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CLAIM: You can get free solar panels installed on your roof!

FACT: Some companies offer solar panel installation for no money down, but it’s not exactly free—you’ll be renting the panels, monthly, for the term of the lease, which is usually 20 years.

CUB RECOMMENDS: Explore all of your options. While leasing may make sense for some homeowners, buying your solar system outright could end up being much more cost-effective.

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For several months now, we’ve been getting reports of door-to-door salespeople pitching “free” or “no money down” solar panels to homeowners all over Chicagoland. Sounds great! But are these offers legit?

In general, any company that says they’ll install “free solar panels” on your roof is actually offering a solar lease.

Yes, the solar panels will be installed on your home for no money down, but you will have to pay the leasing company every month to lease the panels, and those leases typically last 20 years. Leases we’ve seen also include a provision allowing the company to raise the lease rate by 2.9% every year.

If you lease your solar panels, you are not eligible for the Federal Tax Credit or Illinois Shines incentive programs.

Combined, these two credits can help you pay off up to 60% of your installation cost within one year of your panels being connected to the grid. In many cases this reduces the payback time to five to seven years. Within that time frame, your monthly electricity bill savings will have recouped the remaining cost of the panels.

With a solar lease, you will never see a return on investment, and do not see the full benefit of the monthly energy savings. Most people will pay more over the lifetime of a solar lease than if they purchased and financed a system.

There are many low interest loans available to help you finance the upfront cost of solar. Check Energy Sage’s explanation of solar loans, and list of providers for more information.

The most active solar leasing company in Illinois right now is Sunrun, an outfit out of California that has been selling and leasing solar panels for several years.

Sunrun peddles its leases door-to-door, often through third-party companies like Chicago Clean Energy Authority and Sun N Us. They’re also at Costco stores, and have even partnered with Comcast to market their offer to Xfinity customers.

We’ve also heard of another company, called Vivint, marketing solar leases in the area. There are likely more.

So is leasing a good deal? Well, it depends.

Back when solar panels cost more, and there weren’t state and federal incentives available to make rooftop solar systems more affordable, solar leasing was often a homeowner’s only feasible option.

But now the price of solar panels is less than half of what it was 10 years ago. Plus, as we point out above, a combination of federal and state incentives can reduce the cost of a solar system on your property by up to two-thirds.

Before you sign a solar lease, find out how much it would cost to buy your system outright, and, if necessary, finance it. Many of the leasing companies themselves provide this option, but CUB recommends getting quotes from at least two different installers.

You can find solar installers near you by visiting the Illinois Solar Energy Association website.

If you’ve spent any time researching or shopping around for solar panels, you’ve probably heard the offer of “free solar panels” or “no-cost solar panels and installation.”

Are these offers for free solar panels and installation a scam? A great deal?

Before you decide free solar panels are the right decision for you, read about how these offers could be misleading.

What does “Free Solar Panels” Mean?

When a solar company offers you “free” solar panels, they are often offering to set up a solar lease or power purchasing agreement (PPA).

As we have described in a previous article, solar leases and PPAs are very different from purchasing your solar panels through cash or loans.

Solar leases and PPAs are similar to renting your solar panel system. These solar financing options provide many of the benefits of solar panels, but without the need to own or maintain the entire solar panel system.

One of the benefits of solar leases and PPAs is that there are no upfront costs. Technically, you are not purchasing the solar panels, hence “free” solar panels. Instead, you are agreeing to allow the solar company to install solar panels on your roof.

In exchange for allowing the solar company to install the solar panels on your roof at no cost, the solar company will charge you a reduced rate for your electricity over the term of the agreement.

Are Solar Leases & PPAs Worth It?

While solar companies might sell solar leases and PPAs as “free” or “no-cost” solar, are these financing options a good idea?

A major factor to keep in mind when agreeing to a solar lease or PPA is that you do not own the solar panels. This can be beneficial for the homeowner because they do not have to make a large initial investment. The homeowner is also not responsible for maintenance and repairs on the solar panels.

However, homeowners who agree to a solar lease or PPA are not eligible to take advantage of solar incentives. Those solar incentives are claimed by the solar company.

Additionally, once the terms of the solar lease or PPA are up, the solar panels will either be taken down, or the homeowner will have an option to purchase the solar panel installation (often at an elevated cost). This not only reduces the extent of your lifetime cost savings, it also prevents the solar panels from increasing your home value when you go to sell your house.

Are Free Solar Panels A Scam?

In most cases, the offer of “free” or “no-cost” solar panels isn’t a scam. The marketing of these offers relies upon the fact that you are not actually buying the solar panels or paying for the installation.

However, nothing comes free. You will still have to pay for the energy you receive from those panels, though you will often be paying overtime than if you paid for your solar panels through cash or a loan. Plus, you will be missing out potential solar incentives and increased property value that comes from owning your solar panels.

Solar Power Installed For Free

But each individual household’s situation is different. Some homeowners will benefit more from a solar lease or PPA than they would by owning their solar panels. The decision comes down to the individual.