If you live in the United States or Canada, you’ve probably seen many advertisements saying you can save a lot of money by installing solar panels on your home. You might have even been told that your state or provincial government will give you incentives or rebates if you sign up. But is this true? Can you significantly cut high energy costs by installing solar panels on your roof?
Renting & Owning Panels
Whether you purchase the solar panels and system or rent them will affect your results.
Private companies offer potential customers the chance to have solar panels installed on their homes for free, but the customer will not own the panels. They will be leasing the panels and paying for the electricity. And most of the time, they end up paying more to lease the panels than if they had purchased them themselves.
Let’s look at what solar panels can do for the homeowner.
What Are Solar Panels?
Solar panels are a collection of photovoltaic cells that are arranged in a grid on top of a panel. The cells absorb the sun’s rays and transform the light from the sun into electricity that is then used to provide power.
When you install these panels in your home, they help combat harmful emissions of greenhouse gasses and help reduce global warming. Today, they are considered a clean and renewable source of energy.
What Solar Companies Claim
This is what the companies claim: if you install solar power systems in your home, you can lower your electric bills, reduce your carbon footprint, and potentially raise the value of your home.
Some companies even claim that once you pay off the high cost of installation, you could potentially power your entire home for free.
Beware of Misleading Information
Aggressive salespeople are giving potential customers a lot of misleading information, and many people are getting scammed. Below are some of the things solar power scammers are doing.
Power Purchase Agreement Contracts
A Power Purchase Agreement (PPA) is a contract the company will get you to sign that will lock you into a decades-long agreement with the company. They will appear to have your best interests at heart and make everything easy for you. They will provide all the solar power equipment and install it “free of charge.” However, once the customer is locked in, they discover that the costs are higher than they were told or anticipated. And once they’re locked in, it’s nearly impossible to be released from the contract without paying an excessive amount. Some customers end up paying tens of thousands of dollars just to get out of the contract. Be extremely cautious when committing to a long term PPA.
Bait and Switch Tax Credit Guarantees
If you search for solar power companies or even pay attention to the ads you see on YouTube, you will often hear them mention a tax credit whereby the United States federal government will reimburse up to $12,000. What they aren’t telling you is that the tax credit is for people who purchase the entire system outright.
Most of these companies are leasing solar power equipment, and the customer does not own it. Therefore, the consumer is disqualified from any federal tax credits, and the solar company gets the credit instead.
In Canada, things are slightly different. Though Canadians are also being scammed, as of June 2022, some provinces do offer incentives and rebates. You can check here to see if your province offers any rebates or incentives. Just know that these decisions change at any given time, and the website encourages you to verify with the province whether the rebate or incentive is still being offered.
The Promise of Unrealistic Savings
Many people have found themselves in financial debt because they were promised their energy bills would be decreased to nearly nothing. Or, if they go with the company’s plan, it won’t cost them a penny. This is not true.
Most of the ads that catch consumers’ attention are the ones claiming to be government-funded programs that will get you free solar panels for your home.
According to the website Verify, a company with the mission to stop the spread of false information, the United States federal government is not giving away free solar panels. These ads are misleading.
The FTC warns potential customers to read the contract carefully before signing it. “Most people will pay more over the lifetime of a solar lease than if they purchased and financed a system,” the Illinois Citizens Utility Board says.
Is It Better to Buy the Solar Panels Yourself?
If you are thinking about buying your own solar power system, there are a few things to consider that will aid you in making the best decision for you and your family.
- How much will the solar power system cost?
- How much energy will it produce for the system you purchase?
- How does that cost compare to what you already pay for the same energy use?
- How long will it take for your upfront investment to pay for itself in saved energy costs?
- Will the system pay for itself in five years?
If you already have the capital to pay upfront and are comfortable with all the answers to the five questions above, solar power could be a good option.
There is a great tool to help you get started, especially if you are new to considering solar power. Solar Reviews is a website that has a calculator that can give you representative costs and savings for a solar power system in every part of the United States. This tool is invaluable for beginners who need help understanding the basic costs.
Another website that can help you make all the calculations in order to reach the right decision is Investopedia. Their site enables you to calculate all of your initial costs as well as the approximate energy you use on a daily basis. After you’ve worked through the calculations, you should end up with the number of years it will take for your solar system to pay for itself in savings.
If you are fortunate enough to live in a very sunny part of the world and are struggling with high utility bills, you could potentially start to see the benefits of installing a solar power system within five years. On the other hand, some homeowners have had to wait 10 or 20 years before reaping the savings.
To avoid becoming a victim of a solar power scam, do your research. If you feel rushed or pressured into deciding, take caution. Dedicate the time to investigate different companies and read online reviews from customers before purchasing or leasing.
About the Author: Alexandra Christensen is a freelance writer and single mom of three adopted kids with unique abilities. She is a novice homeowner and spends a lot of time on DIY sites looking for ways to make home improvements while saving some money. When not freelancing, she can be found at https://medium.com/@alexandra_creates.