‘Free’ Solar Panels: Is Free Solar a Scam? [2023 Guide]

You have probably seen ads from solar companies offering "free" solar panels. While these offers are not necessarily scams, they can be misleading. Although the company will not charge any money up-front for solar panels for your home, you must agree to pay a monthly fee for using their solar panels. In other words, you’re leasing them instead of buying them.

Here we will discuss what companies really mean when they offer solar panels for free. There are other ways to lower the upfront cost of a solar panel installation that yield greater savings in the long run. For example, you can apply for clean energy incentive programs or you can use a low-interest loan to finance your project.

If you’re interested in financing, you can click below to meet with a solar installer the Guides Home Team recommends.

The phrase "free solar panels" is a misleading marketing tactic some companies use. There are no companies or government programs that offer free solar panels. When you see the phrase "free solar panels," it can mean one of the following things:

If the offer doesn't fit in any of the above categories, it may be a scam.

A solar lease is exactly what its name suggests. The provider installs solar panels at zero upfront cost, and you sign a contract wherein you agree to rent the system during a specified period (typically 10 to 15 years).

This agreement makes sense if the solar lease is priced lower than your monthly electric bills, but you can actually lose money if the lease is priced higher.

You may be offered a solar power purchase agreement, or PPA. In this type of agreement, the solar panels are still installed on your roof at no cost to you. However, instead of paying a fixed monthly fee like in a lease, you are charged for the electricity generated by the solar panels during the billing period.

To make the deal attractive, solar PPA providers will charge a kilowatt-hour price slightly lower than local electric tariffs. Read the agreement carefully — some PPA contracts may try to charge you more.

Government-subsidized solar programs do exist, but they are rare and only available for low-income households. These programs are normally managed by government agencies, regulated utilities or nonprofit organizations. Private companies may participate as approved installers, but they are subject to stringent guidelines.

To summarize, "free" solar panel offers are not always scams, but they are misleading. Many companies are more transparent in their sales pitch: They will clearly state that the upfront payment is zero, but you must sign a solar lease or PPA and make ongoing payments to the solar company.

Generally speaking, you can't get free solar panels from the government. Some government agencies have created programs that subsidize solar panels, but they are only available for low-income households that meet certain requirements.

The agency in charge of the program will filter applications by income level and hire qualified contractors to install solar energy systems. Other government programs may offer you a discount on your energy bills.

The Disadvantaged Communities Single-Family Solar Homes Program (DAC-SASH) in California is one example of a government program that offers an incentive of $3 per watt of solar capacity. According to the Center for Sustainable Energy, the average price of home solar installations in the U.S. is $3 to $5 per watt, which means this program could potentially cover 100% of system costs.

There are many ways to reduce the upfront cost of a rooftop solar system without having to sign a lease or PPA contract. The financial incentives available for solar panels in the U.S. include:

These solar incentives can be combined, making your photovoltaic (PV) system much more affordable. When you get a solar lease or PPA, all of these benefits are claimed by the company offering you the service, as they are the legal owner of the system. So, as the homeowner, you aren't able to cash in on these incentives.

The solar investment tax credit (ITC) has been a major incentive for U.S. solar installations since 2006. This incentive is also known as the federal solar tax credit, and it gives you back 30% of project costs as a tax deduction.

Depending on where your home is located, additional tax credits may be available from your state government, and you can capitalize on both incentives. For example, New York offers a 25% solar tax credit for homeowners, up to a maximum amount of $5,000. This incentive can be stacked with the federal ITC to save you even more on your system.

Some states also offer tax exemptions, which are slightly different from tax credits. In this case, solar panels are exempt from taxes that would normally apply to other assets.

Solar rebates are direct cash incentives for installing photovoltaic systems. These programs are normally managed by government agencies or local utility companies. Solar rebates and tax credits can be combined, but you must subtract the rebate first and then calculate the tax credit based on the net system cost.

Solar renewable energy certificates (SRECs) are performance-based bonuses. They don't reduce the cost of your solar energy system, but they offer additional cash flow beyond utility bill savings.

Each state has its own regulations surrounding SRECs, so depending on where you live, you may not be eligible to earn them.

In states that have SRECs, homeowners typically earn one SREC for every 1,000 kWh of solar energy their system produces. These certificates can be sold through a specific marketplace to energy companies and other organizations with a legal requirement to support the renewable energy transition in their state.

All of these incentives lower the cost of a home solar system. You can also use a low-interest solar loan to cover net costs after subtracting incentives. With this strategy, you can go solar at a small upfront cost without being bound to a lease or PPA.

There are many solar providers and installation companies on the market, and choosing the best option can be a challenge. Ideally, you should look for a solar company that offers both high-quality products and professional workmanship. Getting a solid warranty is also an important consideration, as it protects your investment: Any components that fail during the warranty period are replaced for free, ensuring your monthly power bill savings.

SunPower is one of the leading solar companies in the U.S. The company's proprietary modules are among the most efficient in the industry, and they are covered by a 25-year product warranty. You can also get a 25-year workmanship warranty if your home solar system is installed by SunPower's approved contractors.

A pioneer in residential solar energy, SunPower was founded in 1985 and is now regarded as a preeminent leader in the industry. The company has a diverse portfolio of residential solar energy systems, storage solutions and other solar services. Its solar panel provider, Maxeon Solar, was initially part of SunPower but became a separate entity in early 2022. The companies still work closely together. Maxeon offers some of the most efficient solar panels on this list, ranging from 20.1% to 30% efficiency.

Though SunPower operates in all 50 states, its availability changes according to ZIP code. Be sure to check with the company to see if it services your home's address.

There is no such thing as "free solar panels." When you see ads offering this, they normally refer to solar PPAs or leases. While it is true that you pay nothing upfront, you are charged monthly payments based on the contract signed.

There are other ways to go solar for cheap. Some government agencies, for example, have created energy assistance programs for low-income households, and some of them install solar panels at no cost to the homeowner. However, these installations are subsidized by the government.

The cost of solar panels in the U.S. averages about $2.94 per watt, or just under $11,000 for a 5 kW system. Local incentives from your state government or utility company can lower this depending on where you live.

You can use a loan to cover the net cost of your solar project after incentives, and then use part of your energy savings to pay off the loan. There are many solar financing options that charge lower interest rates than a typical personal loan.

Technically, solar panels can be installed for free. But this doesn't mean you’ll never pay. Some companies will offer solar lease or PPA agreements, which have zero upfront cost. However, you agree to pay a fixed monthly fee during a specified contract term, and there is typically a high penalty for opting out early.

You can install solar panels at little to no initial cost by combining financial incentives and a low-interest loan. Generally, the monthly loan payments will be lower than the monthly fees in a solar lease or PPA. In other words, your net power bill savings could be much higher.

There are no states that offer free solar panels. You may find specific government agencies that subsidize solar panels as part of an energy efficiency assistance program, but these benefits are usually exclusive to low-income households.

The Database of State Incentives for Renewables and Efficiency is an excellent resource where you can check solar incentives and tax credits by state.

The cost of solar panels for a home solar system varies depending on equipment brands and local installation costs. The Solar Energy Industries Association (SEIA) is a useful reference that provides detailed information about the U.S. solar industry, including typical prices by market segment.

Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York's Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.