Submitted. The end of 2025 marked the expiration of the residential federal solar income tax credit, followed by a sudden proliferation of advertisements promising “Free Solar.” The word free—that magical four-letter term that soothes the ears and often shuts off the brain—has pushed into obscurity the age-old wisdom that you get what you pay for. Otherwise sharp kollel minds and even savvy businesspeople have been lured by the promise of effortless riches, suddenly bestowed by some invisible benefactor, usually assumed to be the government.

Alas, old wisdoms remain true, and the government is not nearly as generous as it may appear. So what, then, is the secret behind “Free Solar”? It is not a Ponzi scheme. Rather, “Free Solar” is simply the marketing name for solar leasing.

In a leasing arrangement, a solar leasing company purchases and owns the photovoltaic (PV) system installed on a customer’s roof. The electricity produced by the system reduces the customer’s electric bill, and in exchange the customer pays a fixed monthly lease payment. In addition, the leasing company collects the Solar Renewable Energy Certificates (SRECs), which are payments made by the State of New Jersey to solar system owners for energy production. The leasing company also claims the commercial federal investment tax credit, which—unlike its residential counterpart—has, for now, survived the passage of the OBBB legislation. This combination of revenue streams allows leasing companies to generate sufficient profit to generously compensate installers and sales teams, and in some cases even pay for a customer’s new roof.

What, then, does the customer gain? In most cases, the customer does save money, since the reduction in the electric bill typically exceeds the lease payment. When a new roof is included, that benefit may in fact become the primary financial incentive. However, there are important strings attached. Solar leases generally require a 25-year commitment, during which the customer is prohibited from removing the panels. If the homeowner undertakes construction that significantly alters the roof, they may be required to buy out the system at a contractually defined “buyout price,” which is often substantially higher than the system’s actual market value at that time.

The reader may wonder whether a better option exists. The answer is yes.

One alternative is for a friend or relative to purchase a solar system and lease it to the homeowner on more favorable terms than those offered by commercial leasing companies. This approach allows the system owner to claim the 30% federal income tax credit and potentially other tax benefits. The precise structure of such an arrangement should, of course, be reviewed with a qualified tax professional.

Another option is to purchase the system outright. While this requires significant upfront investment, the total cost is typically less than half of the cumulative lease payments over a 25-year period. In this case, the homeowner receives the SREC income directly, which—together with electric bill savings—generally pays back the system cost within 4.5 to 6 years.

Finally, solar systems can be financed. Financing with zero down payment may appear similar to leasing at first glance, but the loan term is usually shorter, and the homeowner retains ownership of the system and receives the SREC income. This significantly increases monthly savings compared to a lease.

Below is a case study comparing a 25-year lease with a 20-year financing option offered by Climate First Bank. Both proposals are for an 18.92 kW solar PV system installed on a home in Lakewood, New Jersey, and were issued in January 2026.

Table 1. Comparison of the monthly payments and average monthly savings

As shown in Table 1, the financing option produces substantially higher monthly savings. It should be noted that SREC income is available only for the first 15 years of operation. As a result, during the final five years of the loan, monthly savings under the financing option will be lower than those of the lease. However, this temporary disadvantage is more than offset by the fact that loan payments end after year 20, while lease payments continue for the full 25 years.

The total savings over the system’s lifetime are shown below.

Table 2. Lifetime savings from leasing and financing options

As can be seen from this table the lifetime solar savings with financing are 60% higher than with the leasing option.

Solar energy can indeed reduce household energy costs, but the way in which a homeowner goes solar matters greatly. While leasing arrangements marketed as “Free Solar” can offer modest monthly savings and low upfront costs, they come with long-term contractual limitations and significantly lower lifetime financial benefits. Ownership—whether through direct purchase or financing—allows homeowners to capture the full value of their solar systems, including SREC income and long-term savings after payments end. As the case study demonstrates, financing in particular provides substantially greater lifetime savings than leasing. For homeowners who can qualify, owning solar is not only the more flexible option—it is also the more financially sound one.