How this page is reviewed
See methodology, assumptions & sources
| Risk tier | YMYL |
|---|---|
| Author | Calculover Editorial Team Finance education |
| Editorial owner | Calculover Auto & Energy Desk Energy-economics methodology owner |
| Reviewer | Calculover Editorial Review Source and limitation review |
| Last reviewed | 2026-05-14 |
| Last verified | 2026-05-14 |
| Data effective date | 2026-05-14 |
Methodology
Solar Lease vs Buy compares purchase, loan, and lease/PPA financing for residential rooftop solar by projecting net-of-incentive cash flows over the system lifetime, applying the federal Residential Clean Energy Credit, state incentives, and lease escalator schedules where supplied.
Assumptions
- System size, kWh production, utility rate, and lease escalator are user-supplied or fall back to NREL averages.
- Federal Residential Clean Energy Credit eligibility depends on ownership; leased systems do not qualify for the homeowner.
- Resale-value impact and inverter-replacement cost are user-supplied estimates.
Limitations
- This page does not predict future utility rates, state incentives, or net-metering policy changes.
- Roof age, shading, panel-degradation curves, and installer warranty terms can materially affect outcomes.
Sources
- Homeowner’s Guide to Going Solar, U.S. Department of Energy
- Residential Clean Energy Credit, Internal Revenue Service
- Database of State Incentives for Renewables & Efficiency, DSIRE / NC Clean Energy Technology Center
Professional guidance: This page is for solar-financing education only and is not financial, tax, or contracting advice. Confirm system size, incentives, and contract terms with a licensed solar installer and tax professional.
What Does It Mean to Buy Solar?
Purchasing a solar system means you own the panels, inverter, and all equipment outright. You can pay cash or finance through a solar loan. As the owner, you claim the 30% federal Investment Tax Credit (ITC), any state incentives, and net metering credits. The system typically pays for itself in 7-12 years, after which electricity is essentially free for the remaining 15+ years of the system's 25-30 year lifespan.
Ownership also increases your home's resale value. Studies from Lawrence Berkeley National Lab show that owned solar adds approximately $15,000-$20,000 to a home's sale price.
What Is a Solar Lease?
A solar lease is a rental agreement where a third-party company installs panels on your roof and you pay a fixed monthly fee (typically $50-$150/month) for 20-25 years. The leasing company owns the equipment, handles maintenance, and claims all tax credits and incentives. Your savings come from the difference between your lease payment and what you would have paid the utility company.
Solar leases typically include annual escalators of 1-3%, meaning your monthly payment increases each year. This can erode savings over time, especially if utility rates don't rise as fast as projected.
What Is a Solar PPA?
A Power Purchase Agreement (PPA) is similar to a lease, but instead of a fixed monthly payment, you pay a per-kilowatt-hour rate for the electricity your panels produce. The rate is typically 10-30% below your local utility rate. Like leases, the PPA provider owns the system and claims all incentives.
PPAs can be attractive because your payment directly correlates with energy production — in cloudy months you pay less, in sunny months you pay more (but still below utility rates).
Which Option Is Right for You?
Buy / Own Solar If...
- You have $15K+ cash or qualify for a solar loan
- You have federal tax liability to offset with the 30% ITC
- You plan to stay in your home 7+ years
- You want maximum long-term savings
- You want to increase your home's resale value
Solar Lease If...
- You want zero upfront cost and no maintenance
- You prefer predictable monthly payments
- You don't have enough tax liability for the ITC
- You're comfortable with 20-25 year contract terms
- You accept lower total savings for convenience
PPA If...
- You want zero upfront cost with pay-per-use pricing
- You prefer to pay only for electricity actually produced
- Your utility rates are high and rising
- You want immediate savings without system ownership
- PPAs are available in your state (not available everywhere)
Real-World Example
Buy (cash): $20,000 upfront minus $6,000 ITC = $14,000 net cost. Saves ~$2,400/year on electricity. Payback in ~6 years. 25-year net savings: ~$46,000.
Solar Lease: $0 upfront. $100/month with 2.9% annual escalator. 25-year total paid: ~$43,000. Saves ~$12,000 vs. utility bills over 25 years.
PPA: $0 upfront. $0.14/kWh (vs. utility $0.20/kWh). 25-year total paid: ~$38,000. Saves ~$17,000 vs. utility bills.