Of the world’s total energy demand, less than 1/10th of 1% was produced by solar energy in 2011.
Although the solar panel business has grown significantly since that time, the majority of homeowners are still powering their homes from the electrical grid. For those looking to make the switch, the potential costs can be daunting.
If you’ve been looking to make your home more sustainable with solar savings, you’ve likely run across an advertisement for free solar panels. And, no doubt, the idea of a free power system is tempting.
But don’t sign on the dotted line until you know the truth behind these campaigns. Read on and discover the answer to “are solar panels really free?”.
What Does “Free Solar Panels” Really Mean?
In your search for solar power systems, you’ve probably seen more than a few companies that advertise “free solar panels” or “pay 0$ for solar panels and installation”. Like most things in life, these solar panel systems aren’t free. They’re more like a solar financing system, also known as “third-party owned” (TPO) solar panel systems.
There are two types of TPO’s:
- Power Purchase Agreements (PPA’s). The solar panel company installs and maintains the solar panel system at no cost to the homeowner. The homeowner pays the company per kWh of energy generated by the panels. This rate is, generally, more economical than what the homeowners would pay for energy otherwise.
- Solar Leases. The solar panel company installs and maintains the solar panel system at no cost to the homeowner. The homeowner pays the company a fixed monthly amount for the energy generated by the panels. This rate is, generally, more economical than what the homeowners would pay for energy otherwise.
In both types of TPO, the third-party, aka the solar panel system company, will install solar panels on your home free of charge. The catch is that you don’t own the solar panels. Instead, you purchase energy from the company that installed your panels.
Are Free Solar Panels Worth It?
Although free solar panels aren’t really free, in that you’re paying the solar panel company for the energy they generate, they do offer some benefits in terms of solar power savings. First, you don’t have to pay for the installation and maintenance of the system – which can be costly. Secondly, you’re typically paying less for the energy than you otherwise would – saving significantly on your energy bills.
Keep in mind, though, that solar panel companies, like any other company, are looking to make money. That means they wouldn’t be offering free installation and maintenance if there wasn’t money to be made. And they’re making their money from selling the energy your produce.
Although it carries a heavy upfront cost, purchasing your solar panel system outright will ultimately provide even more energy savings. Plus, you can take advantage of the 30% federal solar tax credit to get you set up. There are also a number of state and utility rebates, credits, and grants for individuals and companies looking to install a solar panel system.
Other potential disadvantages of TPO’s include:
- contracts that must be renegotiated after 15 or 20 years
- contracts that have to be reassigned to new owners upon the sale of your home
- in some cases, the amount paid for energy goes up over time (these are called escalators and can be found in your contract)
- in the long run, you save more by purchasing and installing your own system
At the end of the day, most TPO’s will save you money on your energy. There are of course companies that won’t help you save money and some that will help you save more than others.
For these reasons, it’s important to shop around for your solar panel system. Today, there are countless options to choose from, so look around, compare, and find one that’s right or you.
Other Ways to Get Solar Power Savings
Free solar panels aren’t free, but they do breakdown the former financial barrier to installing solar panel systems. They’re a good option for people who don’t have the budget to purchase a solar panel system but wish to make their home more green and eco-friendly. And, in most cases, they do result in solar power savings.
However, it’s even more advantageous to purchase a solar panel system outright, if and when possible – and solar power loans are making it possible. A solar loan is somewhere between TPO and ownership. They’re zero down leases with an option to own, and you see a great return on your investment.
Once you own your solar panel system, you’re immediately making money. Not only will you be saving on the power you generate, but you can sell back any excess energy for additional gains.
With an operational solar panel system, you can also sell your solar renewable energy credits (SRECs) for extra income. Between the credits and savings, you’ll see a 125% return on investment within the first 5 to 7 years of independently producing energy. That return jumps to 500% on average by the 20th year.
In addition to those benefits and potential profits, owning your system adds to the value of your home. Should you ever decide to sell your home, you can’t take your panels with you. But you can ask an additional 4.1% on top of your home’s value – which is over $9,000 for a house priced at $226,000.
Go Solar Today
The temptation of free solar panels may be strong for those wishing to be more green but who lack the cash to do so. Solar panel companies will install and maintain a system on your home, and you save money on your monthly bill or how much you’re paying per kWh, depending on your agreement. But, ultimately, you don’t own the system and you would see a lot more long-term savings if you did.
If the thought of purchasing a panel system sends shivers through your wallet, talk to us about your options. Solar power is more affordable than ever, and we’ve got the tools to get you off the grid and energy independent.