When done right – sized, located and installed properly – a solar energy system is a great way to reduce your reliance on utility companies and, eventually, to achieve energy independence at your home or office. State and federal governments know this and provide incentives to further inspire home and business owners to ‘go solar.’ There are companies and individuals who are abusing the incentives and the customers they’re supposed to serve.
These calculating companies have a focus on selling Power Purchase Agreements (PPA) and or leasing solar PV systems for the sole purpose of profaditing on the government tax credits and state incentives. Paul LaBarbera, the owner of Magitek Energy Solutions, Inc. and one of the leading authorities on solar energy in the Midwest, stated that responsible solar companies focus on ensuring that a home or business owner’s system is optimized to provide the most energy and the greatest return on the investment in the system.
One of the problems is that these deceiving companies are using up incentives offered by state and federal governments to install systems that are not very efficient. In fact, some of their installations constitute outright fraud. This is particularly troublesome when they convince home or business owners to lease solar energy systems or sign a PPA (Power Purchase Agreement). The solar energy company reaps the benefits of all the incentives because they actually own the system.
“These companies are chewing up incentives with poorly conceived system designs,” said LaBarbera. “You’ll see systems they’ve installed that are facing north. North facing systems will produce as much as 50-percent lower output per panel. They’re also installing systems where trees or other structures shade the solar panels and significantly degrade their efficiency and financial practicality. The state and federal governments are paying for these poorly designed systems and the companies are taking advantage of the consumers, too.”
The government provides a certain amount of funds for incentive programs. When the first allocation level of funds is used up, another level is available, but at a lower percentage of incentive to the consumer. Companies abusing the system will slap solar panels randomly on a roof with a focus on collecting the highest amount of incentives rather than designing the system to have the highest efficiency.
“They’re not only taking advantage of the government and the consumer, they’re also taking advantage of other people who would use those incentives properly,” said LaBarbera.
But let’s say you’re still considering a PPA or lease. Why wouldn’t you – after all they’re free, right? Wrong! With strings attached, ‘free’ solar panels are hardly free and hardly a good idea. It sounds so easy. Why shouldn’t you allow that company to come over and install its solar panels on your roof?
There’s an old saying that “there is no free lunch.” Homeowners would do well to keep this in mind when considering the offers of companies that offer ‘free solar panels for their roofs.’
The promise is that you can lease solar panels or purchase the power generated from the solar panels and save the cost of installing solar panels. But a Power Purchase Agreement (PPA) or leasing solar panels comes with strings attached that homeowners would do well to consider. For instance, companies offering ‘free’ solar panels are quick to point out the state and federal tax incentives and grants available for installing solar panels on your roof. But, if you’re leasing the panels or sign a PPA, who really receives the benefits of the incentives and grants?
The answer is that the companies offering ‘free’ solar panels reap the benefits. It costs that much less for them to put the solar panels on your roof as they become the middlemen in your home’s electrical grid.
If you purchase solar panels yourself, you receive the benefits of tax incentives and grants. They reduce your investment and shorten the amount of time it takes before your savings have paid for your solar energy system. Once you’ve reached that point in the equation, the electricity produced by your solar panels is yours. You don’t owe anyone for it – not the utility and not the middleman who installed so-called ‘free’ solar panels on your roof. But there are other strings.
With a PPA or leased solar panels on your roof, you’re dealing with someone else owning that equipment. It’s as though they’re the landlord with a contract, that covers everything, from the roof down. Keeping in mind that a typical contract is 20 years, it begs the question: what happens when you decide to sell the house and move?
What happens is that you have a landlord who needs to be appeased. That means you have to purchase the solar energy system yourself or convince the new homeowner to: A. purchase the solar energy system from the landlord or, B. sign up for the remainder of the contract. This makes the presence of solar panels on your roof a potential sticking point in negotiations to sell your home.
On the other hand, if you own the solar panels on your roof, your solar energy system increases the value and appeal of your home. Even though they’re paid for, you’re still receiving money back from your investment.
And what about the cost of the lease or PPA? If electrical costs go up, your payments will go up. You may find yourself paying more for the electricity overtime than what you started paying. But if you own the solar panels, you don’t have to pay the increased cost of the utility’s electricity you’re not using.
And what about the quality of the installation of the solar panels. Based on the agreement, these ‘free’ solar panel companies have demonstrated a less than optimal approach to installing solar panels on their tenant’s roofs.
We live in the Northern hemisphere. Where solar panels are concerned, this means that the Southern exposure of the roof is the most efficient placement for solar panels. Eastern and Western exposures can have some value but the Northern exposure is of such low value that it’s not reasonable to place solar panels on that portion of a roof. And yet, the ‘free’ solar panel companies are doing just that. They even place solar panels on roofs where trees and other obstructions will block the sunlight thereby reducing the value of those solar panels to nearly zero.
Many homeowners who purchase solar panels will finance the installation. The payments are generally less than or equal to the leased payments for energy from someone else’s solar panels on their roofs. The financed payments will end. Unless you remember to cancel at the end of your contract, the ‘free’ solar panel payments will go on indefinitely.