Sunlight is free. Solar panels cost money.
So when you see advertisements touting “free solar panels,” it certainly sounds too good to be true.
Any homeowner weighing the decision to invest in a major project like rooftop solar would be tempted by such an offer. And who can blame them? The average cost of a solar installation hovers around $24,000 in the US.
But like most things in life, when it sounds too good to be true, it usually is. Though there are certainly ways to reduce or even eliminate the upfront costs of rooftop solar, it’ll never be completely free.
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“Less credible companies still say that,” according to Krystal Persaud, founder of Grouphug Solar and co-founder of Wildgrid. But they’re often just trying to lure you in or sell your contact information to solar installers.
So how do you sift through the fluff and get to the grain of truth behind claims of “free” solar panels? Here’s everything you need to know about reading the fine print — and getting a great deal on solar panels.
What do companies mean by free solar panels?
“Typically, the people who are saying ‘free solar’ are on the end of lead generation. They’re going to say anything to get you to put in your information, because that’s how they make money,” Persaud said.
In other words, the companies making these claims often aren’t the same ones that would actually install solar on your roof — they’re marketers. These firms are just one type that can be involved in solar projects, which also include manufacturers and installers.
“If that leads you to a legitimate solar company, they’re not going to give you solar panels for free. The reason why they spin that claim is because you could get solar for zero dollars down,” Persaud said.
This is possible through solar leases and power purchase agreements. Under a PPA, a solar company will install a solar system on the roof of your home and charge you for the energy you use. You, the homeowner, won’t own the solar system. The company will.
Solar leases are similar to PPAs in that the homeowner won’t own the system. Think of it like leasing a vehicle. Leases typically don’t require any money upfront — you just pay a fixed rate each month to keep the system on your home. This way, you still enjoy the benefits of lower energy bills without the need to shell out the entire cost of solar or financing.
Both PPA and solar leases are “a way that people can still participate in the solar energy economy, but with a contractual obligation with this outside company who is bearing those costs,” said Gilbert Michaud, assistant professor at the School of Environmental Sustainability at Loyola University Chicago.
What’s the catch? Are ‘free’ solar panels a good idea?
Power purchase agreements and solar leases allow people to realize savings on their energy bills without a huge upfront cost. But you may be thinking there must be a catch. Sort of.
Much like getting into any other financial agreement, pay very close attention to the rate you’ll pay, whether that’s the price per kilowatt-hour for a PPA, or the fixed monthly rate of a lease. Make sure you’re getting a good deal, and watch out for “escalators,” which will raise the rate after a certain period of time.
A good rule of thumb is that your lease or PPA payment should always be lower than your current electricity bill, Persaud said.
Another thing to be aware of: Since the solar company maintains ownership of the system under a PPA or lease, it’ll generally be the one that benefits from both tax incentives and renewable energy credits.
One advantage of owning, rather than leasing, your solar panels is that they tend to boost home values. “If you own the asset, it actually increases the value of your home, as opposed to if you’re in a lease or PPA program, you don’t really own anything,” Michaud said.
Still, for people unable to afford purchasing their own solar system, a PPA or lease can help save on energy bills. In the fourth quarter of last year, PPA prices were on average about 5 cents per kilowatt-hour, according to one estimate, compared to an average of about 15 cents per kilowatt-hour for electricity across the US.
“You might not save a crazy amount of money, but you’re not paying more,” Persaud said. “It’s a way to go solar without paying more.”
Are free solar panels a scam?
The short answer is no. But with any big home purchase, there are always going to be unscrupulous people trying to take advantage of vulnerable homeowners. Again, it’s possible to install solar with no upfront cost, but the system is never completely free. So here’s how to avoid any scams that might come your way.
“Always, always, always get two to three different quotes,” Persaud said. Don’t trust a single company making a big, flashy promise.
Don’t let a salesperson rush your decision. “Whatever they’re saying, it’s not urgent. Solar is not going away. The federal credit is not ending anytime soon,” Persaud said. “There’s literally not a rush to do it.”
Be wary of big commissions. Solar salespeople are compensated based on how much they sell, and there’s no regulation on how big their commission can be. “They’re going to try to charge as much as possible,” Persaud said. Again, this is why it’s important to compare quotes. And don’t be afraid to negotiate.
Finding a reputable solar company
If you haven’t been approached by a salesperson or lured in by a social media ad, you might be searching for a solar installer on your own. You can start with CNET’s curated list of best solar companies, but to find a reputable company, talk to your friends and neighbors who have solar, and consult online reviews to narrow down your list. You can also check for licenses or certifications, and be sure to ask the installer as many questions as you need to feel comfortable.
Other solar panel financing options
If you decide to skip the “free” solar offers — in the form of solar leases and power purchase agreements — there are plenty of other ways to finance solar panels.
Cash: You’ve got the funds to pay upfront for the purchase and installation of a solar system? Great! This will grant you all the benefits of solar, including energy savings, tax credits and a higher home value. The only potential drawback here is that since you own the system, you’ll be responsible for its maintenance.
Home equity: Home equity loans and lines of credit, or HELOCs, are tools that use your home as leverage for a loan. It’s best to avoid them unless you’re sure you’ll be able to pay off the debt. Failure to do so can result in your home being foreclosed on. That said, if the math of potential energy savings works in your favor, it may make sense to leverage your home’s equity to finance a solar system.
Solar loans: Many lenders now offer loans specifically designed for solar installations.This gives you a similar setup to a solar lease — here you’re paying off the system in monthly increments — with the added benefit that you’re working toward ownership of the panels. It also allows you to take advantage of net-metering and any tax incentives your state might offer.
Other loans: Some people opt for personal loans or other types of credit to finance their solar systems. Just make sure the interest rate isn’t too high, because that can eat away at the savings generated by solar in the first place. In some states, like New York, there are also “on-bill recovery” loans that allow you to pay for solar panels by leveraging the savings on your electricity bill.
How to reduce the upfront cost of solar panels
If you’re ready to commit to a solar system for your home, but you’re still worried about its cost, there are some ways to reduce the financial hit. Most importantly: Get quotes from multiple companies.
“Solar companies will come to your house, they’ll do site assessments, they’ll sit down in your living room and walk through different options,” Michaud said. “That’s valuable. Engage with folks and understand what’s out there and what exists.”
There are also less obvious, more complex ways to save on the upfront costs of solar panels. These include:
Community solar: Instead of putting panels on your roof to enjoy direct energy savings, you can opt to invest in community solar projects if your state allows. Typically these are nearby solar farms, and the energy they generate can reduce your energy bills. Community solar is a great option for people who rent their homes, those who can’t afford solar or those with restrictive HOAs or who otherwise can’t install solar.
Solar co-op: Various organizations exist across the country to help people pool their resources to reduce the costs of solar. These programs can provide lower prices than buying solar on your own, like buying in bulk.
Efficiency upgrades: Before reaching for the solar panels, look at the rest of your house. “Solar is an exciting type of infrastructure, but if the ultimate goal is to save money on your electricity bills, I encourage homeowners to think about efficiency upgrades first,” Michaud said. “Those could include insulation, upgrading and replacing windows or other things that are maybe less fun but can help you realize savings immediately and lower costs. Once you’ve done those efficiency retrofits or upgrades, maybe solar is a good idea.”