Difficult

As long as you don't own the rooftop solar panels on your roof, they're not considered fixtures and don't add any additional value to your property. Free solar panels do the opposite of what they're supposed to do.

Selling your house with a rented property may be challenging because few potential buyers would want to sign up for a long-term rental agreement.

If no one wants to buy your property, you might need to terminate the contract, which could cost you a lot.

No Tax Rebates or Incentives

You don't own the solar panels on your roof when you get them for free, so you won't be able to take advantage of any tax credits or rebates associated with installing one.

You won't be able to take advantage of any federal solar tax credits or other local rebate programs, like SREC's. If you don't qualify for these financial benefits, your long-term savings could be even lower than they would otherwise be.

What are Other Solar Financing Alternatives?

Solar Panels In Florida

You shouldn't believe the term "free." Other solar energy financing alternatives can offer you greater savings than just leasing.

You should prefer to buy your solar panel system outright rather than finance it. It saves the most money over the longest period.

However, even though solar power has never been cheaper than it is now, installing a solar panel is still quite expensive. If you are not willing to spend too much on a solar installation, you don't need to be worried because there is another financing alternative: Solar Loans.

Solar energy systems that use cash purchases and solar loan payments will save you the most money in the long run.

Solar loans offer an affordable way for homeowners to install solar panels without having to pay upfront. With a solar loan, you can buy the entire solar power plant outright, which means you get better long-term savings than solar leasing or solar PPA.

You'll be able to take full benefit of the solar incentives and tax credits available in your state.

When Should You Opt for Free Solar Panels?

While you may not need to invest any money upfront, you will save much less with free solar panels than if you bought the system. Not only that, but you won't be able to take full benefit of any available state or federal income taxes credits.

A solar loan may be the best option for installing a solar energy system if you don't want to spend upfront costs. Solar loans let you purchase solar equipment without paying upfront, receive tax credits for installing solar power systems, and save on energy costs.

Free solar panels are only useful if you're not eligible for the federal government's solar energy incentives.

You should compare all the other financing alternatives before deciding which one to go for. With this method, you can get the best possible solar system for the lowest cost.

Final Outcomes

  • Free solar power includes two financing plans: Solar leases and solar PPAs
  • Free solar panel systems aren't a scam, but they may be less cost-effective than other financing options.
  • Instead of owning the solar panel system on your roof, you pay a monthly fee to a solar company in return for the power generated by the solar panel system.
  • When you install free solar power systems, you cannot take advantage of certain federal and state tax credits and rebates.
  • Only install free solar panel systems if you don't have the funds for an upfront installation fee, don't qualify for a solar loan, or can't take advantage of a state or Federal government incentive.

About the Author David Roberts

I'm a Mechanical Engineer who's obsessed with solar energy and sustainable living.

follow me on:

Leave a Comment: