Understanding the Realities of Zero-Cost Solar Offers

[Originally published on August 6, 2021, | Updated on January 24, 2024 - 5 min read]

Understanding the Realities of Zero-Cost Solar Offers

In the relentless summer heat, with soaring electric bills, the allure of solar energy becomes increasingly appealing. Advertisements touting "Zero-Cost Solar" offers are everywhere, promising a solution that seems too good to be true. And often, it is.

The Truth About Zero-Cost Solar

Solar energy, while increasingly affordable, is not free. Government tax incentives can significantly reduce costs, covering up to 30% of a solar purchase. Still, "Zero-Cost Solar" refers to a solar lease program, not a giveaway.

Solar Leases: What They Entail

Solar leases can be attractive, especially if you want to avoid upfront costs. With good credit, you can start with little to no money down, followed by monthly lease payments. These payments should be lower than your current electricity bill. However, leases come with their own set of challenges and hidden costs.

Common Misconceptions and Challenges of Solar Leasing

1. Ongoing Utility Bills

Contrary to popular belief, leasing solar panels only sometimes eliminates your utility bill. Most households will still rely on grid power during the night. Any solar energy not used during the day can be returned to the grid in exchange for credits. However, this requires a delicate balance, affected by weather, property changes, and utility rate adjustments. Over time, you may pay both the lease and utility bills.

2. Ineligibility for Tax Incentives

One of the biggest drawbacks of leasing is the ineligibility of federal and state solar incentives. These incentives, including the 30% federal tax credit and state-specific credits like Arizona's $1000 tax incentive, are only available to the owner of the solar system. The leasing company reaps these benefits in a lease arrangement, not the homeowner.

3. Complications in Home Selling

Selling a home with a leased solar system can be tricky. The lease, often lasting 15-20 years, must be transferred to a buyer who qualifies for it. If they don’t or are unwilling to assume the lease, you might face the burden of paying off the remainder in a lump sum. Additionally, leased systems do not increase your home’s resale value.

4. The PPA Model

Some companies offer Power Purchase Agreements (PPAs), where the homeowner agrees to buy the power generated by the solar panels installed on their property. While PPAs have no upfront costs, they can escalate costs over time and come with similar restrictions and complexities as leases if you decide to sell your home.

Why Purchasing Your System Might Be Better

Buying your solar system outright can have more significant long-term benefits. You become eligible for all solar incentives, have the freedom to modify your system as needed, and add value to your home. The upfront cost might be more manageable than expected with various financing options available.

The Rise of Solar + Energy Storage

In 2024, the trend is shifting towards solar combined with energy storage. The Inflation Reduction Act has introduced investment tax credits for standalone energy storage technology, making it more financially viable. State incentives and utility rate increases drive homeowners towards integrated solar and storage systems, offering more value and reliability.

Conclusion

Navigating the solar market can be challenging, but understanding the pros and cons of leasing versus buying is crucial. While "Zero-Cost Solar" might be an attractive short-term solution, it's essential to consider the long-term implications.

For detailed information on solar financing options and the latest trends in solar energy, contact us for more information!