The ad is enticing: “Free solar panels programs,” it reads before explaining that a company installs free solar panels on your roof and then “you produce clean energy and share in the benefits. You enjoy a more sustainable home and we take care of all the maintenance.”

In the foreground of the ad you can see a smiling man and his baby, while a smiling woman is at the front. 

“Free solar, no catch,” reads another ad. “Apply now for free solar panels. Includes installation,” it shouts showing a home with solar panels on its roof.

However it's presented, whether in capital letters or lowercase ones, if the offers sound too good to be true is because they’re not totally “free.” Instead of smiles, you’ll probably end up with a frown and a long-term contract that can ultimately cost you a fortune.

What’s the catch?

The catch in these offers is that yes, while the panels and installation of those modules is free, the offer is tied to a lease where you agree to pay a monthly fee as part of a long-term contract (15-25 years).

In a story from last August in the Hanford Sentinel, California State Assemblymember Joaquin Arambula explained a situation where a door-to-door salesman told an elderly, Spanish-speaking man that he was eligible for free solar panels. “The salesman told the gentleman that he needed to sign on a computer tablet so they could inspect the roof - what he really unknowingly signed was a contract.”

Central California Legal Services was later able to get the man out of the contract without harming his credit, plus a $900 reimbursement. Otherwise, the man would have been responsible for payments over 25 years totaling $35,000.

Most financial experts agree that leasing creates additional problems over purchasing a system outright or paying for one that you will ultimately own. 

That’s not too say that leasing a solar power system for your home is a bad idea in all cases. For one, yes, you don’t have to pay anything upfront. A solar power system can run you on average between $10,000 and $15,000, which can be out of reach for some people.

If you lease the solar panels and equipment, you can start saving on your electricity bill without having to take money out of your pocket, which could cover the monthly cost of the lease. 

Another advantage is that the lessor is often responsible for the maintenance of the panels and other equipment. If something goes wrong, all you do is call them and report the problem.

When the lease term is up, you can either renew or put an end to the agreement.

But if none of those scenarios applies to your situation, the lease can come with a hefty price.

The way a solar service provider make its money back to cover the cost of the panels, installation, permits, monitoring and maintenance of the system for the term of the lease is by acquiring the incentives, rebates and net metering profits from the system they install for you at no charge.

And those incentives and credits can reduce the price of a home solar system by thousands of dollars. In addition, solar systems usually generate more power than you can use for the home, and that extra electricity is sent to the utility in exchange for credit on your bill when you take energy from the grid when the panels aren’t working. That’s called net metering and those profits can be substantial depending on your energy needs.

Something else to keep in mind is that solar power systems are usually guaranteed to keep generating power for 25-30 years. Often, the payback period for a solar system can be achieved in 6-8 years, meaning that it will be completely “free” for two decades or more. 

Another issue with solar leases is that the contracts often contain escalators, meaning the amount you pay to the solar company goes up over time. 

And perhaps most important of all, if you decide to sell your house and you’re not done with the solar lease, you may have trouble finding a buyer willing to take on the lease. You’re only option might be to pay the buyout clause stipulated in the lease

Instead, when you own the solar system, it actually adds value to your property and is more attractive to potential buyers. 

To find out how much it would be to cover the equipment and installation of a solar system for your home, you can get a fast, easy quote through the Hahasmart price checker that gives you this information in seconds by simply using your address and average monthly utility bill.  

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