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Everything companies mean with their power purchase agreements and solar leases spiel.
Stephen J. Bronner Contributor
Stephen J. Bronner is a New York-based freelance writer, ghostwriter, editor and reporter. Over his more than a decade in journalism, he has written about local politics and schools, startup success tips, the packaged food industry, the science of work, personal finance and blockchain. His bylined work has appeared in Inverse, Kotaku, Entrepreneur, NextAdvisor and CNET, and op-eds written on behalf of his clients were published in Forbes, HR Dive, Fast Company, NASDAQ and MarketWatch. Stephen previously served as contributors editor and news editor for Entrepreneur.com, and was the VP, Content and Strategy, at Ditto PR. He enjoys video games and punk rock. See some of his work at stephenjbronner.com.
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Stephen J. Bronner
5 min read
Sunlight is free. Solar panels are not.
With electricity prices higher across the US than they were just a couple of years ago, many people see solar panels as an increasingly appealing option to power their homes.
The fact that some companies market "free solar panels" makes them even more tantalizing.
Solar panels generally cost about $20,000, after federal tax incentives, to install on the typical American home -- not exactly pocket change. This expense is what makes solar installation companies' so-called "free" promotions so alluring. But as with most things in life, you need to read the fine print.
"'Free' can mean a number of different things," said Phillip Haddix, Solar for All Portfolio Manager at DC Sustainable Energy Utility, a provider of rebates and incentives for people to install solar systems. "It'll primarily depend on where those companies operate. A lot of what is possible in terms of affordable or free solar depends on not only the federal incentives that are available, but also what is available at the state level."
What solar companies usually mean by "free" are either power purchase agreements or solar leases, both of which might actually be a good deal. Solar PPAs are available in at least 28 states, including California, New York, Texas and Georgia, so if you're interested in solar you should research which programs are available where you live.
Best Solar Companies of 2023 See at Cnet
What do companies mean by free solar panels?
If you live in a state that offers strong incentives or allows leases and power purchase agreements, "free" solar panels may be legitimate. There might still be a cost to these schemes, however.
In some places, such as Illinois, certain government incentive programs offer solar panel installation for free if you meet certain criteria, such as an income requirement.
More often, these offers involve leases or power purchase agreements. Under a PPA, a solar company will install a solar system on the roof of your home and charge you for the energy you use. You, the homeowner, won't own the solar system. The company will.
Solar leases are similar to PPAs in that the homeowner will not own the system. Think of it like renting a vehicle. Leases typically don't require any money upfront -- you just pay a fixed rate each month to keep the system on your home. This way, you still enjoy the benefits of lower energy bills without the need to shell out the entire cost of solar or financing.
Both PPA and solar leases are "a way that people can still participate in the solar energy economy, but with a contractual obligation with this outside company who is bearing those costs," said Gilbert Michaud, assistant professor at the School of Environmental Sustainability at Loyola University Chicago.
What's the catch? Are free solar panels a good idea?
Power purchase agreements and solar leases allow people to realize savings on their energy bills but without a huge upfront cost. But there must be a catch, you may be thinking. Sort of. Much like getting into any other financial agreement, pay very close attention to the rate you'll pay, whether that's the price per kilowatt-hour for a PPA or the fixed monthly rate of a lease. Make sure you're getting a good deal, and watch out for "escalators," which will raise the rate after a certain period of time.
Another "catch": Since the solar company maintains ownership of the system under a PPA or lease, it will generally be the one who benefits from both tax incentives and renewable energy credits. Entities such as power companies will pay owners of solar systems for these RECs, which are created when a certain amount of electricity is generated from a renewable source.
One advantage of owning, rather than leasing, your solar panels is that they tend to boost home values. "If you own the asset, it actually increases the value of your home, as opposed to if you're in a lease or PPA program, you don't really own anything," Michaud said.
Still, for those unable to afford purchasing their own solar system, a PPA or lease can help you save on your energy bills. In the fourth quarter of last year, PPA prices were on average about 5 cents per kilowatt-hour, according to one estimate, compared to an average of about 15 cents per kilowatt-hour for electricity across the US.
Other solar panel financing options
Interested in adding solar panels to your home? Here are some things to consider with various financing options.
Cash: You've got the funds to pay upfront for the purchase and installation of a solar system. Great! This will grant you all the benefits of solar, including energy savings, tax credits and a higher home value. The only potential drawback here is that since you own the system, you'll be responsible for its maintenance.
Home equity: Home equity loans and lines of credit, or HELOCs, are tools that use your home as leverage for a loan. It's best to avoid them unless you're sure you'll be able to pay the debt off. Failure to do so can result in your home being foreclosed upon. With that said, if the math of potential energy savings works in your favor, it may make sense to leverage your home's equity to finance a solar system.
Other loan: If the potential energy savings outweigh the interest rate of the loan, borrowing money to pay for a solar system may make sense. Some lenders now offer loans specifically for buying solar systems, but again, make sure the terms are favorable and that you'll be able to make the monthly payments.
How to reduce the upfront cost of solar panels
If you're ready to commit to a solar system for your home, but still worried about its cost, there are some ways to reduce the financial hit. Most importantly: Get quotes from multiple companies.
"Solar companies will come to your house, they'll do site assessments, they'll sit down in your living room and walk through different options," Michaud said. "That's valuable. Engage with folks and understand what's out there and what exists."
Haddix said to compile all this information together. "As with any big purchase, get multiple offers and compare them," he said.
There are also less obvious, more complex ways to save on the upfront costs of solar panels. These include:
- Community solar:Instead of putting panels on your roof to enjoy direct energy savings, you can opt to invest in community solar projects if your state allows. Typically these are nearby solar farms, and the energy they generate can reduce your energy bills. Community solar is a great option for people who rent their homes, those who cannot afford solar or for those with restrictive HOAs or otherwise cannot install solar.
- Solar co-op: Various organizations exist across the country to help people pool their resources together to reduce the costs of solar. These programs can provide lower prices than buying solar on your own, like buying in bulk.
- Efficiency upgrades: Before reaching for the solar panels, look at the rest of your house. "Solar is an exciting type of infrastructure, but if the ultimate goal is to save money on your electricity bills, I encourage homeowners to think about efficiency upgrades first," Michaud said. "Those could include insulation, upgrading and replacing windows or other things that are maybe less fun, but can help you realize savings immediately and lower costs. Once you've done those efficiency retrofits or upgrades, maybe solar is a good idea."
FAQs
How many solar panels does it take to power a house? ›
An average home needs between 17 and 21 solar panels to fully offset utility bills with solar. The number of solar panels you need depends on a few key factors, including your geographic location and individual panel specifications.
Which type of solar panel is most efficient? ›Monocrystalline solar panels are often considered the most efficient solar panel option. Therefore, they are typically installed for larger energy systems in commercial and residential properties.
What happens to solar panels when they are no good? ›Because of this, most solar panels can't be recycled in the US, at least not fully. Instead, dead panels are sent to an e-waste facility that will salvage what they can—usually the aluminum, glass, and copper. The rest of the panel's components are typically shredded and sent to a landfill.
Why aren't solar panels 100% efficient? ›Solar panels don't convert sunlight into electricity with perfect efficiency mainly because they cannot absorb energy from the entire solar spectrum; there are certain wavelengths of light that solar panels cannot process, therefore they are reflected back off the solar panels or lost all together.
How many solar panels do I need for a 2000 square foot house? ›Thankfully, we've got the answer for you! A 2000 square foot house will need 28- 34 solar panels, which comes out to an average cost of \$3.50 per watt. Not only will installing solar panels save homeowners money on their electric bill, but they can also increase the value of their home.
How many solar panels do I need for a 1500 sq ft home? ›How many solar panels are needed for a 1500 sq ft home? A 1500-square-foot home, on average, will need between 14 and 17 solar panels to power the home. This is based on an average energy consumption of 967 Kilowatt hours per month.
Which solar panel is best for home off grid or on grid? ›Especially for residential houses, on-grid solar systems are appealing in that they do not require bulky and costly battery storage solutions, and you will also need fewer solar panels than you would if you were on an off-grid system – due to no need for producing extra power when there is no sunlight.
What is more efficient than solar? ›However, wind turbines harness about 50% of the energy that passes through them, compared with the 20% efficiency of the top residential solar panels. ¹⁰ And unlike solar panels, wind turbines can produce energy at any time of day, making them very effective when implemented properly.
What's the highest wattage solar panel? ›For residential panels, the highest wattage solar panels available are around 500W, which is more than enough for residential use. The wattage for residential panels is limited to 500W due to the need to ensure that the panels' size will fit on most rooftops.
Why isn't solar power better? ›The cons are that it only produces energy when the sun is shining, needs a significant amount of land, and that certain solar technologies require rare materials.
How many years do solar panels last? ›
The estimated operational lifespan of a PV module is about 30-35 years, although some may produce power much longer. While few systems are entering the waste stream right now, more systems will come to the end of their useful life in the next few decades.
Why would you not want solar panels? ›High upfront costs: While solar panels are often available for $15,000 or less, your costs could be higher if you live in a high-cost location or require a tricky installation. Space restrictions: You can't install a system large enough to deliver adequate electric bill savings.
What is the newest solar panel technology? ›Emerging technologies include pyramidal lenses, developed by researchers at Stanford University, which promise to concentrate the amount of light that hits a solar cell—getting the same amount of light to hit an area a third of the size—a breakthrough that could make solar panels more efficient in indirect light ...
Will solar panels ever reach 50% efficiency? ›Will solar panels ever reach 50 percent efficiency? Maybe! Researchers say that he technology used by NREL to create solar cells with 47.1 percent efficiency can be fine-tuned to reach 50 percent efficiency in the future.
How much does a battery best solar system cost? ›The solar battery system itself costs between $4,000 and $7,500 on average, while labor accounts for another $2,000 to $3,500. You could pay less for labor if your system is smaller, while larger systems may require more time and a higher labor cost.
Can AC run on solar panels? ›Yes, you can power an A/C system or supplement your power supply with solar panels. The size of the unit and other factors will determine the number of panels required to power the system.
Can I run my entire house on solar power? ›Fact vs Myth: Can Solar Energy Really Power an Entire House? [2023 Update] One of the most frequently asked questions by homeowners in regard to solar power is, “can it really power my entire house?” The answer to that is actually quite simple – yes, solar can indeed power your entire home.
How much would it cost to install solar panels for a US home of about 2000 sq ft? ›How much does it cost to put solar panels on a 2,000-square-foot home? Although the amount of energy a household uses will influence how many solar panels it needs, it will likely cost around $20,000 to install solar panels on a 2,000-square-foot home.
How many kW solar for a 3000 sq ft house? ›The lowest efficiency panels you'll find on the market have a rating around 300 watts. That average 3,000 sqft home using 1,185 kWh per month would need between 30 and 46 budget solar panels to supply all of its electricity needs.
How big of a solar system do I need for a 3 bedroom house? ›How Many Solar Panels Do I Need For a 3 Bedroom House? You'll need approximately 26 solar panels for an average 2,300 square foot 3-bedroom house. The exact number will depend on the size of your home, your energy use, and the average number of sunlight hours you receive.
How many kW does it take to run a house? ›
How Many Kilowatts Does It Take to Power a House? With the average American home consuming 900 kWh a month or 30 kWh a day, that brings the total yearly usage to around 10,800 kWh. This means that most solar energy systems will need to be large enough to produce this many kWh's in a given year.
Are solar panels better on the east or west side of a house? ›Solar panels facing west will generate more energy later in the day, closer to peak use times. Peak production time happens around 4pm, which is about the same time that household usage starts to increase. If your aim is to produce the electricity that you use, then west-facing solar panels can help you meet your goal.
Is south or west better for solar panels? ›Within the solar industry, it's common knowledge that the optimal orientation of solar photovoltaic (PV) panels in the Northern Hemisphere is typically south, to maximize electricity production over the life of the system.
Is solar panels better on roof or ground? ›If you are limited on space and looking to spend less up-front then roof-mounted solar is the way to go. If you have the property to spare and are looking for the most efficient solar energy solution, then ground-mounted systems are definitely your best bet.
Is solar really cheaper than electricity? ›Although solar energy requires an initial investment to purchase and set up, people find that solar energy is a lot less expensive than electric power in the long run due to the rising price of electricity.
How many wind turbines are needed to power a house? ›Meaning only two AtlasX turbines would be needed to power the average household. There are a few other factors to consider so make sure you do your own wind turbine calculations for your application: The wind will likely be stronger in the colder months and weaker in the summer months leading to less power generated.
Are windmills better than solar panels? ›The wind is a more efficient power source than solar. Wind turbines release less CO2 to the atmosphere. A wind turbine produces 4.64 grams of CO2/1kWh while the solar panel produces 70 grams of CO2/1kWh. Wind power consumes less energy and produces more energy compared to solar panels.
What can a 700 watt solar panel run? ›A small home or office can be powered with a 700 watt solar panel. Additionally, it can supply power for a boat or RV. For an RV or campervan with roof space for the panels, a 700 watt solar panel setup is suitable.
What will a 3000 watt solar panel run? ›Given that the majority of your homes appliances will likely not be rated more than 1800 watts (unless you start looking at power tools). This means that a 3000 watt solar generator will be capable of powering pretty much all your homes appliances individually.
What can a 540 watt solar panel run? ›- Runs loads like mini fridge, 1/2 HP pumps, TV, small power tools.
- Compatible with deep cycle batteries including lithium-ion.
- Produces on average 135 Amp-hours/1,620-Watt-hours per day.
How much battery does it take to go off the grid? ›
In a typical off grid cottage application, you would have a 24 or 48-volt battery bank which is somewhere in the range of 600 to 800 amp hour. They can go as high as 6,000 amp hour or more in larger systems.
Which is cheaper wind or solar energy? ›Unlike wind turbines, solar panels don't have any moving parts that could cause more wear and tear, resulting in more maintenance costs after initial investment. When comparing solar farm vs. wind farm, based on the numbers above, solar energy comes out ahead as a cheaper way to generate power for residential use.
Which is the cheapest source of electricity? ›Capital costs tend to be low for gas and oil power stations; moderate for onshore wind turbines and solar PV (photovoltaics); higher for coal plants and higher still for waste-to-energy, wave and tidal, solar thermal, offshore wind and nuclear.
How long do solar panels take to pay for themselves? ›The most common estimate of the average payback period for solar panels is six to ten years. This is a pretty wide range because there are many factors that will influence the number of years it can take to pay off your panels and the monthly savings you can expect.
Do solar panels need maintenance? ›Solar panels typically don't require much maintenance other than periodic cleaning and keeping them free from obstacles that can cast shadows over the panels. Solar panels need an unobstructed path to the sun to operate optimally.
Can you walk on roof solar panels? ›Roofing contractors can and do walk on Tesla Solar Roofs – when wearing the appropriate safety harnesses. They won't damage the roof in the process. However, you as a homeowner, should never walk on your roof.
Why are so many people against solar panels? ›Many people are against them because they think they take up too much space, they can be an eyesore, and they can impact property values. In addition, solar farms can interfere with farming and other land uses, be a danger to wildlife, and create a lot of heat – both in the daytime and at night.
What is the best solar panel made today? ›- SunPower: – Best Overall.
- Panasonic Solar: – Best for Warm Climates.
- Q CELLS: – Most Popular Solar Panel Brand.
- Canadian Solar: – Best Value.
- REC Solar: – Most Powerful.
One way to reduce the cost of solar is to improve the efficiency of the solar panels. With a higher efficiency, fewer panels, or modules, need to be installed to reach a desired power target. This means less labor, less land and less hardware.
Which type of solar panel is best for home use? ›Monocrystalline solar panels are the most commonly used residential solar panel to date because of their power capacity and efficiency. Monocrystalline solar panels can reach efficiencies higher than 20%, making them the most efficient panel on the market.
Is there a 100% efficient solar panel? ›
Monocrystalline solar cells are the most efficient and can be used for residential properties as well as commercial installations. They are made from a single crystal of silicon which is highly efficient compared to panels with multiple fragments of silicon melted together.
Do solar panels lose efficiency when hot? ›Heat can “severely reduce” the ability of solar panels to produce power, according to CED Greentech, a solar equipment supplier in the United States. Depending on where they're installed, hot temperatures can reduce the output efficiency of solar panels by 10%-25%, the company says.
What is the cheapest battery type with solar? ›When it comes to the features, lead-acid solar batteries have a shorter lifespan in general, and their depth-of-discharge is lower compared to the other storage options. They also require regular maintenance. That is why lead-acid batteries are considered to be the cheapest option among the four.
How many batteries do you need for a solar system? ›If you want to save the most money possible, you'll need enough battery storage to cover your energy usage when your solar panels aren't producing – somewhere around 2-3 batteries. If you want to keep the power on when the grid is down, you'll usually just need one solar battery.
Which solar battery lasts longest? ›Three types of batteries are commonly used in solar storage: lead-acid, lithium-ion, and saltwater. Of these three options, lithium-ion batteries will last the longest.
How long can a house run on solar power alone? ›How long can a solar battery power a house? Without running AC or electric heat, a 10 kWh battery alone can power the basic operations of a house for at least 24 hours, and longer with careful budgeting.
How long will it take for solar panels to pay for themselves? ›The most common estimate of the average payback period for solar panels is six to ten years. This is a pretty wide range because there are many factors that will influence the number of years it can take to pay off your panels and the monthly savings you can expect.
Can 1 solar panels power a whole house? ›Fact vs Myth: Can Solar Energy Really Power an Entire House? [2023 Update] One of the most frequently asked questions by homeowners in regard to solar power is, “can it really power my entire house?” The answer to that is actually quite simple – yes, solar can indeed power your entire home.
Can solar panels power a full house? ›The right combination of solar panels, inverters, and battery packs can do it. You can run your entire home with a solar panel system. You need to know what you're doing, though. Here's how you can do it for your entire home.
How many solar panels does it take to run a clothes dryer? ›Another appliance combo is the washer and drier, which account for an estimated 63 kWh every moon cycle. Thus, they will require about three solar panels to run.
Can you live off grid with just solar panels? ›
Yes. Even large-sized homes can run completely off the power grid thanks to today's advanced solar technology. Large solar energy systems require many solar panels, which can be housed on a roof or even on a ground-level platform (assuming there's enough space).
How do you pay off solar panels? ›There are three primary ways to pay for solar: with a cash purchase, with a solar loan, or with a solar lease/power purchase agreement.
What is the solar tax credit for 2023? ›The installation of the system must be complete during the tax year . Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032.
Is it better to pay off solar? ›Paying cash or financing solar should depend on whether your system can pay for itself or not. If solar financing will not give you savings until the loan is fully paid off, paying cash makes more sense. But if you'll start getting savings immediately, solar financing is perfectly fine.
Can you have both electricity and solar panels? ›Using solar power and traditional electricity together is a cost-effective way to enjoy the perks of sustainable solar energy. If you can't afford to go completely off the grid with a large solar panel system, taking energy from both sources is still better than relying solely on the utility grid.
Can my house be 100 solar? ›With a modern solar energy system, including power storage, you can definitely run a whole house completely on solar power. Today's high-efficiency solar panels and solar batteries make it cheaper than ever before to power an entire home exclusively using solar energy.
Do solar panels work on cloudy days? ›Photovoltaic panels can use direct or indirect sunlight to generate power, though they are most effective in direct sunlight. Solar panels will still work even when the light is reflected or partially blocked by clouds. Rain actually helps to keep your panels operating efficiently by washing away any dust or dirt.
What happens to solar power when batteries are full? ›Should the battery bank become full, it will stop absorbing power from the solar system. The solar panels will continue to generate voltage, but that voltage will not be used or stored until there is available energy demand, or battery space.
Why are my solar panels not feeding the grid? ›Some of the reasons your solar system might not be in good condition are inverter problems, a malfunctioning solar meter, snail trails. Other reasons your solar system might malfunction are micro-cracks, seasonal changes, shoddy installation workmanship, broken panels, dirt and dust, and PID effects.
How long do solar batteries last? ›On average, solar batteries last between 5 to 25 years. Lithium-ion batteries are the most prevalent solar battery type and have a lifespan of up to 15 years. Some factors that impact a solar battery's longevity are battery type, installation, depth of discharge, cycle life, environment and maintenance.