Do you get free energy from solar panels?

There is no such thing as a free lunch (or a free solar panel installation). Free solar panels are not free; you will pay for their electricity, usually under a 20 to 25-year solar lease or power purchase agreement (PPA).

 

Sales Pitch: Free Solar In New Jersey

Free solar panels are typically used for advertising solar leases or solar power purchase agreements (PPAs). Under both of these arrangements, a leasing company will put solar panels on your roof for no money up-front but will charge you for the electricity that they produce.

 

Most offers will save you a little money but not all of them, so make sure you’ve done your research. Beware of a few other things: 

 

1. Ask what brand panels and inverters they will use (because the “free installation” generally includes lower quality materials). 
2. Make sure that you understand the details of your lease agreement. Regardless of the up-front costs, you will be required to pay the leasing company between $0.10 and $0.17 for every kilowatt hour of solar electricity that your installation produces. While this has the potential to save you money in the long run, check the installer's financial assumptions before you sign up. Many solar companies phoenix az estimate that electric prices will increase by 5% a year when the historical average has only been about 3.8% per year in New Jersey.
3. Understand what you will be “giving up” to the leasing company. Typically, you will lose your federal tax credit, any available rebates, and your potential SREC income.
4. Remember that you don’t own the solar panels on your house; the leasing company does. Ask what could happen to your solar panels if the leasing company goes out of business. Since the panels are considered an asset of the leasing company, can they be liquidated in the event of bankruptcy? Will their creditors remove them from your house? 

The Solar Panels On Your Roof ARE NOT Yours!

The reality is that you do not own the solar system and the solar energy that the panels produce is not free.  

 

Under solar lease agreements or PPA, ownership is retained by the solar company, and you pay for the electricity it produces. The company has built a small power plant on your roof and is selling you the electricity. And it would be best if you bought it from them for the entire 20-25 year term.

What are the Major Pitfalls of "Free Solar"?

Homeowners that sign solar PPAs or leases sign long-term lease agreements (anywhere from five or 20 to 25 years) and make monthly lease payments to the provider that typically amount to a little less than their current utility bills.

 

 At the end of the lease term, homeowners can opt to purchase the system outright, or the solar leasing company can reclaim and remove the system.