Free Solar Panels: Why They May Not Be Completely Free

Vault’s Viewpoint

• Know that solar panels are never technically free, but there are ways to market solar panels this way and remain legitimate.
• Lower the cost of solar panels through federal and state programs and tips to offset the cost of the panels over time.
• Avoid solar scams and misleading claims by knowing what to look for in a trusted solar company installer.

Are Free Solar Panels Free?

In short, no. Solar panels are never free, but marketing tactics can make it seem that way. For example, solar companies—or those posing as solar companies—may claim that the federal government provides solar panels for free. As noted by the Department of Energy, there are no government programs that require companies to install free solar panels on its behalf. There are also no programs that offer a free roof or roof repairs.

Solar companies may also claim your monthly lease or loan payments will replace your previous electric bill, but this doesn’t technically make the panels free. However, customers can save money on this option over the years, but it’s not as cost-effective as owning the panels and accessing the ample tax incentives available.

In some cases, solar companies, solar brokers or fraudulent salespeople will also request extensive personal details to reveal whether a customer qualifies for free solar panels. They may use this tactic to draw customers in or, in the worst-case scenario, steal customer data for identity theft.

What Are No-Cost Solar Panel Claims Referring To?

Not all free solar panel claims are scams. There is a roundabout way to justify the concept of no-cost solar systems. For example, the federal tax incentive lowers the cost of installation and solar materials by 30% until 2032. Customers may also qualify for state tax incentives and net metering programs (selling energy back to the local grid) that lower the upfront cost and the length of the payoff period.

Additionally, some companies offer solar loans, solar leases and Power Purchase Agreements (PPAs) that require little to no money upfront. There are plenty of legitimate solar loan offers on the market, but just like finding the best personal loan, it’s critical to consider the details of the loan agreement.

In the case of a lease or PPA, customers don’t own the solar system and cannot take advantage of federal incentives. Often in place of your monthly electric bill, the solar installer charges homeowners a monthly fee to lease the materials. A PPA agreement can be complex and become more expensive over time.

Solar Panel Costs and Savings

Solar panels cost between $18,000 and $29,000 for the average 8kW system or between $13,160 and $19,824 after incorporating the 30% federal tax credit. As we mentioned above, homeowners can also access tax and regional incentives to lower the total cost further. These incentives include:

• Tax rebates up to a certain system size
• Sales tax exemptions
• Property tax exemptions
• State-subsidized loans
• Net metering programs

Solar Panel Payoff Period

Solar systems can “pay for themselves” when you consider the money saved from your previous electric bill. In most cases, the payoff period falls between eight and 12 years. At this point, savings from your electric bill surpass the cost of installing and caring for the solar system. Since most solar systems last 25 years or more, customers significantly increase savings during the second half of their system’s lifespan.

Keep in mind that customers who lease solar panels or sign up for PPA agreements cannot reach the payoff milestone. Instead, solar installers continue to own the solar system and charge customers a monthly fee for the panels. The tactic is one way that a solar installer can justify using “free solar panels” in their marketing since customers don’t pay for the solar panels themselves over their lifespan.

Tips for Lowering the Cost of Solar Panels

There are still several ways to lower the cost of solar panels. Begin by researching the federal, state and regional solar incentives for your area. An experienced solar installer can also help you decipher these incentives. Here are some additional solar cost-saving tips.

• Compare the prices of at least three top solar installers and solar panel brands.
• Install a solar system customized to your daily energy use.
• Hire a roof inspector before installation to choose the best product for your home.
• Ensure that your solar panels have a comprehensive warranty.
• Analyze loan offers closely before signing to ensure long-run benefits.

The Hidden Costs of Solar Panels

For homes that qualify, there are incentives available to lower the cost of solar panels. However, even in these cases, there are hidden costs of making the switch to solar power.

Solar Permits

In most cases, homeowners will pay between $300 and $450 for solar construction permits. If roof alterations or changes to your property are necessary, you may also need separate permits for each. For example, many customers trim tree branches to increase the direct sunlight on their roofs. In most cases, your solar company will pull permits for you and include the cost in your bill.

Roof Repairs

An inspector may also recommend fortifying your roof to support solar panels. Some types of solar panels are heavy, and it’s crucial to address all roof repairs before installation. Cash, HELOC or home equity loans may then come into play. The interest rates on these loans will vary, adding to your total solar investment over time.

Property Taxes

According to a 2019 study by Zillow, home values can increase by 4.1% after installing solar panels. However, over half the states offer property tax exemption from the increase caused by solar systems. If you don’t live in one of these states, factor in the annual cost.

Installation Issues

Poorly designed solar systems are one common way to lose money on your solar investment. Systems that are too small for your home or placed incorrectly will require supplementary power from your local grid. Overestimating your energy use, on the other hand, leads to expensive and unnecessary installation costs.

Solar Panel Repairs

As we noted above, always read your solar warranty closely to ensure that it covers installation and manufacturer errors. Additionally, if you live in an area prone to large storms and hail, check the environmental section of your warranty. That said, solar panel repairs are uncommon but can arise as the systems get older.

Battery Storage

Unless you plan to attach your solar system to the grid, you’ll need a solar battery to store excess energy for cloudy days and winter months. Solar batteries can add an average of $9,000 to your installation, though many solar tax incentives also include solar battery storage.

How To Avoid No-Cost Solar Panel Scams

Spotting the words “free solar panels” on solar marketing doesn’t necessarily make it a scam, but it is a red flag. According to the Better Business Bureau, aggressive sales tactics include going door-to-door and requesting personal or banking details upfront to confirm free solar panel eligibility. Here’s how to avoid potential solar scams.

• Research a solar company before supplying any personal information.
• Confirm that an in-person sales representative works for the company on their advertisement.
• Verify that the company is licensed and certified to install solar panels, such as by the North American Board of Certified Energy Practitioners.
• Confirm that the company made the top solar installer lists.
• Read customer reviews specifically for the installer in your area.