Homeowners interested in solar, and even those who aren't, have likely come across an ad, or Google listing, or offering, for 'free solar panels'. Like most things in life that are free, the offering of free solar panels seems like one of those things that are too good to be true. The reality is that yes, it is too good to be true, and that claim is often used in a deceptive way to get solar prospects to fill out a lead form, or get sucked into a solar contract that is often a bad deal in the end.
What it really means
When a company is offering 'free solar panels' they are usually trying to push a solar lease or PPA (power purchase agreement). In both situations, the company will put solar panels on your roof for no upfront cost, or "for free".
In both a lease and a PPA, you do not own the solar panels installed on your home, the solar company does. You pay the solar company for the power the solar panels they own produces, installed on your roof. It's like paying a utility company for power when they've built a plant on your lawn.
So while you will be zeroing out your electric bill with the panels and won't be paying SDGE for power, you will be paying the solar company a similar amount for power, and with the lease you won't putting any money towards owning your system.
Leasing Vs. Owning
You can compare it to paying rent vs. paying a mortage on a house you own. When you own panels and finance them, your monthly payment won't go towards buying power, it will be put towards owning your system, which is zeroing out your power bill. After you pay the system off in 12 years, you own the panels, and won't have to pay monthly payments or a monthly electric bill, which is when the true savings kick in.
With the lease or PPA, you are basically renting panels, paying for them to produce power for you but not ever putting money towards owning them. So after 12 years of paying your solar company, when the amount of money you've paid them has surpassed the actual cost of the system, you will not be saving any more money, as your payments have only been put towards paying for the power your system produces.
So 12 years down the line when you would have paid off your system with a loan, and would have no longer had to pay a solar payment or a power bill, you will still be making monthly payments to the solar company, and won't be reaping the true savings solar provides.
But at least you didn't have to buy the panels outright, right?
Wrong. With the low cost of solar these days, there are plenty of options for financing, including zero-down options for homeowners who don't want to drop a lot of cash at the beginning. Most financing rates will make it so that you won't be paying any more than your power bill was so that you're not taking on extra cost but are putting money towards your panels.
Granted, leases or PPA's may be a good option for some homeowners. Maybe they don't plan to stay in their house for entire payback period, in which case when they move they can transfer to the solar panel lease to the new homeowner. Also, while most solar companies have 20 year+ warranties on their panels and decent workmanship warranties, solar panel owners will eventually have to pay for maintenance and service of their system, while leases will not. Leases may also be a better option for homeowners who are ineligible for federal or state investment tax credits resulting from investment in a solar panel system and do not want to wait for the following year to take advantage of tax credits. It's a good way to get panels on your house quickly with little to no upfront investment and begin saving on your power bills.
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