By Solar Expert
July 29, 2026
Free solar panels in New Jersey are not free. When a door knock in Monmouth County or a cold call in PSE&G territory promises "no-cost solar" or "$0 down," what is actually on the table is a financing structure — a loan, a lease, or a power purchase agreement (PPA) — and each one obligates you very differently for the next 20 to 25 years. "$0 down" describes when you start paying, not whether you pay. This guide shows you how to tell which of the three you are being offered, and how to price the entire obligation instead of the first month's payment.
As of July 28, 2026: New Jersey's residential SREC-II incentive is set at $77 per megawatt-hour for registrations received on or after July 27, 2026, paid over a 15-year term to whoever owns and registers the system — which under a lease or PPA is the provider, not the homeowner.
Official sources (last checked: July 28, 2026):
No. In nearly every case, "free solar panels" or "$0 down" is a loan, a lease, or a PPA — a financing structure, not a gift. So if you see "Free Solar Panels in Toms River" you should be aware. Panels, racking, inverters, labor, permits, inspections, and utility interconnection all get paid for by someone. The only thing a zero-upfront offer settles is who fronts that money and how you repay it: in monthly loan payments, in monthly lease payments, or in cents per kilowatt-hour the system produces.
That is not a reason to walk away. Zero-upfront financing is ordinary, legal, and often sensible. A solar loan with nothing down is the same category of consumer credit as a car loan. Leases and PPAs are legitimate, regulated products that genuinely suit some households — homeowners with no appetite for owning and maintaining equipment, or who cannot qualify for a loan on good terms.
The problem is never the structure. It is language that implies ownership or a giveaway when the contract conveys neither. If a pitch uses the word "free" and cannot produce, on request, a monthly payment figure, an escalator percentage, a term length, and the name of the party that will own the panels, you are being sold on a feeling rather than a document.
Claim: "$0 down" tells you when you begin paying and reveals nothing about what the system will ultimately cost you.
Evidence: Every solar installation carries real, unavoidable costs — equipment, licensed labor, municipal permits, electrical inspection, and utility interconnection. A zero-upfront offer does not remove those costs; it relocates them into a repayment schedule that runs 20 to 25 years. The figure that determines the deal is the total obligation over the full term, and that figure appears in the contract, not in the pitch.
Three structures sit behind almost every $0-down solar pitch: a loan, a lease, and a PPA. A loan makes you the owner of the system; a lease and a PPA leave ownership with a third party. That single distinction drives everything else — incentives, tax benefits, roof work, home sales, and how you get out early.
With a solar loan you hold title to the equipment from day one. You keep the SREC-II income, you keep New Jersey's sales-tax and property-tax treatment for qualifying systems, and you decide when the roof gets worked on. What you owe is a fixed debt to a lender, on ordinary consumer-credit terms. Zero-upfront here is unremarkable — the same arrangement millions of people use to buy a vehicle.
A lease is a fixed monthly fee for the use of equipment somebody else owns. The provider holds title, registers the system, collects the incentives it earns, and remains responsible for it as its own asset. You get electricity from the roof and a payment on the calendar. Most leases run 20 to 25 years and include an annual escalator.
A power purchase agreement charges you per kilowatt-hour the system generates rather than a flat monthly fee. Ownership sits with the provider exactly as it does in a lease. The practical difference is your exposure: in a strong production year you buy more kilowatt-hours at the contracted rate, so a sunny summer raises the bill rather than lowering it.
| Question to ask | Loan | Lease | PPA |
|---|---|---|---|
| Who owns the equipment? | You | The provider | The provider |
| Who keeps the SREC-II income? | You | The provider | The provider |
| Who gets the federal tax benefit? | Nobody — the residential credit ended for systems completed after Dec. 31, 2025 | The provider, as a commercial owner | The provider, as a commercial owner |
| What do you pay monthly? | A fixed loan payment | A fixed lease payment | A rate per kWh produced |
| Is there an annual escalator? | No | Commonly yes, roughly 1%-3% a year | Commonly yes, roughly 1%-3% a year |
| What happens when you sell? | Loan is normally paid off at closing; system conveys with the house | Buyer must qualify and assume it, or you buy it out | Buyer must qualify and assume it, or you buy it out |
| Who pays to remove panels for a re-roof? | You decide and you control the timing | A contract term — read it before signing | A contract term — read it before signing |
| How do you exit early? | Pay off the loan balance | Buyout schedule set in the agreement | Buyout schedule set in the agreement |
Claim: You can identify which of the three structures you are being offered from the contract alone, in under a minute, without any technical knowledge.
Evidence: Each structure has to name itself in the document that creates it. A loan appears as a loan or retail installment contract with a principal balance and an interest rate. A lease names a lessor and a lessee and states a monthly rent. A PPA states a price per kilowatt-hour. New Jersey requires any home improvement contract over $500 to be in writing, so the document exists before you commit — and the party named as owner of the equipment is the answer to nearly every other question in this article.
The system owner keeps it — you under a loan, the provider under a lease or PPA. SREC-II is a production incentive paid to whoever owns and registers the generating asset, so the structure you sign decides where 15 years of income lands. This is the largest concrete number hiding inside a "free solar" conversation, and it is almost never raised at the kitchen table.
The figures are public. Under the New Jersey Board of Public Utilities order adopted May 21, 2026, the residential SREC-II incentive is $77 per megawatt-hour for registrations received on or after July 27, 2026, paid over a 15-year term. Registrations received before that date were set at $85 per megawatt-hour and stay there for their full term. One SREC-II is earned per megawatt-hour — that is, per 1,000 kilowatt-hours — of generation.
NJBPU's own modeling for the 2026 review assumes a first-year yield of about 1,280 kilowatt-hours per kilowatt of installed DC capacity for a representative New Jersey system. Run that on a 10 kW-DC array: roughly 12,800 kWh in year one, or about 12.8 SREC-IIs, which at $77 comes to approximately $986 in the first year. Across the full 15-year term, allowing for normal annual panel degradation, that is on the order of $13,000 to $15,000 — depending on roof orientation, shading, and how the system actually performs.
Whether that stream belongs to your household or to a lessor is settled entirely by which document you signed. It is not a hidden fee and not misconduct; a third-party owner is entitled to the incentives its own asset earns. It is simply a five-figure line item that belongs in your comparison — and it is missing from any pitch that presents a lease payment next to your current electric bill and stops there.
Claim: Choosing a lease or PPA over a loan can move roughly $13,000 to $15,000 of SREC-II income away from a New Jersey homeowner over 15 years on a typical 10 kW system.
Evidence: The arithmetic uses only published state figures. NJBPU set the residential SREC-II incentive at $77 per MWh for registrations received on or after July 27, 2026, over a 15-year term, and its own 2026 modeling assumes about 1,280 kWh per kW-DC in year one. A 10 kW-DC system therefore earns roughly 12.8 SREC-IIs a year, or about $986, before degradation. Because SREC-IIs are paid to the registered owner of the generating asset, that entire stream follows ownership — to you with a loan, to the provider with a lease or PPA.
Under a lease or PPA, the provider does; under homeowner ownership, nobody does. That reversal happened at the end of 2025 and it explains a great deal about how solar is being marketed in New Jersey this year.
The federal Residential Clean Energy Credit, Section 25D, was repealed by the One Big Beautiful Bill Act. Per IRS guidance, it is unavailable for expenditures made after December 31, 2025, with an expenditure treated as made when the original installation is completed. In plain terms: a New Jersey homeowner who buys or finances a system finished in 2026 claims no federal residential credit for it.
The commercial credit under Section 48E was not repealed. A lease or PPA provider is a commercial owner of the equipment, so the federal tax benefit still exists inside the transaction — it simply belongs to the company rather than to you. That is a legal, disclosed structure, and it is part of how a $0-down monthly payment gets priced in the first place. It is also a fair explanation of why third-party offers are being pushed harder in 2026 than they were two years ago.
The commercial credit is not automatic, either. It carries begin-construction and placed-in-service deadlines, and foreign-sourcing content requirements that tightened during 2026, so a provider's own eligibility depends on project specifics. None of this is tax advice — ask a tax professional about your situation before it factors into a decision.
Claim: A salesperson who mentions "the 30% tax credit" on a system you would own is describing a benefit that no longer exists for you.
Evidence: Section 25D was terminated for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed — so a homeowner-owned system finished in 2026 does not qualify. The Section 48E commercial credit survived, but it is claimed by the entity that owns the equipment. Under a lease or PPA that entity is the provider, which means the credit reaches your transaction only as an input to the provider's pricing, never as a line on your tax return.
An escalator raises your payment every year, commonly by roughly 1% to 3%, so the total you pay over 25 years is far more than 25 times the first-year payment. Those percentages are a market observation rather than a regulated standard — your escalator is whatever your contract says, including zero.
The compounding is easy to underestimate. The table below converts an escalator into multiples of your first-year payment, so you can apply it to whatever number is actually on your offer.
| Annual escalator | Year-20 payment vs. year 1 | Year-25 payment vs. year 1 | Total paid over 25 years |
|---|---|---|---|
| 0% | 1.00x | 1.00x | 25.0x the first-year amount |
| 1% | 1.21x | 1.27x | 28.2x the first-year amount |
| 2% | 1.46x | 1.61x | 32.0x the first-year amount |
| 3% | 1.75x | 2.03x | 36.5x the first-year amount |
On a 20-year term the totals come to roughly 22.0x, 24.3x, and 26.9x the first-year annual amount at 1%, 2%, and 3% respectively. Take the monthly figure you were quoted, multiply by 12, then multiply by the number in the last column. That result — not the first month's payment — is the offer.
Understand what the escalator is: a bet on future utility rates. A payment climbing 3% a year is a good trade if PSE&G, JCP&L, or Atlantic City Electric rates rise faster than that, and a poor one if they do not. Nobody can tell you which way 25 years of New Jersey rate cases will go, which is why a large escalator is worth negotiating down or trading against a higher starting payment.
Claim: A first-month payment cannot tell you whether a lease or PPA is a good deal, because the escalator changes the total by tens of percent.
Evidence: An escalator compounds. At 3% a year, the payment in year 25 is about twice the year-1 payment, and the 25-year total is about 36.5 times the first-year annual amount versus 25 times with no escalator — roughly 46% more for the same equipment. The multiplier is arithmetic you can run on your own quote in a minute, which is why the escalator percentage and full payment schedule belong in writing before you sign.
An owned system moves with the house; a leased or PPA system has to be handed to someone who qualifies for it. These are the moments when a structure chosen for its monthly payment turns into a scheduling and closing problem, and they arrive years after the sale conversation is over.
A leased or PPA system typically must be assigned to your buyer, and the buyer generally has to qualify on credit with the finance company. If that buyer will not or cannot assume it, the seller commonly has to buy out the remaining balance before closing. New Jersey sellers also have disclosure obligations that cover a solar system's presence and its ownership status, so this is not something that stays quiet until the walkthrough. A loan, by contrast, is normally satisfied from the sale proceeds and the system conveys with the house.
If the roof under the panels needs replacing mid-term, the array has to come off and go back on, and who pays for that is a contract term rather than a law. On an owned system, you control both the timing and the vendor. On a leased or PPA system, the agreement decides — and the answer ranges from the provider handling it, to a flat removal-and-reinstall fee charged to you, to a requirement that the provider's own crew do the work on its schedule. Ask for that clause in writing, especially if your roof is more than about ten years old.
Leases and PPAs typically define a buyout schedule — a stated price, usually declining, at which you can end the agreement and often purchase the equipment. That schedule is an ordinary part of the contract and it is rarely discussed at the point of sale. Ask for the full table of buyout amounts by year, not a description of how buyouts generally work.
Claim: The costs of a third-party-owned system tend to surface at the worst possible moment — during a home sale or an urgent roof repair.
Evidence: Both events require the cooperation of a company that is not a party to your transaction. A sale needs the buyer to qualify with, and be accepted by, the finance company, or it needs a buyout completed before closing. A re-roof needs panels removed and reinstalled under whatever terms the agreement set years earlier. Neither is unusual or improper, but both are time-sensitive, and both are far easier to price when you read the transfer, buyout, and removal clauses before signing rather than under a closing deadline.
New Jersey gives you a written contract, a three-business-day cancellation window, and a licensing standard you can verify yourself. Under the state's Home Improvement Practices Act (N.J.S.A. 56:8-151), any home improvement contract over $500 must be in writing, and you may cancel it for any reason before midnight of the third business day after you receive a copy. That right applies to all qualifying home improvement contracts — not just door-to-door sales — the contract must state it in plain language, and any money you paid must be refunded within 30 days of cancellation.
Licensing is the other check you can run without anyone's permission. A company doing residential solar work in New Jersey needs both an electrical contractor license from the Board of Examiners of Electrical Contractors and Home Improvement Contractor registration with the Division of Consumer Affairs. Both are searchable on the state's public license verification portal, and the entity named on your contract should match the entity holding the credentials.
New Jersey has enforced these standards before. In May 2021 the New Jersey Attorney General and the Division of Consumer Affairs settled with NRG Residential Solar Solutions over allegations of deceptive sales practices that misled consumers into leasing solar panels, including unfulfilled savings promises and lease-term violations. The settlement required clearer disclosure of lease terms and payment schedules, honoring cancellation rights, and a complaint-resolution process. That is a historical enforcement action, not a description of any company operating today — but it shows what the state considers actionable, and every item in it was a disclosure the homeowners should have received before signing.
Claim: The three-day cancellation right is the most useful protection a New Jersey homeowner has against a rushed $0-down solar signing, and most people do not know it applies to them.
Evidence: Under N.J.S.A. 56:8-151, a home improvement contract over $500 may be cancelled for any reason before midnight of the third business day after the consumer receives a copy, with all money refunded within 30 days. The common misconception is that this covers only door-to-door sales; it covers qualifying home improvement contracts generally. That converts a same-day signature into a three-day review window — enough time to read the escalator, the buyout table, and the transfer clause with nobody sitting across the table.
Read what the contract calls itself. A loan or retail installment contract states a principal balance and an interest rate. A lease names a lessor and a lessee and states a monthly rent. A PPA states a price per kilowatt-hour. If the document is not in front of you, ask one question: who will own the equipment? The answer separates all three.
Yes, but only inside a narrow window, and after that the exit terms are whatever the agreement says. Under N.J.S.A. 56:8-151, a home improvement contract over $500 can be cancelled for any reason before midnight of the third business day after you receive your copy, and any money you paid must be refunded within 30 days. Send the cancellation in writing, dated and signed, to the address in the contract, and keep proof of delivery. Once that window closes on a lease or PPA, you are no longer looking at a cancellation right — you are looking at the buyout schedule, and on a 20- or 25-year agreement an early buyout in the first few years is usually the most expensive way out. This is the practical reason to price the full term before you sign rather than after.
It is a stated price at which you can end the agreement before the term runs out, usually declining year by year, and sometimes including purchase of the equipment. Buyout terms are set in the contract, not by the state, and they vary widely between providers. Ask for the full schedule of buyout amounts by year before you sign, not a general explanation of how buyouts work.
The remedies are whatever the agreement provides, and they typically include default and collection provisions, since you are the paying party under a long-term contract with a company that owns equipment attached to your house. Read the default section alongside the buyout schedule — together they define your realistic exits. If you are already in trouble on an agreement, talk to a consumer attorney rather than to the provider's retention department first.
Yes. If you cannot qualify for a loan on reasonable terms, do not want responsibility for owning and maintaining equipment, or expect to be in the home long enough for a modest escalator to stay ahead of utility rates, a lease or PPA can be a sound fit. The requirement is that you compare it against a loan with the SREC-II income counted on the ownership side, so you are choosing rather than defaulting.
Yes. In May 2021 the New Jersey Attorney General and the Division of Consumer Affairs settled with NRG Residential Solar Solutions over allegations of deceptive practices that misled consumers into leasing solar panels, including unfulfilled savings promises and lease-term violations. The settlement required clearer lease-term disclosure, honoring cancellation rights, and a complaint-resolution process. It is a historical matter and says nothing about any company selling in New Jersey today.
Zero-upfront solar is worth considering. It is worth considering with the whole number in front of you: the term, the escalator, the 25-year total, who registers the system for SREC-II, who receives those 15 years of payments, what a buyout costs in year eight, and what happens when the roof needs work or the house goes on the market. Every one of those answers is written down somewhere in the paperwork before you commit, and New Jersey gives you three business days after you receive your copy to find them.
PowerLutions, an award-winning New Jersey solar and battery contractor, helps consumers compare the complete long-term obligation—not merely the attractive first-month payment. We will run a loan, a lease, and a PPA on your actual roof with the same assumptions and the SREC-II income shown on the side it belongs to, so the comparison is a comparison rather than a pitch. We work across the state, from PSE&G territory to the Shore — see our New Jersey service areas.
Have a $0-down offer in hand and want a second read before the cancellation window closes? Email info@powerlutions.com or call 732-987-3939, and bring the contract — the escalator, the buyout table, and the SREC-II clause are the three things we will look for first.
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