Many homeowners believe that solar companies are solely focused on making money from them. Is solar a scam? While it is true that solar providers are businesses seeking to generate profit, the way they earn money ultimately leads to long-term savings for customers. Here’s how it works.

Utility companies hold monopolies in their service areas, which means that no other electricity provider can compete for your home. This lack of competition shields energy companies from the need to earn your business. Over time, electric companies raise their rates to cover expenses, inflation, and to pursue profits. For example, a rate may start at 10 cents per kilowatt-hour. After one year, it increases to 12 cents. Ten years later, it could reach over 25 cents per kilowatt-hour.

These companies also use tiered rate pricing. This means you pay a higher rate once your home uses over 1,000 kilowatt-hours in a month. The more you use, the more you pay per kilowatt. For the average home that uses 1,800 kilowatt-hours in the summer with air conditioning, the electric company makes them pay a premium. This punitive pricing hurts families trying to keep their house at safe temperatures. Think about it: most companies reward you for purchasing more of their services. These companies just charge you more and threaten to shut off your power altogether, knowing that you NEED more energy. If that isn’t taking advantage of families in need, who knows what is?

Solar companies have a unique pricing model. When you install solar panels, you enter into a long-term contract for financing or leasing. With financing, this contract ensures a fixed rate for the cost of the solar system. For instance, you might agree to pay $150 a month for the next 25 years. Regardless of the amount of energy the panels generate, this rate of 15 cents will remain constant. This ensures that the cost you are paying will not increase over time. The contract provides assurance of predictable costs for many years to come.

If your electric rate increased only 3% every year, many homes using a normal amount of electricity would be paying over $100,000 over 25 years… then continue paying every month after that. Solar panel’s tend to cost about 60% over 25 years what homes increasing their rate by 3% a year would be paying. And just for some perspective, many homes in Florida had their rates increase by around 30% last year… That’s three-zero…

Over 25 years if you started by paying $150 a month, the electric company’s rates could cost you over $100,000 total. The solar contract would cost around $60,000 total over that time. The solar provider profits on your purchase of the solar system, the financing company profits on producing the money up front and charging a percentage for themselves. Yet they save you tens of thousands compared to rising electric company rates.

Leasing still saves you money, but it works a bit differently. Leasing charges you a monthly rate to operate the panels for you. Leasing has a monthly rate like the energy company that adjusts with inflation, but it starts at a lower price. Leasing solar panels tends to cost $20-$50 less than the energy company. It increases 2.9% a year, which is lower total than the rate increases for the energy companies (again, one company in Florida increases by around %30 in 2023). So its a similar principle as paying your rates as you do now, but the costs are lower and the increases are capped, so you still save a ton of money.

Solar companies make profit, but in a way that provides predictable, affordable energy for your household. Instead of being price gouged, solar gives you price stability and protection from inflation. The next time you think solar is a money-making scam, remember – the solar contract saves you much more money than what you pay the electricity provider. That’s a winning deal for any smart homeowner. To see if your home qualifies, schedule a free Home Efficiency Assessment now! Our energy specialists will come to your house at a time that works for you, look at your utilities and expenses, and see how Zone 5 can save you money. We make money, the electric company takes less, and you save big!