Installing solar panel systems is expensive, and any adverts on social media and Google that offer “free solar panels” interest many homeowners.
Is the government offering free solar panels to interested citizens? While you see common ads all over the internet of companies promising free solar panels programs from the government, the truth is, there is no such this as free energy.
Most advertisements claiming to install a solar system on your roof at no upfront cost are from private companies. But what do free solar panels or a no-cost program mean?
In this blog post, we will address this question. We also consider how you can benefit from government incentives and tax rebates to lower your solar panel cost.
If you wonder how many solar panels you need to power your house, I wrote a whole article that I encourage you to read.
Companies Offering Free Solar Panels Programs: What Do They Mean?
If there is no such thing as free lunch from solar panel companies, why do they claim to provide such a deal? Most of the time, an advert with the terms no-cost solar program or free solar panels refers to solar power purchase agreements (PPAs) or solar leases.
These agreements mean that you allow the solar company to install solar panels on your roof without an upfront cost. However, the company will charge you for the electricity produced from your roof at a reduced price.
Most programs can help you save money by reducing your electricity bill, but not all. Therefore, do your due diligence before settling for a solar lease company and compare all available options near you.
When solar company salespeople or marketers talk about free solar, they mean PPAs or solar leases that finance the initial cost of installing solar panels.
Under these agreements, you provide solar companies with the roof to install the panels. They will cover the purchase price, installation, and maintenance cost, which means the company owns the system, not you.
The solar energy from the panels is not part of the “free program” because you pay for the electricity the system produces. In other words, you provide the premise where the company installs the power plant and buy the by-products of the plant.
Are There Government-Free Solar Panels?
The shortest answer is no. The government does not provide free-solar panels. If you choose the PPAs or solar leases, you will miss out on government incentives and financial tax benefits of renewable energy. I am saying that solar leases and PPAs are bad. No. These solar programs can still save money over time.
If you want to benefit from the federal and local government rebates to help offset installation costs, you can use cash investment or finance the panels using personal loans. Different states have different local programs you can explore to reduce your investment cost.
Can solar leases help me go solar with a less upfront cost? Anybody looking for free solar or to install solar panels with limited upfront cost should consider solar leases. Many people want to go solar to save money, reduce/eliminate electricity bills, and protect the environment.
But since environmental benefits are similar regardless of who installs the panels, it is good to focus on the cost-benefit analysis.
Although the solar industry has a good name as a champion of the environment, it is like any other industry, with players expecting to make a profit. Companies providing solar leases profit by selling electricity to you, although at a relatively lower rate than the normal cost.
The solar industry has many players offering solar leases, so you can shop to establish which company has the best deal. You could save more money with some companies than others, so take your time to examine different offers.
Acquiring Free Solar Panels Through Solar Loans
You can finance this project with solar loans if you want free solar panels. Solar leases made it possible for anyone to go solar, provided they have a roof. You do not need cash in the bank or deep pockets to purchase and install a solar system.
Solar leases provided help to many households when solar panel prices were unattainable by many. The leases removed barriers, allowing homeowner to finance their projects stress-free.
Today, solar systems are more affordable than they used to be. Besides solar leases, homeowners have access to several financing options. One such financing option is the solar loan, which allows you to install the panels on your roof at zero cost.
The advantage of a solar loan is that it allows you to own the system, thus providing you with the benefits of both worlds.
Therefore, before settling for any ‘free solar panel’ adverts, you see online, ensure you know what they offer. Consider various options, evaluating their cons and pros to make a better decision.
Let’s consider the three options: cash purchase, leases, and loans, to help you determine a good decision.
Solar Purchase Options: Cash Vs. Loans Vs. Leases
We have established the difference between solar loans, leases, and purchase agreements. Now let’s evaluate their return on investment in the table below.
Your return depends on how you choose to finance your solar panels.
|Financing option||The initial cost||Eligibility for govt rebates and incentives||Savings|
|Solar lease or PPA||Zero||No||Low|
From the table, cash purchase has a high upfront cost but presents the highest savings because you can access government rebates and incentives.
On the other hand, PPAs and solar leases have no upfront costs, but they also have low savings. You are not eligible for government rebates or incentives because the solar panels are not yours.
1- Cash Purchase
If you have money or have saved for a solar panel system, it is better to purchase the system in cash than any other option. Purchasing solar panels in cash gives you value for 25 years.
Although the initial cost is high, you will reap financial benefits in the long run. The cumulative savings on electricity bills for 25 years will outweigh the upfront cost, thus resulting in a positive return on investment.
Furthermore, with cash investment, you are eligible for tax credits and incentives from state and local governments.
2- Personal Solar Loan
If you want a positive return on investment for your solar panel system, the solar loan is your second-best option after cash. You will not incur an upfront custom, but the loan interest will eat into your energy savings for the first seven years until you clear the loan.
Your solar panels’ payback period will depend on the size of the system, upfront cost, solar loan interest rates, and energy efficiency. But after you have paid off the loan, you will get 100% energy savings.
3- Solar Lease And PPAs
You can also explore solar leases and PPAs if you are looking for “free solar panels.” Most solar panel companies offering solar leases or PPAs use zero upfront and maintenance costs as their selling points.
Nevertheless, this option has fewer savings because the solar companies take part of energy savings from the monthly payment you make. By the end of the lease or warranty period, the PPA will have eaten up more than half your savings.
Based on the above analysis, most homeowners choose the first and the second options. If you decide to go the cash way, you can still reduce the upfront cost and increase your return on investment.
Let’s consider some ways to do so.
Lowering Your Solar Panel Upfront Cost With Government Incentives
Going for a ‘free solar panel’ or a no-cost solar program means that the solar system on your roof is not yours- it belongs to the installer. The agreements will likely benefit the installer more, allowing them to claim the federal tax credit and local incentives for the panels on your roof.
Here is how you take advantage of these incentives and reduce your upfront cost in a cash purchase.
1- Income Tax Credit And Incentives
If the high upfront cost has kept you on the fence from investing n solar energy, you can take advantage of the government’s financial incentives to reduce it. The government offers Federal Tax Credit (ITC) for all U.S. homeowners.
This incentive allows homeowners to claim at least 30% of the total cost (purchase and installation cost). Homeowners can claim this credit if the system is installed and operational before December 31, 2032.
But if you go with PPA or a no-cost solar program, your installer will claim the credit. So, for instance, if the panels on your roof cost $15,000, the federal tax credit would award $4,500 to the installer.
This money-back could have been yours if you owned the system. But with PPAs, you will miss this key financial benefit for renewable energy.
2- State Or Local Incentives
After claiming the 30% federal tax incentive, you can apply for a 30% discount on your solar panel cost from state-level rebates. What I am saying is that if you purchase solar panels in cash, you can benefit from state and federal incentives, thus helping to offset the upfront cost.
3- Some States Have a Tax Credit For New Solar Installations
You can also take advantage of net metering, where the utility company compensates you for the electricity you supply to the grid.
These credits will help lower upfront costs, making solar panels cheaper than you think.
What to read next:
- What is the Average Cost of Solar Panel Installation? (This much!)
- What Are The Solar Energy Advantages and Disadvantages?
- 11 Best Solar-Powered Led Strip Lights For Better Decoration.
Although there are no free solar panels from the government, you can reduce high upfront costs by claiming various federal and state tax credits. The tax credits are available for those who purchase and install solar panel systems in cash or through personal loans.
However, if you choose no-cost solar programs like solar leases and PPAs, the installer will claim the federal tax rebate and incentives because they own the solar panels on your roof. You may not save much with these financing options because the installer takes part of your savings through a monthly payment.
Therefore. Before you choose a solar panel financing option, take time to evaluate the benefits of each option.