How to Read a 'Free Solar' Pitch Before You Sign Anything

If you spend any time online, you have seen the ads. 'New government program gives free solar panels to homeowners in your ZIP code.' There is no such program. There never was. What is actually being sold is a long-term contract where someone else owns the equipment on your roof and you buy the electricity it produces, or you pay a flat monthly fee for the privilege of hosting it.

These contracts are called PPAs (power purchase agreements) and leases. They are not inherently evil. For a homeowner with no tax liability and no cash for a down payment, a fair PPA can still save money. The problem is that 'fair' is doing a lot of work in that sentence, and most of the contracts circulating door to door right now are not fair.

The first clause to look for is the escalator. This is the annual rate increase baked into your payment. A 2.9% escalator sounds modest until you compound it across 25 years. A system that starts at $120 a month finishes at around $240. If your local utility raises rates more slowly than the escalator, the math eventually flips and you are paying more for solar than you would have paid the grid.

Next, check the production guarantee. A good PPA promises a minimum number of kilowatt-hours per year and writes you a check if the system underproduces. A bad PPA quietly omits this, which means a shaded or undersized array is your problem, not theirs.

Then read the transfer language. You will probably sell the house before the contract ends. Some leases require the new buyer to qualify with the leasing company's credit standards, which can spook a buyer in the middle of a sensitive negotiation. Others let you prepay the remaining balance, which can run into tens of thousands of dollars.

Finally, ask who keeps the 30% federal credit and any state rebates. In a lease or PPA, the answer is always the leasing company. That single fact is the reason these products exist. The installer collects your incentives, monetizes them, and gives you a fraction of the savings back in the form of a discounted electricity rate.

If a salesperson cannot answer questions about the escalator, the production guarantee, the transfer terms, and who owns the tax credit, the conversation is over. Walk away and get a cash or loan quote from a local installer for comparison. Even if you ultimately choose the PPA, you will understand what you are signing.