‘Free’ Solar Panels Are Not Free: What You Need to Know
If a company is advertising “free” solar panels, it may not be a scam — but it is misleading.
Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.
Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.
You have probably seen ads from solar companies offering “free” solar panels. While these offers are not necessarily scams, they can be misleading. Although the company will not charge any money up-front for solar panels for your home. you must agree to pay a monthly fee for using their solar panels. In other words, you’re leasing 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 upfront cost of a solar panel installation that yield greater savings in the long run. For example, you can apply for clean energy incentive programs or you can use a low-interest loan to finance your project.
If you’re interested in financing, you can click below to meet with a solar installer the Guides Home Team recommends.
- Why Are Companies Telling Me Solar Panels Are Free?
- Can You Get Free Solar Panels From the Government?
- How To Reduce Upfront Costs
- How To Choose a Reputable Solar Company
- The Bottom Line
- FAQ
Packages include 24/7 system monitoring 25-year warranty guarantees power production, product performance and workmanship Installation process is handled 100% in-house
Offers a range of financing options 24/7 customer service line Panel insurance protects against theft and damage
What are the solar incentives, rebates, and tax credits available in California?
If ‘Free’ Solar Panels Aren’t Free, Why Are Companies Telling Me They Are?
If the offer doesn’t fit in any of the above categories, it may be a scam.
What Is a Solar Lease?
A solar lease is exactly what its name suggests. The provider installs solar panels at zero upfront cost, and you sign a contract wherein you agree to rent the system during a specified period (typically 10 to 15 years).
This agreement makes sense if the solar lease is priced lower than your monthly electric bills, but you can actually lose money if the lease is priced higher.
What Is a Power Purchase Agreement (PPA)?
You may be offered a solar power purchase agreement, or PPA. In this type of agreement, the solar panels are still installed on your roof at no cost to you. However, instead of paying a fixed monthly fee like in a lease, you are charged 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 lower than local electric tariffs. Read the agreement carefully — some PPA contracts may try to charge you more.
What Are Government Solar Programs?
Government-subsidized solar programs do exist, but they are rare and only available for low-income households. These programs are normally managed by government agencies, regulated utilities or nonprofit organizations. Private companies may participate as approved installers, but they are subject to stringent guidelines.
To summarize, “free” solar panel offers 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 or PPA and make ongoing payments to the solar company.
Can You Get Free Solar Panels From the Government?
Generally speaking, you can’t get free solar panels from the government. Some government agencies have created programs that subsidize solar panels, but they are only available for low-income households that meet certain requirements.
The agency in charge of 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.
The Disadvantaged Communities Single-Family Solar Homes Program (DAC-SASH) in California is one example of a government program that offers an incentive of 3 per watt of solar capacity. According to the Center for Sustainable Energy. the average price of home solar installations in the U.S. is 3 to 5 per watt, which means this program could potentially cover 100% of system costs.
How To Reduce the Upfront Cost of Solar
There are many ways to reduce the upfront cost of a rooftop solar system without having to sign a lease or PPA contract. The financial incentives available for solar panels in the U.S. include:
- State and federal tax credits
- Sales tax and property tax exemptions
- Solar rebate programs
- Solar renewable energy certificates (SRECs)
These solar incentives can be combined, making your photovoltaic (PV) system much more affordable. When you get a solar lease or PPA, all of these benefits are claimed by the company offering you the service, as they are the legal owner of the system. So, as the homeowner, you aren’t able to cash in on these incentives.
Tax Credits
The solar investment tax credit (ITC) has been a major incentive for U.S. solar installations since 2006. This incentive is also known as the federal solar tax credit, and it gives you back 30% of project costs as a tax deduction.
Depending on where your home is located, additional tax credits may be available from your state government, and you can capitalize on both incentives. For example, New York offers a 25% solar tax credit for homeowners. up to a maximum amount 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, which are slightly different from tax credits. In this case, solar panels are exempt from taxes that would normally apply to other assets.
- You may get a sales tax exemption, which represents an immediate discount when purchasing solar panels. It ensures you won’t pay your local sales tax on solar panels and mounting equipment.
- Local governments may also offer property tax exemptions for solar panels, mandating the increase in home value resulting from the installation is not taxed. For example, a 500,000 home that gets a 25,000 solar panel system will still be taxed based on its 500,000 value.
Rebates
Solar rebates are direct cash incentives for installing photovoltaic systems. These programs are normally managed by government agencies or local utility companies. Solar rebates and tax credits can be combined, but you must subtract the rebate first and then calculate the tax credit based on the net system cost.
Other Ways To Reduce the Cost of Solar
Solar renewable energy certificates (SRECs) are performance-based bonuses. They don’t reduce the cost of your solar energy system, but they offer additional cash flow beyond utility bill savings.
Each state has its own regulations surrounding SRECs, so depending on where you live, you may not be eligible to earn them.
In states that have SRECs, homeowners typically earn one SREC for every 1,000 kWh of solar energy their system produces. These certificates can be sold through a specific marketplace to energy companies and other organizations with a legal requirement 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 net costs after subtracting incentives. With this strategy, you can go solar at a small upfront cost without being bound to a lease or PPA.
What you need to know
Whether you’re looking to install solar panels on your home or your business – we can help. We’ll answer some of the most common questions about solar, provide you with important resources, and help arm you with the knowledge and information you need to talk to solar contractors with ease. Not sure you’re ready just yet? We can help with that, too. Learn about the many benefits of solar.
Are you a solar installer? Visit our Renewable Energy Installers section for helpful tips and resources.
Sure, Florida might be the “Sunshine State” but solar power works great here, too. And while it’s true Oregon is not known as one of the country’s sunniest spots, we do get more sunshine than Germany, which is the world leader in solar energy generation. You can install solar panels on your rooftop or you may prefer a ground mount solar system. Talk to your solar contractor about which method is best for your home or business. Here are some additional location tips you should consider:
Sun and shade
Southern exposure provides maximum output, although east or west orientation may work also. There should be little or no shading year-round for optimal performance. This applies now and in the future, so consider surrounding trees or nearby construction before installing. Talk to your solar contractor for more details.
Most PGE lines can easily support new solar projects; however, a few areas have limited capacity to connect solar without significant changes to the feeder or the substation. Small residential and business projects can still usually be accommodated but may require design changes to protect grid safety and reliability.
Your space
Your PGE bill shows how many kilowatt-hours (kWh) you use both monthly and daily. You and your solar contractor can use this to determine what size solar system will meet your electrical needs. Note, the output of a solar system varies depending on weather, season, and time of day. This is also a great time to consider battery storage and resiliency.
There are a lot of expenses associated with a new solar power system, but you can cut your net costs by thousands with incentives and federal tax credits. Additionally, Net Metering rewards you with ongoing credit for the power you generate. Apply for Net Metering online prior to starting your installation project.
Pennsylvania Solar Incentives
Pennsylvania’s solar price drop over the last five years. 1
Solar power in Pennsylvania is more cost-effective vs. other states. 2
The U.S. power grid doesn’t have the strength necessary to handle our current and future electricity demand. This is causing longer and more frequent power interruptions. 4 In Pennsylvania alone, power outages affected more than seven million residents from 2008 to 2017. 5
Choosing a Pennsylvania solar company like Sunrun to install solar panels with battery storage is a cost-effective way to increase control over electric bills and keep your home powered through blackouts. As the nation’s leading home solar and battery storage company, 6 we work so you can create and store your own Pennsylvania solar energy at home while ensuring you get the most benefits possible from your state’s solar incentives.
Understanding Solar Incentives
Inflation Reduction Act (IRA)
Qualified homeowners with home solar could be eligible for a tax credit of up to 30% against the cost of the system.
Solar Renewable Energy Credits (SRECs)
Compensation per kilowatt-hour (kWh) produced by the system. (Based on market value.) 8
Philadelphia Solar Rebate Program
Philadelphia residents may qualify for a 200 rebate for every kilowatt (kW) of solar power installed. 9
Solar Renewable Energy Credits (SRECs)
Pennsylvania is one of the few states that offers an SREC program. SRECs, also known as Solar Renewable Energy Certificates (RECs), let you earn credits for every kilowatt-hour (kWh) of solar energy your system creates. Each year, you could make money by selling your solar credits in the SREC market. 8
Philadelphia Solar Rebate Program
If you live in Philadelphia, you may qualify for a 200 rebate for every kW of solar power installed. This rebate value is for residential solar installations. 9
We’re Here to Help You Change the Way You Power Your Life
Interested in getting these benefits with a new solar installation in Pennsylvania? You’ll be happy to know that our home solar and battery storage plans in Pennsylvania start at down. What’s more, with Pennsylvania Electric Company (PECO), PPL Electric Utilities, and other utility companies’ net energy metering (NEM) programs, you could earn credits on your bill for the excess solar energy you create. 11,12 Net metering in Pennsylvania can give you more control over future electricity bills.
Whenever you’re ready, use our Product Selector or request a free quote to get one-on-one service from our expert Solar Advisors. Sunrun is one of the best solar installers in Pennsylvania that you can team up with, so rest assured, you’re in good hands.
Frequently asked questions
Maintenance and repairs
Do I need to do any maintenance? Little maintenance is required with a solar electric system other than washing the panels a few times a year to help keep the system operating at its best.
Does having solar on my roof mean I am off the grid and not connected to electricity from SMUD? No. Having solar on your roof does not mean you are off the grid. While it is possible to design a system to produce all your power and enable your home to be off the grid, we do not recommend that you install a system that large.
What happens at night when the sun is down? Do I still get electricity? At night, or on very stormy days, a conventional solar electric system goes dormant. During these dormant times, you will get power from the electricity grid. When the sun comes back out, the system resumes producing energy. If you don’t use all the electricity that you are producing at that moment, you can sell the excess electricity generated back to SMUD.
What happens at the end of my contract if I’m in a lease or PPA ? Contact your solar provider to discuss the terms and conditions of your lease or PPA.
Site and product selection
How can I tell if my house will be a good fit for solar? The typical home will need to have a southern-facing roof with little or no shade. East and west facing roofs also are viable, but their output is decreased by 12%-15% or more over the course of a year. A perfect slope for your roof would be 25% to 30%. While a solar electric system will produce power at a wide variety of slopes and orientations, it is important to try to maximize your output in relation to the size of the system. The best orientation is usually south, then west, then east. Of course, shading can impact all of those decisions.
How can I calculate the size of the solar electricity system I would need? The size of your system should be based upon your electricity usage patterns, not the size of your roof. There are many variables that determine your system’s production, for example slope, orientation and shading. SMUD will allow your system to be sized up to 110% of the last 12-month kWh consumption or up to 120% for customers on the Solar and Storage Rate (SSR) if battery storage is added at the premises. For more information, contact the solar interconnection team. Visit battery storage for homeowners to see if battery storage is right for you.
Can I increase the size of my solar electricity system?
For customers on the Solar and Storage Rate (SSR), SMUD will allow your system to be sized up to 110% of the last 12-month kWh consumption or up to 120% if battery storage is added on the premises. For existing NEM1 legacy customers, if the system size is increased by more than 10% of generating capacity originally approved, or 1 kW, whichever is greater, or exceeds 110% of generating capacity originally approved, you must move to the SSR rate schedule and submit a new Interconnection application.
Besides the basic warranty, price service questions, what are the other questions I should ask? Always try to get an idea of what is going to be produced by the system. While it is impossible to predict the weather and its impact on the output of your system, there are formulas to determine expected output.
Will my roof leak or do I need to re-roof my home? It’s not often that your roof leaks. Newer mounting systems have improved resistance to leaks. Your solar electric system will be on your roof for at least 20 years so your roof should be in a condition to last that long.
Can I put it someplace else on my property other than my roof? Yes, many properties have large lots or acreage to accommodate ground-based systems or carports with solar installed.
I am buying a new home and solar is an option. Should I buy the solar? Purchasing solar when you buy a new home can be one of the most cost effective ways to invest in solar. The cost that solar would add to your mortgage payment is almost always less than the savings you would get on your monthly SMUD bill.
Does SMUD require a building permit if I install my own system? Yes. SMUD requires a building permit for all installations, whether installed by a homeowner or contractor.
I am re-roofing my house, can I install integrated solar tiles? Integrated solar tiles made to blend in with concrete tiles are mostly used in new construction. For more information regarding solar tiles, contact your contractor.
Will having a solar system help in the sale of my home ? There are many factors that go into a solar system. Contact your realtor for more information.
Cost
Will a rooftop solar electric system lower my bill? Yes, solar electricity lowers your bill, but you must still factor in the upfront cost of the system.