To put it simply, “there is no such thing as free”. When solar installations are advertised as “free”, this is sales tactic or play on words to spark interest in a solar lease or PPA (Purchase Power Agreement). These options will get solar on your roof with no upfront cost, but there will be a charge for the electricity produced by it. Most offers will save you money but not all. You must compare factors like:
- Price per month
- Savings over time
- Roof warranty (separate from the solar components)
- Experience and stability of the installer
When leasing, the solar company or lessor retains ownership of the solar array installed on your roof. The rate at which you are sold the electricity produced by the array is usually less than what the utility charges. The purpose of the solar lease is to remove obstacles for customers who want to go solar but do not have the cash flow to purchase, especially when prices were much higher.
TPO (third party owned) system key factors:
- Lease – consistent monthly rate
- PPA – charged per kWh
- Cheaper than what the utility charges
- $0 upfront cost (Typically)
- Solar company responsible for maintenance
- Often contains escalators
- In some cases, the home is sold, the lease must be transferred to the new owner
- Only a fraction of savings compared to ownership
Solar leases and PPAs’ are definitely good options if you cannot benefit from the Solar Investment Tax Credit. For those who do not have the option to purchase a system in cash, there is a long-term beneficial solution in the solar loan. The lease is actually becoming less popular in 2019 because in the long run, the lease will relinquish the opportunity to see larger savings because you are not taking advantage of substantial tax credits available with ownership.
Times have changed and solar is way more affordable these days. Financing options have become more viable, offering the same zero-down aspect of the lease, with the ownership benefits. Your energy is only free when produced by a paid off system that you own. Having no upfront cost when financing has the same effect of having an installation with no upfront expense. When the system is paid off, you now have your very own power plant that produces free energy, and may even have the potential to generate income.
At the end of the day if you are contemplating going solar, it is best to shop around. Compare all of your financial options, as well as the installers in your area. Some companies are able to save you more than others or offer better quality products. If your goal is to produce “free” energy for your home or business, PurePoint Energy recommends considering an ownership option. As a solar installation company who does not gain any additional benefit by installing a system that was leased, financed, or purchased in cash, our advice is free from bias. Ultimately you should choose the best option that works for you as an individual. You’ve already made the right choice by going solar.