The answer is no, free solar panels are not exactly free.
Is it true what the market says about free solar panels?
Free solar panels are not entirely true. You may have seen or come across advertisements from some companies in the market that advertise to offer free solar panels. Although such advertisements are not exactly a scam, the use of words like free solar panels is extremely misleading to consumers, so we need to be careful in identifying them before signing a contract.
2.What are free solar panels?
2.1 What is the essence of free solar panels?
The essence of these free solar panels is that the energy company will install solar panels on the user’s roof and does not require the user to pay any installation or subsequent maintenance costs, but the user needs to sign the relevant solar lease agreement or power purchase agreement with the company. These agreements state that the solar company retains ownership of the solar panel system, and when you use their panels, you have the option of either paying a fixed monthly lease fee, or paying the company for the electricity produced by the panels. This is equivalent to you leasing a solar panel from these energy companies or rather, the energy company uses your roof to generate solar power then sells the power to you at a lower price.
2.2 What is a solar lease agreement
A lease agreement is an agreement between the user installing solar panels and the energy company that states that the energy company is responsible for installing the solar panels on the user’s property and that the user is responsible for paying the monthly cost of the electricity generated by using the equipment.
2.2.1 What are the advantages of signing a solar lease agreement?
First of all, signing a solar lease agreement can help you avoid the initial cost of installing solar panels, and the company will be responsible for all subsequent repairs and replacement parts for the solar panels. At the same time, entering into a solar lease agreement requires a lower overall credit score, making it easier for you to meet the requirements for entering into an agreement with an energy company.
2.2.2 What are the drawbacks of entering into a solar lease agreement
First and foremost, the most important drawback is that the solar panels are not owned by you personally, but by the energy company responsible for the installation. One of the things to be aware of is that a solar lease agreement can last for up to 25 years and the monthly payments will gradually increase. If you want to terminate the agreement early while it is still in force, you will have to pay a hefty penalty, and if you want to sell the house while it is still in force, you will need to make sure that the new owner of the house accepts the continuation of the agreement.
2.3 What is a Power Purchase Agreement?
When installing solar panels, the customer enters into a power purchase agreement with the energy company, whereby the energy company is responsible for installing the solar panels on the customer’s property and the customer pays for the electricity generated by the solar panels.
2.3.1 Advantages of Power Purchase Agreements
First of all, in order to make PPAs more attractive and to get more customers, these solar companies set the cost of purchasing electricity under the PPA at a lower price than the local electricity price. It does not require you to pay a fixed fee, but only a monthly payment for the power generated by the solar panels on your roof. So during the winter months or other times of the year when there is less electricity being generated, you will not be required to pay a fixed monthly fee as you would with a solar lease agreement.
2.3.2 What are the disadvantages of signing a power purchase agreement?
The same disadvantage of a power purchase agreement as a solar lease agreement is that the contract is for a longer period of time, and you face higher penalties if you want to end the agreement early. At the same time, the price of electricity generated by solar panels is not constant, it may increase depending on the local conditions, and you will need to pay more for the electricity produced by the solar panels. Another thing is that signing a power purchase agreement may make it harder to sell your home.
2.4 What is the extra cost behind getting free solar panels?
While getting free solar panels is appealing, there are some hidden costs that we need to consider before actually signing an agreement with a solar energy company.
First, signing an agreement with an energy company can deprive the user of benefits that would be available to them if they actually needed to purchase solar cells, such as federal tax credits, partial solar rebates, and more. Second, if the solar panels on your roof produce more electricity per month than you need for your home, all of that excess electricity will go to the energy company and will not provide any financial benefit to you. Finally, because the agreement states that the solar energy company installs the solar panels at no upfront cost to the customer, this may result in some unscrupulous companies using poor quality solar panels to pass them off as good, thus reducing the efficiency of the energy conversion, which will result in losses for you.
3. Is there any other way to get free solar panels?
The answer is no. Although we can’t get free solar panels, there are many incentives issued by the government that can save us a lot of money on our purchase. The following are some of the incentives that are currently available.
3.1 Incentives offered by the government for the purchase of solar panels
3.1.1 Access to Tax Credits
The Solar Investment Tax Credit, also known as the Federal Solar Tax Credit. Since its enactment in 2006, the Solar Investment Tax Credit has been the primary incentive for residents to utilize solar energy installations, and after 2024, this incentive allows users to claim thirty percent of the cost of their solar panel equipment and installation as a credit on their federal tax bill, which can be applied to any equipment used and installed prior to 2032. Depending on where you live, you may also be eligible for additional tax credits from your state. It is important to note that if you have a power purchase contract with a solar energy company, the credit will go to the owner of the system, which is the energy company.
3.1.2 Developing Incentives on SRECs and Performance-Based Incentives
SREC refers to Solar Renewable Energy Certificates, which will reward customers who own solar systems and use them to produce electricity. For every megawatt-hour of electricity your system produces, you earn one SREC, and the SRECs you earn can be sold for cash on the SREC market.
Performance-based incentives mean that when you produce a certain amount of clean electricity, you qualify for a performance incentive. Your utility is required to reward you based on the power, whether it ends up being used by you or sent back to the main grid.
3.1.3 Other Local Incentives
Each state has different incentives for installing solar panel systems, such as getting a direct price break on the purchase of solar panels, providing property tax relief for solar panels installed by the customer, and avoiding the installation of solar panels from increasing the value of the home, which would raise taxes.
