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Are Free Solar Panels Actually Free?

Are Free Solar Panels Actually Free?


You may have seen advertisements from solar installers touting free solar panels and wondered if it's too good to be true. Indeed, instincts often ring true - rarely do things come without strings attached. These appealing "free solar" offers typically entail specific financing arrangements where homeowners forgo ownership of the solar panels and instead pay for the energy they utilize. This is where it’s important to decipher the true intentions behind companies offering free solar panels.

Fortunately, our team at Solar Me is here to offer clarity and guidance. Read on, and we'll outline what's at stake before you choose free solar panels. Rest assured that understanding the nuances of these offers is crucial, and partnering with a reputable solar power company can illuminate the path forward to better savings and true energy independence.

Free Solar Panels for Homes: Is It a Scam or Not?

Free solar panels for homes in New Jersey may sound enticing, but the reality is far from a no-cost endeavor. When solar companies advertise free solar panels, they're typically referring to financing options like solar leases and power purchase agreements (PPAs), which don't require upfront payments for the panels but entail ongoing payments to the solar company. Similar to leasing a car, these arrangements don't confer ownership of the solar system to homeowners.

Instead, they make monthly payments to the solar provider in exchange for utilizing the panels and benefitting from net metering to reduce electricity bills. While the solar company reaps incentives such as the federal tax credit and Solar Renewable Energy Credits (SRECs), homeowners are left footing the bill for the energy generated by the panels. Despite the appeal, it's important to understand the intricacies of these financing options and consult with a reputable solar power company to determine the most suitable path forward.

free solar panels for homes

Can You Get Free Solar Panels from the Government?

While the government doesn't offer free solar panels outright, it does provide various incentives to make solar energy more accessible and affordable for homeowners. One of the most significant incentives is the Federal Solar Investment Tax Credit (ITC), which allows the owner of a solar panel system to deduct 30% of the installation costs from their federal income taxes. However, it's essential to note that in order to qualify for this tax credit, you must be the owner of the solar panels installed on your property.

This distinction becomes particularly relevant when considering options like solar leases or power purchase agreements (PPAs), where the installer retains ownership of the system. Understanding the nuances of these incentives and ownership arrangements helps homeowners maximize the benefits of solar energy while navigating government programs effectively.

Solar Investment Tax Credit

The Solar Investment Tax Credit (ITC) stands as a pivotal incentive for those considering the transition to solar energy. This federal program offers a substantial credit that allows homeowners to claim 30% of both equipment and installation costs toward their federal tax bill. As of 2024, this incentive remains a driving force behind the adoption of solar power, with the credit applicable to systems installed and operational before December 31, 2032.

However, it's important to note that if homeowners choose arrangements such as "no-cost" solar programs or power purchase agreements (PPAs), the installer becomes the recipient of this credit instead. Consequently, homeowners forfeit the opportunity to leverage one of the primary financial advantages of investing in renewable energy which highlights the significance of ownership considerations in solar installations.

Solar Renewable Energy Credits (SREC) and Incentives Based on Performance

Solar Renewable Energy Credits (SRECs) and incentives based on performance offer additional avenues for homeowners to benefit from their solar energy systems. In states with solar carve-out mandates, SRECs play a vital role in promoting solar energy generation. Homeowners earn SRECs for every megawatt-hour (MWh) of electricity their system produces, which can then be sold on SREC markets for monetary compensation. Aggregators or brokers facilitate this process to provide homeowners with the opportunity to monetize their solar generation.

Additionally, performance-based incentives reward homeowners for their solar energy production, regardless of whether the electricity is consumed onsite or sent back to the grid. These incentives provide further encouragement for homeowners to invest in solar energy systems and contribute to the transition towards renewable energy sources.

Solar Renewable Energy Credits (SREC) and Incentives Based on Performance

State and Local Incentives

State and local incentives, including New Jersey Solar Incentives, can help make solar energy more accessible and affordable for homeowners. These incentives often include tax credits, rebates, and net metering programs, but the availability and specifics vary from one state or locality to another. State net metering programs, for instance, enable homeowners to receive compensation from their utility companies for surplus electricity fed back into the grid.

Additionally, certain cities and counties may offer direct rebates to alleviate the upfront costs associated with installing solar panels to further incentivize homeowners to embrace renewable energy solutions.

How to Go Solar with No Upfront Costs

For those seeking to adopt solar energy without the burden of upfront costs, options such as solar leases, solar loans, and community solar programs offer viable pathways. Despite solar energy’s appeal, it's essential to recognize that the solar industry operates within a for-profit framework which underscores the importance of thorough research to secure the most advantageous terms.

Sign a Solar Lease

Signing a solar lease can offer homeowners a convenient and affordable pathway to solar energy adoption. With a solar lease, homeowners pay a fixed monthly fee to the solar lease provider for the electricity generated by the solar panels installed on their property. This fee is typically lower than the rate charged by traditional utility companies to help provide savings on electricity bills.

One of the pioneering companies in the solar lease market was SolarCity, although numerous competitors have since emerged. Solar leases were instrumental in democratizing access to solar energy, allowing homeowners without substantial upfront capital to participate in the renewable energy revolution.

Sign a Solar Lease

Take Out a Zero-Down Solar Loan

In today's evolving solar landscape, taking out a zero-down solar loan presents an attractive alternative to traditional financing methods. Unlike solar leases, which entail ongoing payments to a third-party owner, zero-down solar loans combine the benefit of minimal upfront costs with the advantage of system ownership.

While some solar loans may carry higher interest rates, they offer homeowners the potential for significant long-term savings compared to leases. As solar technology becomes more affordable and financing options diversify, zero-down solar loans emerge as a compelling solution for homeowners looking to harness the benefits of solar energy while keeping system ownership.

Subscribe to a Community Solar Farm

Subscribing to a community solar farm offers homeowners an accessible and hassle-free way to benefit from solar energy without the need for on-site installations. Typically, signing up for a community solar farm is free, and cancellation is also free. Participants pay for the electricity generated by their share of the solar farm, usually at a discounted rate compared to traditional utility rates.

While the savings may be lower compared to owning or leasing a solar system, community solar farms offer an attractive option for renters and homeowners alike who wish to reduce their carbon footprint and lower their energy costs without the commitment of installing equipment on their property.

What Is the Best Financial Option to Install Solar Panels?

When deciding on solar panel installation, it’s important to balance financial considerations with environmental benefits. There are various financing options available, from cash purchases for optimal returns to leases offering peace of mind sans upfront costs. Our team at Solar Me can help you understand each option's nuances to make an informed decision.

Financing Option Upfront Cost Savings Eligibility for Rebates & Incentives Who Pays for Maintenance
Cash Purchase High High Yes Homeowner
Personal Loan None / Low High Yes Homeowner
Home Equity Loan Moderate to High High Yes Homeowner
Home Equity Line of Credit (HELOC) Low to Moderate Moderate to High Yes Homeowner
Solar Leases and PPAs None Low No Solar Installer

Cash Purchase

A cash purchase of a rooftop solar panel system offers the highest value over its lifetime. Despite the initial cost, homeowners can benefit from incentives, tax credits, and long-term savings. Additionally, owning the system outright can enhance the value of the home.

Personal Loan

Choosing for a personal loan to finance your solar panel installation offers a favorable return on investment. While the initial cost may be minimal, interest payments gradually diminish energy savings until the loan is repaid. Typically, the payback period spans around seven or eight years, contingent upon factors like system size, electricity costs, and interest rates. After recouping your initial investment, you retain 100% of your energy savings.

Home Equity Loan

A home equity loan, often referred to as a second mortgage, provides homeowners with a lump sum based on the equity in their property. Repayment occurs through monthly installments, alongside a fixed interest rate, akin to the primary mortgage. This financing option allows homeowners to manage both their primary and secondary mortgage payments at once.

Home Equity Line of Credit (HELOC)

Choosing a Home Equity Line of Credit (HELOC) offers homeowners flexibility in financing solar panels. Similar to a home equity loan, a HELOC allows homeowners to access existing equity in their property. Operating akin to a credit card, a HELOC provides a line of credit from which homeowners can withdraw cash as needed to fund their solar panel installation.

Solar Leases and PPAs

Choosing a solar lease or Power Purchase Agreement (PPA) offers the convenience of no upfront costs and minimal maintenance responsibilities. However, these arrangements typically result in lower solar energy savings compared to other financing options. Solar leases and PPAs heavily favor the solar installer, allowing them to claim incentives and receive a portion of the homeowner's savings through monthly payments. You should also be cautious of escalators, which can increase monthly payments over the term and diminish potential savings. While leases and PPAs provide simplicity, homeowners should carefully weigh the long-term financial implications before committing to these agreements.

Solar Leases and PPAs

What Are the Pros and Cons of Third-Party-Owned Solar Systems?

While third-party-owned solar systems offer upfront cost savings, they come with both advantages and drawbacks that you should consider.

The Advantages of Third-Party-Owned Solar Systems

  • Reduced monthly electric bills: With third-party-owned systems, customers can still utilize net metering to decrease their monthly electric expenses. Consequently, despite paying for the system on a monthly basis, the overall cost is typically lower than previous bills.
  • Maintenance responsibility waived: As the installer retains ownership of the system, they assume the responsibility for any necessary repairs or upkeep. It's worth noting that solar panels require minimal maintenance.
  • Absence of upfront costs: Third-party-owned systems eliminate the need for an initial payment.
  • Availability of long-term contracts: Solar companies often offer long-term contracts, with PPAs typically spanning 20 to 25 years and leases typically ranging from 10 to 25 years.
  • Flexibility in end-of-contract options: At the conclusion of the contract, homeowners have the choice to either retain or remove the panels from their property.

The Disadvantages of Third-Party-Owned Solar Systems

  • Reduced long-term savings: Choosing monthly payments results in lower overall savings compared to an upfront cash purchase.
  • Potential hindrance in selling your home: Transferable PPAs and lease agreements can deter prospective buyers, potentially complicating the sale process.
  • Annual payment escalation: Lease and PPA agreements often feature escalator clauses, leading to yearly payment increases. If these increases surpass utility rate hikes, overall costs may exceed non-solar alternatives.
  • Ineligibility for federal tax credits: Homeowners miss out on upfront incentives and tax credits as these benefits go to the third-party system owner.
  • Lack of system ownership: Choosing a lease or PPA means relinquishing ownership rights, resulting in reduced freedom and control over the solar system.

Do Free Solar Panels Save You Money on Your Electricity Bill?

Free solar panels have the potential to significantly reduce your electricity bill. Typically, solar lease and Power Purchase Agreement (PPA) payments are structured to ensure that the cost of solar energy is lower than what you would pay your utility company for electricity. With a solar lease, you'll pay a fixed monthly fee to the solar company, often resulting in substantial savings compared to traditional utility bills. Similarly, PPAs calculate your monthly payment based on the amount of electricity generated by the solar system, offering competitive rates compared to utility electric rates.

However, be wary of price escalators commonly included in PPA agreements, which may lead to yearly increases in solar charges. It's essential to ensure that these escalators remain lower than typical utility price increases to avoid potentially spending more on PPA payments over time than you would on a standard utility bill.

How Much Do Solar Panels Cost in New Jersey?

Solar panel cost in New Jersey varies but generally ranges around $2.95 per watt, slightly surpassing the national average of $2.85 per watt. For a 5 kW system, total expenses typically fall between $12,300 and $16,700 before applying incentives such as the 30% federal tax credit.

Solar Panels Cost in New Jersey
Average Cost $14,200
Highest Cost $29,000
Lowest Cost $12,200

Moreover, the size of the solar panel system is the primary determinant of installation costs in New Jersey. Typically, larger systems incur higher expenses. System capacity, measured in kilowatts (kW), directly influences costs, with a 3 kW system costing approximately half as much as a 6 kW system.

System Size Average Cost Cost After Solar Tax Credit
3 kW $8,700 $6,090
4 kW $11,601 $8,120
5 kW $14,501 $10,151
6 kW $17,401 $12,181
7 kW $20,301 $14,211
8 kW $23,201 $16,241
9 kW $26,101 $18,271
10 kW $29,002 $20,301


While "free" solar panels can offer immediate savings and convenience, they come with drawbacks like reduced long-term savings and limited ownership rights. Solar panels are an investment that should be taken seriously, and to make informed decisions, homeowners should weigh the pros and cons of various financing options.

Partnering with reputable solar companies and thoroughly understanding financing terms is essential. For those considering solar panel installations, be sure to explore financing options carefully and consult with experts to determine the best fit for their needs. Take the first step towards sustainable energy solutions today by contacting Solar Me for personalized guidance and assistance. Founded in 2014, our local solar company is proud to be a pioneer in the industry.

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