Free Solar PPA vs Buying Solar in DC: The Honest Comparison

DC homeowners are told they have a choice: get solar for free, or own your system and earn SREC income. Here's what the salesperson doesn't show you — the hidden loan fees, the insurance cost, and what happens to SREC income over time.

Washington DC has one of the most unusual solar markets in the country. Pepco's residential rate hit 23.9¢/kWh in 2026 — and the city's SREC program creates conditions where solar investors can install panels on your roof completely for free. But you can also buy the system yourself, own it outright, and keep the SREC income. Which is actually better?

The honest answer depends on how you're paying. A cash purchase is a genuinely good investment if you have the money. A solar loan looks attractive in year one and gets worse every year after. And the free PPA eliminates risk entirely — which is worth more than most salespeople will admit.

Why free solar exists in DC

DC's 0¢/kWh PPA is possible because of two things working together. Investors who fund your installation can claim the commercial Investment Tax Credit (ITC) — this is not a residential credit available to homeowners, it's a commercial credit available to the investors putting up the capital. DC's SREC program then pays those investors for the clean energy your roof generates. Those two revenue streams together fund your free installation.

You contribute the roof. They contribute everything else — panels, installation, inverters, warranty, maintenance. You pay nothing upfront, nothing monthly, and nothing per kilowatt-hour for the solar electricity your panels produce.

What happens at 20 years

At the end of your PPA term you have three options — and nobody tracks you down to force a decision. You can keep using the system at no cost and just let it run. You can have it removed at no cost, per the contract terms. Or you can renew, typically with a warranty extension of 5 or 10 years. The system keeps producing free electricity unless you say otherwise.

One thing most people don't think about: insurance. With a PPA, the system is owned and insured by the investors — not by you, not through your policy. Hail, storm damage, equipment failure: covered, no calls to your insurance company, no policy changes, no extra premium. With a purchased system, you need to add solar panels to your homeowner's policy as a separate line item. That's an ongoing cost that rarely appears in the purchase math.

Buying solar in DC: when it makes sense

A 10kW system in DC runs roughly $26,000–34,000. With a cash purchase, DC exempts the system from property tax increases and sales tax — real savings that make ownership more attractive than in most states. And most importantly, you keep your SRECs.

DC's SREC market currently pays around $370 per SREC, and a 10kW system generates roughly 10–12 SRECs per year — approximately $3,700–4,400 annually in SREC income. For a cash buyer, that income stream is real and meaningful. It doesn't require living in the home — you can own the SRECs independently.

But the SREC market isn't guaranteed forever. DC's program is structured to decline as more solar comes online and the market matures. A new mayor, policy changes, or grid interconnection problems could alter the program significantly. If you're investing $30,000 counting on SREC income for your ROI, you're making a long-term bet on regulatory stability. That bet has paid off historically. It's also kept some people up at night. If you're wealthy enough that $30,000 is a comfortable investment you can afford to have underperform — buying can be a good investment. If that money represents real financial strain, the peace of mind from the free PPA is worth more than the potential upside.

The solar loan: what they don't tell you

This is where the honest comparison gets uncomfortable for the solar industry, so pay close attention.

Solar loans in DC are pitched with one number: the monthly payment. What salespeople routinely skip is the dealer fee — a charge of anywhere from 2% to 30% of the system cost that gets built into the loan principal before you sign. On a $30,000 system, a 20% dealer fee means you're actually borrowing $36,000. That fee is rarely disclosed prominently, and it significantly inflates both your loan amount and the total interest you'll pay over 20 years.

Beyond the fee, there's the SREC math that makes loans particularly problematic over time. DC's SREC values are structured to decline as the program matures and more solar enters the market. Your loan payment, by contrast, stays fixed for the life of the loan. In year one, SREC income can exceed your loan payment — solar looks like it's paying you. By year 10, the gap has narrowed dramatically. By year 15, many loan borrowers are paying out of pocket every month, with declining SREC income and a payment that never drops.

The free PPA has none of this exposure. The investors absorb the SREC risk. Your cost remains zero.

Side by side

The honest framework for deciding

If you're comparing the free PPA to a solar loan — the comparison isn't close. The hidden dealer fee, the fixed payment against declining SREC income, and the added insurance cost make loans significantly worse over a 20-year horizon than they appear in year one. Any salesperson who doesn't walk you through the dealer fee and the SREC decline curve is not giving you the full picture.