Solar Lease vs PPA vs Buying: Which Is Best?
You can buy solar panels with cash or a loan, lease them for a monthly fee, or sign a power purchase agreement and pay for the power they make. Here's how each works, how the end of the homeowner tax credit changed the math, what to check in a contract and what happens if you sell your home.
By Pond.com editors Updated 3 min read
Quick answer
- Buying with cash gives the biggest long-term savings; a solar loan spreads the cost but adds interest and sometimes hidden fees.
- A lease charges a fixed monthly fee; a power purchase agreement (PPA) charges for each kilowatt-hour the panels produce.
- With leases and PPAs, the solar company owns the system and may still claim a federal tax credit that homeowners can no longer get.
- Watch for yearly price escalators, which can erase your savings over a 20- to 25-year contract.
- Leased systems can complicate selling your home, because the buyer must qualify for and accept the contract.
The way you pay for solar matters almost as much as whether you get it. Buying, leasing and power purchase agreements can all lower your bills, but they differ a lot in cost, risk and what happens if you move.
This article is general information, not financial or legal advice.
How each option works
| Buy (cash) | Buy (solar loan) | Lease | PPA | |
|---|---|---|---|---|
| You pay | Full price upfront | Monthly loan payments | Fixed monthly fee | A rate per kWh produced |
| Who owns it | You | You | Solar company | Solar company |
| Upfront cost | High | Little or none | Little or none | Little or none |
| Long-term savings | Highest | Good | Lower | Lower |
| Maintenance | You | You | Usually the company | Usually the company |
| Typical term | n/a | 10 to 25 years | 20 to 25 years | 20 to 25 years |
How the 2026 tax change affects the choice
Homeowners who buy solar can no longer claim the 30% federal tax credit, which ended for systems installed after 2025. Solar companies that own systems through leases and PPAs may still claim a commercial credit for systems that start construction by July 4, 2026 or go into service by the end of 2027. Some pass part of that on as lower rates.
That can make a lease or PPA cheaper than it used to be compared with buying. But owning still usually gives the most savings over the life of the system, if you can afford it.
What to check in a lease or PPA
- The escalator: a yearly increase in your payment or rate. Compare it with how fast your utility's rates have risen.
- The starting rate compared with what you pay your utility now.
- Production guarantees: what happens if the panels make less power than promised.
- Buyout options and their price.
- Transfer rules if you sell your home.
- Roof work: who pays to remove and reinstall panels if your roof needs repairs.
- Liens: whether the company files a notice on your property, which can come up when you sell or refinance.
What to check in a solar loan
- The APR, not just the monthly payment.
- Dealer fees: some low-rate loans hide a large fee in the system price. Ask for the cash price and compare.
- Prepayment penalties and any balloon payment.
- Whether the loan is secured by your home.
Selling a home with solar
- Owned and paid off: solar often adds value and is simple to transfer.
- Owned with a loan: you'll usually need to pay off the loan at the sale.
- Leased or PPA: the buyer must qualify for and agree to take over the contract, or you may need to buy it out. Some buyers walk away over this.
Common questions
It's a yearly increase in your lease payment or PPA rate, often 1% to 3%. Over 25 years, a 2.9% escalator nearly doubles your payment. If utility rates rise more slowly, your savings can disappear.
Many leases let you buy the system early or at the end of the term, often at a set price or fair market value. Check the buyout terms before you sign, since they vary a lot.
Usually the solar company, which owns them. Most leases and PPAs include monitoring, repairs and inverter replacement. Read the contract to see what's covered and how quickly they must respond.