What you need to know about increasingly popular solar leases and PPAs
As a homeowner, you’ve probably considered the many pros and cons of solar panels. While the benefits generally outweigh the disadvantages, solar panel cost tends to deter people from going solar. However, there are other options worth exploring that allow you to go solar with little to no upfront cost, such as programs that offer “free” solar panel installation on your home.
Like with most free things, these solar programs have a catch (spoiler alert: they aren’t actually free). Here’s what you need to know about free solar panel options, including common myths, eligibility factors, and solar tax breaks.
In this article:
- How do “free” solar panel programs actually work?
- Where and how “free” solar options are delivered
- Benefits of “free” solar panels
- Potential drawbacks of leases and PPAs
- How to qualify for “free” solar panels
- Common myths about “free” solar panels
- Government incentives and policies
- “Free” solar panels: Read the fine print
- Frequently asked questions
How do “free” solar panel programs actually work?
There are a few common ways to go solar with no upfront installation costs, most often through solar leases or power purchase agreements (PPAs). These options are frequently promoted as “free solar panel” programs — but while you won’t pay to purchase the panels themselves, they’re not entirely free. You’ll still pay for access to the energy they generate, and you won’t own the system outright.
Both leases and PPAs fall under a model known as third-party ownership (TPO), where a solar provider installs and owns the panels on your property. This arrangement has become increasingly popular: according to Aurora Solar’s 2025 Solar Snapshot, more than half of installers (51%) now say their customers prefer TPO options over paying with cash or a loan.
In the next sections, we’ll explore the key differences between solar leases and PPAs to help you decide if either “free” solar option is right for your home.
Solar leases: rent panels, reduce your energy bill
With a solar lease, homeowners rent their solar panels versus buying them outright. While you’ll have to make monthly payments to your solar panel provider, you can still benefit from the power generated by the solar panels. The idea, of course, is that the money you save on your electric bill is more than your monthly lease payment, so you save money overall.
Solar leasing will save you on upfront costs while lowering your monthly utility bills, but your long-term savings will ultimately likely be lower than if you owned your solar panels. Additionally, leasing means you aren’t eligible for solar tax credits or incentives.
Power Purchase Agreements (PPAs): pay for solar electricity, not the panels
Homeowners who enter into a PPA have no ownership over the solar panels installed on their homes. Instead, a third party owns and operates the solar panels, and the homeowner agrees to buy the electricity that the solar panels generate — often at a discount.
There are zero upfront investment or upkeep costs associated with a PPA, so in that sense, the solar panels are “free.” Similar to a solar lease, potential long-term savings are much lower, and you won’t benefit from any solar tax breaks.
Where and how “free” solar options are delivered
Most “free” solar panel options, including leases and power purchase agreements (PPAs), involve installing panels directly on your property under a third-party ownership model. However, if rooftop installation isn’t viable for your home, there are other low-cost ways to access solar energy without owning a system, such as community solar. Below, we break down how these delivery methods work.
On-site solar for your home: lease or PPA options
If your property is suitable, you or your landlord can host solar panels, typically on your roof, through a lease or PPA that often requires no upfront installation cost. While you won’t own the equipment or qualify for tax credits, you’ll make monthly payments — either a fixed lease fee or a rate based on how much electricity the system generates — depending on your agreement.
Community solar: access shared solar energy without panels on your roof
If rooftop solar isn’t an option due to shade, limited roof space, renting, or budget, community solar offers another way to benefit from clean energy. Rather than installing your own panels, you subscribe to a share of a nearby solar project and receive credits on your electric bill for the energy it produces.
While community solar isn’t typically marketed as “free,” it often requires little to no upfront cost and can still help lower your monthly electricity expenses. Availability varies by state, so be sure to check what’s offered in your area.
Benefits of “free” solar panels
With a solar lease or a PPA, you can benefit from solar energy at much lower upfront costs, and still get lower monthly utility bills and a smaller carbon footprint.
Cost savings on energy bills
Whether you have a PPA or a solar lease, you could see a decrease in electricity costs, but the actual savings will depend on several factors. These include the rate offered in your PPA or lease agreement and how that compares to your local utility’s electricity rates, how much solar energy your system produces, and how much electricity your household uses. For PPAs, the fixed or escalating per-kWh rate you agree to should ideally be lower than your utility’s retail rate.
The bottom line: Always compare actual quotes to your recent utility bills to understand your potential savings.
Environmental impact
No matter how you go about it, switching to solar energy is more sustainable than using electricity from the grid, which is often powered by fossil fuels. Relying on a renewable resource, like solar energy, will lessen your household’s environmental impact.
Maintenance and repairs
For both solar leasing and PPAs, the solar company that owns the solar panels is responsible for regular maintenance and repairs. Not only does this save you cash as a homeowner, but it also ensures that you won’t be stuck with damaged solar panels.
Potential drawbacks of leases and PPAs
There are a few drawbacks to leasing solar panels or entering into a PPA compared to buying solar panels outright. Here are the three main disadvantages of “free” solar panels worth considering.
Long-term contracts
Both solar leases and PPAs tend to come with long-term contracts in the ballpark of 15 to 25 years. If you move or sell your home before the contract is up, you’ll either need to transfer the agreement (which isn’t always easy) or buy out the remaining contract, often at a premium.
Property value considerations
Unlike owned solar systems, which typically add to your property’s value, leased or PPA systems generally do not increase your home’s appraised value since they represent an ongoing financial obligation. In some cases, they can even complicate a home sale, especially if buyers are hesitant to assume the contract terms.
Solar tax credits and incentives
While federal and local solar incentives are a good thing, you won’t be able to take advantage of them if you have a solar lease or PPA because you don’t technically own the solar panels at your home.
How to qualify for “free” solar panels
While “free” solar programs cost less than investing in your own solar setup — at least initially — these contracts are still serious financial commitments. From checking your credit score to performing an at-home assessment, here’s what to expect when applying for one of these programs.
Credit score and financial requirements
Most “free” solar panel programs, particularly solar leases, require an initial credit check. Even if the solar option you’re considering doesn’t have any financial requirements, they want to make sure you’re able to keep up your end of the bargain for the length of the contract. If you default, you may face monetary penalties. Most require a credit score around 650 (some accept scores as low as 600), though certain community solar programs — like low-income Solar for All initiatives — waive credit checks entirely.
Property assessment
Solar leases and PPAs usually require an in-person property assessment during which an expert will examine your home and property to determine if it’s suitable for solar panels and the ideal system size. If your roof is not in good condition or your location doesn’t receive much sunlight, then it may not be fit for solar panels.
Common myths about “free” solar panels
Some common misconceptions have arisen with the popularity of “free” solar panel programs and contracts. Here’s the truth about these solar myths.
Myth: They are completely free
While programs like solar leases and PPAs can technically get you “free” solar panels that you don’t have to pay for upfront, you don’t own the solar panels and, therefore, can’t benefit from tax credits, local rebates, or the maximum amount of lifetime savings. Plus, leases and PPAs lock you into 20–25-year contracts — often with annual escalator clauses that hike payments by 2–3% for inflation and have steep buyout fees if you exit early — so “free” panels can still carry hidden long-term costs.
Myth: All programs are the same
You must conduct your own in-depth research before entering a solar lease or PPA because these contracts can differ greatly. From monthly payment increases to lease buyouts, you need to know the long-term cost of the “free” solar panel program that you choose. Before you sign, ask each provider:
- What’s the escalator rate? How much will my payments rise each year?
- What are the buyout terms? How much does it cost to own the system before my contract ends?
- Can I transfer or terminate? What happens if I sell my home or move?
- Who handles maintenance? Are repairs and replacements covered, and at what cost?
- What performance guarantees exist? Is there a minimum production guarantee or service warranty?
- Who claims tax credits? Confirm whether you or the provider will take federal and state incentives.
Government incentives and policies
To encourage people to adopt solar energy in their homes, the federal government has established significant tax credits. State and local governments have followed suit, outlining incentives for residents who install solar panels.
Federal tax credits
Thanks to the Residential Clean Energy Credit, homeowners can get a 30% tax credit for solar panels and other clean-energy properties (like geothermal heat pumps or wind turbines) placed in service from 2022 to 2032, but this doesn’t apply to “free” solar panel programs. Only homeowners who purchase their solar energy system can qualify for the tax credit. This is detailed by the IRS and DOE.
A quick note: The Federal tax credits for solar are at risk in the latest U.S. budget. You can learn more about what’s at stake and what you can do here.
State and local incentives
Some state and local governments also offer incentives for those who buy solar panels and switch to solar energy. For example, Florida supports solar adoption with a state sales tax exemption on solar system purchases and a property tax exemption that prevents home value increases from installations.
Visit the Database of State Incentives for Renewables & Efficiency and enter your ZIP code to see all the state and local solar incentives available in your area.
“Free” solar panels: Read the fine print
Just because you can’t afford to buy solar panels for your home doesn’t mean you can’t use solar energy. From solar leases to PPAs and community solar programs, it’s easier than ever to power your home with solar energy and save some cash at the same time. If you’re ready to go solar, it’s important to evaluate your options carefully, keeping an eye out for hidden fees, long-term contracts, and tax credits and incentives.
Frequently asked questions
Are “free” solar panels really free?
Yes and no. “Free” programs like solar leases and PPAs eliminate upfront equipment costs — but you still pay monthly (via lease fees or per-kWh rates), and you don’t own the system. That means no federal tax credit, no state rebates in your name, and potential escalator fees or buyout charges.
Who owns the solar panels in a “free” solar panel program?
In solar leases and PPAs, the solar panels are owned by a third-party solar or financing company that charges the homeowner for monthly lease payments or monthly energy costs, respectively. You pay them but never hold title to the equipment.
What are the eligibility requirements for “free” solar panels?
Most free solar panel programs, including solar leases and PPAs, require a credit check and home assessment to determine whether you qualify and if your home is suitable for solar panels.
What happens if I sell my house with leased solar panels?
If you are selling your house before the end of your solar lease or PPA, you will either have to buy out the rest of your contract or find a homebuyer who is able and willing to take over your contract. Failing those, you may face penalties or be required to pay off the balance at closing.
Are maintenance and repairs included with “free” solar panels?
Yes, if you do not own the solar panels installed on your property, like in the case of a solar lease or PPA, you are not responsible for regular maintenance or repairs.
Can I qualify for government incentives with “free” solar panels?
Unfortunately, if you have solar panels through a PPA or solar lease, you aren’t eligible for government incentives or tax credits. Only people who buy and install solar panels on their property can take advantage of these programs.
