Can You Get Free Solar Panels in Arizona?

Key Takeaways:

• “Free solar panels” are not actually free – they refer to $0-down solar leases or PPAs
• Leases/PPAs provide less savings than purchasing solar with cash or a loan
• Arizona has great solar incentives like the 30% federal tax credit and $1,000 state tax credit
• Beware of misleading “free solar” marketing – always get multiple quotes and read the fine print

Are you an Arizona homeowner who keeps seeing ads for “free solar panels” and wondering if it’s too good to be true?

With so many solar companies competing for your business, it can be hard to tell what’s real and what’s just a gimmick.

The last thing you want is to get stuck with a bad deal on solar that ends up costing you more in the long run.

Imagine signing a 20-year lease thinking you’re getting a great deal, only to later realize you would have saved way more by buying the system outright. You could miss out on huge incentives like the 30% federal tax credit and end up with a solar lien that makes it harder to sell your home.

In this article, we’ll cut through the hype around “free solar” and show you exactly how these deals work.

As Arizona’s trusted solar experts, we’ll help you understand the pros and cons of solar leases, PPA’s, loans and cash purchases so you can make the right choice for your needs and budget.

By the end, you’ll know how to spot misleading claims and find legitimate solar savings – so you can take advantage of Arizona’s incredible solar potential without the risk of getting ripped off.

What Does “Free Solar” Really Mean?

When you see an ad for “free solar panels,” it’s important to understand what that actually means. In most cases, companies offering “free solar” are really selling solar leases or power purchase agreements (PPAs).

With a solar lease or PPA, the solar company installs panels on your roof at no upfront cost to you. Sounds great so far, right?

But here’s the catch: the solar company owns the panels, not you. Instead of paying the utility company for power, you now pay the solar company a monthly fee for the solar energy the panels produce.

This fee is usually lower than what you were paying for electricity, which is how they can claim you’ll save money.

So while it’s true that you can get solar panels installed for $0 down, you don’t actually own them.

The solar company gets to claim the 30% federal tax credit and any other incentives since they’re the owner. You just get to use the power the panels produce, but you don’t get to keep all the savings.

Many big national solar companies like Sunrun, SunPower, and Vivint Solar offer these kinds of $0-down leases and PPAs in Arizona. They can be an attractive option if you don’t have the cash to buy solar panels outright or if you don’t qualify for a solar loan. But it’s important to read the fine print and understand exactly what you’re getting into.

Just remember that “free solar panels” are never really free – there’s always a catch. The key is to understand the details so you can decide if it’s the right option for you.

The Downsides of “Free Solar”

While solar leases and PPAs can seem like an easy way to go solar with no money down, they come with some significant drawbacks that you need to be aware of.

First and foremost, leases and PPAs provide much lower savings over time compared to purchasing solar panels yourself. When you buy solar, you own the system and get to keep all the electricity savings for the 25+ year lifespan of the panels. With a lease or PPA, the solar company keeps a chunk of those savings in the form of your monthly payments.

Another big downside of leasing is that you miss out on valuable incentives like the 30% federal solar tax credit and Arizona’s $1,000 state solar tax credit. These incentives can dramatically reduce the cost of going solar, but only the system owner can claim them. When you lease, the solar company gets those incentives instead of you.

It’s also important to consider the long-term commitment of a solar lease or PPA. Most agreements last for 20-25 years, which is great if you’re happy with the deal. But if energy rates don’t rise as fast as expected or you decide to sell your home, you could end up stuck in a contract that no longer makes financial sense.

Speaking of selling your home, having a leased solar system can make the process more complicated. You’ll either need to buy out the lease, transfer it to the new homeowner (if they qualify), or convince the buyer to take over the payments. In contrast, a purchased solar system can be a valuable selling point that increases your home’s value.

To illustrate these downsides, let’s look at a real-life example.

An Arizona homeowner signed a 20-year lease for solar panels on their roof, excited to save money on their electricity bills. But a few years in, they realized their lease payments were barely lower than what they used to pay for power. As utility rates increased slower than expected, their savings shrank.

When they decided to sell their home, they had to convince the buyer to take over the remaining lease payments, which made the sale more difficult. In hindsight, the homeowner wishes they had purchased the system instead to get the tax credits and bigger savings.

Of course, every situation is different, and leases or PPAs can still be a good fit for some homeowners. But it’s crucial to understand these potential pitfalls before signing anything.

Better Solar Financing Options for AZ Homeowners

If you want to maximize your solar savings and avoid the pitfalls of leases and PPAs, there are two main financing options to consider: buying the system outright with cash or financing it with a solar loan.

Purchasing solar panels with cash provides the highest long-term savings and the shortest payback period.

By paying for the system upfront, you own the panels from day one and get to keep 100% of the electricity savings over the 25+ year lifespan of the system. You’ll also be eligible for the 30% federal tax credit and Arizona’s $1,000 state tax credit, which can significantly reduce your out-of-pocket cost.

Of course, not everyone has tens of thousands of dollars sitting around to buy solar panels in cash. That’s where solar loans come in. With a solar loan, you can finance your solar purchase with little to no money down and pay off the system over time with fixed monthly payments.

The great thing about solar loans is that they offer many of the same benefits as a cash purchase. You still own the system and get to keep the tax credits and incentives, which can be used to pay down the loan balance.

And because solar loans typically have lower interest rates than other types of loans, the monthly payments are often lower than what you were paying for electricity.

That means you can start saving money right away while building equity in your solar asset.

Here’s a quick example: a Phoenix family decided to go solar with a $0-down loan from a local credit union. They were able to finance their entire system over 12 years at a low-interest rate, with monthly payments that were slightly lower than their old electricity bills. By taking advantage of the federal and state tax credits, they reduced their loan balance by over $10,000 in the first year. Over the 25-year lifespan of their system, they’re projected to save over $35,000 compared to what they would have paid for utility power.

How to Avoid Solar Scams

While there are many reputable solar companies in Arizona, unfortunately, there are also some bad actors who use misleading sales tactics or hide important details in the fine print. To protect yourself from solar scams, here are some tips to keep in mind:

1. Be wary of high-pressure sales tactics. If a solar salesperson is pressuring you to sign a contract on the spot or making claims that sound too good to be true, trust your gut and walk away. A legitimate solar company will give you time to review your options and make an informed decision.
2. Always get quotes from multiple solar installers. Don’t just go with the first company that knocks on your door or sends you a mailer. Get at least three quotes from different installers so you can compare the costs, benefits, and financing options side-by-side.
3. Ask for a detailed estimate of your long-term savings. A reputable solar company should be able to provide a clear breakdown of your estimated savings over the 20-25-year lifespan of the system, based on your specific energy usage and the financing option you choose. If a company is vague about your savings or only focuses on the short-term, that’s a red flag.
4. Read all contracts carefully before signing. Solar contracts can be complex, with lots of fine print and legal jargon. Don’t feel pressured to sign anything on the spot. Take your time to read through the entire contract, ask questions, and make sure you understand all the terms and conditions. If something doesn’t make sense or seems too good to be true, ask for clarification in writing.

To help you spot potential scams, here are some common red flags to watch out for when shopping for solar:

• High-pressure sales tactics (e.g. “this deal is only available today!”)
• Vague or misleading claims about savings (e.g. “eliminate your electricity bill forever!”)
• Contracts with hidden fees or escalating payments
• Salespeople who avoid questions or give evasive answers
• Companies with no track record or poor customer reviews]

By following these tips and being an informed consumer, you can avoid solar scams and enjoy the many benefits of clean, affordable solar energy for your Arizona home.

Wrap-up

While the idea of “free solar panels” may sound appealing, it’s important to understand the potential drawbacks of solar leases and PPAs. For most Arizona homeowners, purchasing solar panels with cash or a loan offers the greatest long-term savings and flexibility.

However, leases and PPAs can still be a viable option for some, particularly those who can’t take advantage of solar tax credits or secure financing. The key is to be an informed consumer, gather multiple quotes, and carefully consider your specific needs and goals.

Regardless of the financing path you choose, going solar in Arizona is a smart investment thanks to our state’s abundant sunshine and attractive incentives. By making the switch to clean, affordable solar energy, you can save money, reduce your environmental impact, and contribute to a brighter future for Arizona.

If you’re ready to explore your solar options, get a solar quote from a reputable local installer today and take the first step towards energy independence.