There are plenty of advantages when it comes to utilizing solar energy to power our homes. The cost of installing them, however, can often turn many potential solar users away.
A rise in misleading marketing tactics and scams offering “free solar panels” has led many homeowners to believe they can receive a fully functional solar system for free. You may have seen such advertisements, but is there such a thing as free solar panels? Or is there a catch?
The good news is that there are plenty of unique financing structures available to get low or no cost solar panels installed. Read on to find out everything you need to know about obtaining free solar panels for your home.
Why go solar?
As the world seeks concrete ways to fight climate change, renewable energy sources have become more vital. Solar energy is becoming increasingly popular for residential and commercial buildings alike as a reliable source of renewable power.
Today’s solar panels are more efficient than ever before. Solar energy offers plenty of health and environmental benefits that go beyond fighting climate change, from preserving water to reducing the use of fossil fuels.
Not only are they great for the environment, but solar panels can also save their owners money on utility bills over time and even increase the value of a home. The average owner of a solar panel system could easily save an estimated $25,500 to $33,000 on electricity during the lifetime of the system.
However, if you’ve been shopping for the right solar panel system for your home or business, you’ve likely come across advertisements for free solar panels – these ads imply that a company will install a system for free. But is this really the case?
Is it really possible to get free solar panels?
To draw the attention of potential buyers, solar companies often market ‘free solar panels’. Before considering this offer, it’s important to understand what it really means.
The offer of free solar panels does not refer to a company installing solar panels at your house and never charging you for solar power again.
The cost to install a solar panel system can vary widely, depending on the size of the system: a small one can cost as low as $5,000, while large, high-end installations can cost upwards of $40,000. These costs also vary state to state in the U.S.
However, there are a variety of different ways to get solar panels installed at your home without having to pay this hefty cost upfront.
Free solar panels for home use
While it’s unlikely that solar panels will be gifted to you, there are a few ways to go solar with no upfront cost.
Solar panels are often referred to as free because a variety of different solar programs are zero down. This means that the solar panels are installed with no upfront cost, and then the owner pays for the use of the solar panels each month.
The reason this is so cost-effective (and ends up being free in the long run) is that your monthly payments are expected to be much lower than your previous utility bills when the grid supplied your electricity.
There are a couple of options for going solar without paying large sums of cash upfront. And, with the right program, your monthly repayments will be lower than your previous energy bills.
Solar leases and power purchase agreements
There are two primary agreements that homeowners can pursue to pay zero upfront costs on their solar panel systems. This can typically be achieved through Power Purchase Agreements (PPAs) and solar leases.
With a PPA, an energy company installs a solar system on your rooftop and sells you the energy that you use on a per-kWh price.
Solar leases are similar in that the energy company carries out the installation, but your fixed monthly fee is based on an estimate of the amount of power that you will use.
Are solar panels actually free when using a power purchase agreement?
PPAs, along with solar leases, have many zero down plans, meaning that you do not have to pay an upfront cost. All you need to pay is your monthly payments.
So how does it work?
Homeowners enter into a contract with a solar company and rent their solar panels for a period of around 15-25 years. After the panels have been installed on your roof, you then purchase electricity off the utility company.
Do solar leases actually save you money in the long run?
With solar leases and PPAs, there really is no upfront cost to install a solar panel system. In addition, the rate that you pay for energy is usually lower than the rate of typical energy bills. In this way, solar leases can bring in savings in the long run.
Leasees also do not have to pay to maintain or repair the panels, because they are technically owned by the solar company. It’s important to note that solar panels do not technically belong to the consumer in these agreements, but to the company leasing them out.
This situation presents some disadvantages, one of which being that you can not reap the benefits of owning your system such as tax rebates or incentives. These benefits go to the owners of the panels – the solar company.
A PPA or solar lease is usually easier to arrange, although they require a good credit score. It’s important to note, however, that not all states in the U.S. allow PPAs. There are currently fifteen states that allow PPAs.
How do solar loans differ?
Solar loans are considered to be a better financing option when it comes to maximizing the return on investment for a solar panel system. Solar loans allow you to borrow money from a lender to purchase your solar system, which you can repay over time with your energy savings.
Solar loans are generally preferred, because they grant ownership of the system. However, interest payments chip away at energy savings for approximately the first seven years until the loan is paid off.
The amount of time a solar loan takes to pay off ultimately depends on factors like the upfront cost, size, energy efficiency, and interest rates associated with your solar system. After the designated time period, owners get to keep all of their energy savings.
As the proud owner of your solar panel system, however, you can receive all of the tax benefits and incentives available from the government with a solar loan.
What federal and local solar incentives are available?
Once you are approved for a solar loan and own your system, there are several U.S. incentives available to you, depending on the state you live in.
The federal solar investment tax credit is available to all U.S. homeowners and is one of the best incentives to pursue. This credit provides solar panel owners with a 30% rebate on an entire system, which is beneficial if your tax bill is higher than the tax benefits that you could receive through this system.
Additional programs on the state level include Solar Renewable Energy Credits (SRECs) and performance-based incentives.
Eligible houses with solar systems that can produce more than one megawatt-hour (MWh) of electricity can claim SRECs. In certain states, SRECs are sold separately from the physical electricity that your solar panels produce. They are essentially vouchers that prove that the electricity from your solar panels is renewable.
Performance-based incentives are rewards given for producing a certain amount of solar energy. These incentives reward solar owners for choosing renewable energy.
It’s key to note that these federal and state-wide incentives can be combined, meaning you can benefit from both federal and state incentives to help offset the costs of going solar.
What kinds of solar loans are available?
There are a few different kinds of solar loans available to homeowners, depending on where you live.
Secured loans are often more affordable than unsecured loans because they have lower interest rates and are tax-deductible. However, this type of loan (for example, a home equity loan) does use your home as collateral, so you need to be sure that you can pay off the money.
An alternative to a home equity loan is an FHA Title 1 Secured Loan. This has a government guarantee, and instead of repossessing your home if you do not make the repayments, the outstanding amount is paid upon selling your house.
Unsecured loans may cost more, because there can be additional fees, the interest is higher, and you have no access to tax reductions. Similarly to credit cards and other loans, however, your home will not be used as collateral.
The penalty for non-payment is the negative impact on your credit card score.
A Property Assessed Clean Energy (PACE) loan is a straightforward financing option that is available to residents of California, Missouri, and Florida. PACE loans differ from solar loans as they tax assess your property.
Your payments for your solar system will show up along with your other property-related taxes on your tax assessment. Homeowners can benefit from this type of financing because, oftentimes, the first payment is not made for six months.
Your home is the only collateral on this type of loan, and it does not include any of your other assets. This means that they can be a little bit more expensive than other types of solar loans.
All in all, solar loans and leases are zero down. The monthly energy rates are lower than getting your electricity from the grid as usual. If you get a solar loan, once it’s paid off, thanks to the sun, your electricity really is free!
Community solar projects
Community solar is another great option for people who want to utilize solar energy with no upfront cost. Homeowners can simply sign a subscription agreement that says you will subscribe to a community solar project.
Then, the power of that facility will get credited to your electric bill as an offset. These programs are often a win-win, as they allow you to start saving money right away.
Free solar panels for seniors and low-income families
Solar panels are no longer just for the wealthy! Low-income families can also benefit from PPAs/solar leases and solar loans because there are no upfront costs, and savings are made every month compared to paying normal energy bills.
There are some specific low-income solar programs and initiatives happening across the United States which provide additional support for those on low incomes.
These are a few entities that provide free solar panels:
- Grid Alternatives is a non-profit organization that offers several programs, such as:
- Solar Works DC, a program that trains community members to install solar panels. During their training, solar systems are installed for free on the homes of low income residents;
- Energy for All is a program for low-income homeowners in Colorado, California, and Washington D.C.
- Some government grants are available in Boulder, Colorado.
- The California-based Single-Family Affordable Solar Homes Program has installed and interconnected over 9,600 PV systems, and referred over 10,922 low-income homeowners to the utilities’ Energy Savings Assistance (ESA) programs.
- The Mass Solar Loan program in Massachusetts offers discounts on solar loans for low income residents.
Similarly to low-income families, the best option for seniors wanting to go solar is to take out a solar loan or solar lease. Bear in mind that as a senior, if you are not paying tax, you may not receive the tax rebates that make solar loans such a great option.
Frequently asked questions about free solar panels
Let’s dive into the answers for a few of the most frequently asked questions on obtaining free solar panels.
How do solar panels work with my monthly electric bill?
Electricity generated using solar panels is fed back to the main grid. These systems will often use a net meter, which monitors the usage of electricity and keeps track of the units fed back into the grid.
How many solar panels would it take to power a house?
The average home in the U.S needs between 16 and 20 solar panels to cover its electric bills. Three main factors impact how many solar panels you need: your energy usage, the sunlight in your area, and the solar panels you choose.
Is the U.S. government giving away free solar panels?
We found no evidence of a federal program that provides free panels and incentive checks. Some homeowners may be eligible for tax credits related to solar panel installation, but that is not equivalent to a cash payment. We rate this claim False.
Can I sell my home in the middle of my solar lease or loan?
Sometimes, if you are mid-lease or loan, you can run into difficulty when putting your house up for sale.
If you financed your solar PV system with a secured loan, such as a home equity loan, you will need to pay off the rest of the balance before you sell, since your property was used as collateral for the loan.
If you financed your solar PV system with an unsecured loan (one that is not tied to your property), you can sell your home before paying off your loan — but you will still be responsible for paying off the loan.
Can free solar panels be installed on any home?
Not all homes are necessarily suitable for solar panels. If your roof is shaded all year round, you will not generate enough energy to power your home and you may need to purchase additional energy from the grid.
This means that solar power may not be the right option for your home, and you are better off trying to find a green energy provider if you want to power your home with more sustainable energy.
PVWatts is a useful tool that allows you to calculate how much energy your home could generate from solar power.
The final verdict on free solar panels
Although ‘free solar panels’ are not 100% free for most people, it is easier than ever to get solar panels today without paying a penny upfront. Solar leases/PPAs, solar loans, and community solar allow homeowners to install solar panels on their houses with zero down financing or no capital cost.
The bottom line is, although the description of free solar panels is a little misleading, if you take out a solar loan, solar panels are an investment that is sure to pay off over time.
Green Coast is a renewable energy and green living community focused on helping others live a better, more sustainable life.