Ever wondered why solar companies are so fond of the word “free?” After all, what could be a bigger red flag for a consumer than a company promising something free? Most people love to remind us that there is no such thing as free. So why do some solar companies sound like broken records when promising free panels, free installation, and free maintenance? Well as it turns out, there’s a pretty good reason behind it, and to be fair it’s actually not a bad word to use. To understand why “free” solar can actually work (and why you’ll probably keep hearing that word in association with solar for a long time), let’s take a look at a few things.
- Power Purchase Agreement. Have you ever heard of a PPA or Power Purchase Agreement? This is the actual term for potentially being able to go solar with nothing out of pocket, aka “free.” All it means is that you don’t own the system, the solar company does. They do the work of putting the system up, they keep the equipment (and any incentives including the federal tax credits), and you pay for the power. Why would anyone ever agree to this? Well, PPAs were invented for large-scale projects for selling power to utility companies. However, because of how easy it is to do on a small scale, solar companies have started offering it to homeowners. By design, a PPA should save a homeowner money. And not just in the long run, but from day one. So in the most basic of terms, the solar company puts the panels up and makes sure the panels always work. The homeowner pays for nothing other than the power the system produces. How much? Well, it depends on the system. However, your total monthly energy costs must be lower than if you didn’t have solar, otherwise there is no sense in entering into this agreement.
- The cost of cash. The prevailing assumption among homeowners who are not solar-savvy is that going solar is an investment. It’s widely assumed that in order for solar to do anybody any good, it must be a long, slow “stick-it-out through thick-and-thin” sort of thing. The truth is, when it comes to ownership models, solar isn’t all that different from the automobile industry. In other words, owning vs. leasing a car is a very old debate. The benefits of owning solar vs. entering a Power Purchase Agreement are certainly up for discussion, but only if you have cash! What’s clear to just about everyone is that getting a solar system installed and paid for upfront is expensive, which is exactly why alternatives exist! In fact, the CEO of the largest installer of residential solar systems in the USA told Forbes that the biggest challenge faced in the solar industry is education (http://fortune.com/2015/09/29/solarcity-ceo-customers-education/). So when you do make that decision on solar, just be sure you look at both sides of the issue.
- DIY Options. Occasionally, we hear about homeowners who want to go the “do-it-yourself” route and have taken upon themselves the task of installing their own solar. Perhaps it’s the seemingly simple nature of the system (no moving parts!) or the good old-fashioned desire to stick it to the man (freedom!). After all, what could be so hard about attaching some panels to the roof and wiring them to the home? Here are a couple of things to consider:
- Permits. Did you know that both your city and your utility company have to issue you a permit to install and operate a solar system? Seems simple, but think of the last time you waited on hold with the power company. Now imagine having to do something more complicated than resolve a billing issue, and think of how fun that would be. Solar companies do this every day for their clients and will gladly do it for you as well.
- Equipment. Most consumers understand that not all panels are created equal but not everyone realizes that there are more than just panels and wires in a solar system. How confident are you that you can correctly wire an inverter? Or replace one if it goes out? (Note: solar panels easily last 20+ years. Inverters’ average lifespan is only about 10).
- The unknown. Let’s say you did manage to install your system correctly. However, after a month of use it stops working. What do you do now?
For these reasons and others, unless you are an electrician or trained solar technician, it’s generally best to leave something like solar to the pros.
In the end, is it any surprise that solar companies push “FREE” PPAs? Most people still think of solar in terms of “paying for itself” over time, instead of saving from day one with “solar as a service.” It’s true that over the life of the agreement, solar companies profit more from PPAs, but when you consider the high up-front cost alternatives out there, in many cases, a PPA is a win-win. PPAs may have been originally designed for utility companies, but they have some pretty attractive features for homeowners as well, especially when it comes to warranties and maintenance. To see whether going solar is right for you, be sure to visit Crius Solar for a solar consultation today!