Solar Lease vs. Buy vs. PPA vs. Loan: A 25-Year Comparison for 2026

There are four ways to get panels on your roof: pay cash, take out a loan, sign a lease, or sign a power purchase agreement (PPA). Cash usually saves the most money over 25 years. But in 2026 the math changed: homeowners who buy no longer get a federal tax credit, while lease and PPA companies still can. That means a well-priced lease or PPA, especially one without a yearly price increase, can now be a reasonable choice for some households.

This guide compares all four with one worked example, then walks through who gets the tax credit, who fixes things, and what happens when you sell.

The four options in plain terms

	Cash	Loan	Lease	PPA
Who owns the panels	You	You	The provider	The provider
Upfront cost	Full price	Often $0	Often $0 (prepaid option exists)	Often $0 (prepaid option exists)
What you pay	Once	Monthly loan payment	Fixed monthly payment	A price per kWh produced
Typical term	n/a	10 to 25 years	20 to 25 years	20 to 25 years
Yearly price increase	n/a	None (fixed-rate)	Often 0% to 3.9%	Often 0% to 3.9%
Federal tax credit (2026)	None	None	Provider claims it	Provider claims it
Repairs and monitoring	You	You	Usually the provider	Usually the provider

A lease and a PPA are close cousins. The key difference: a lease payment stays the same whether the panels have a great year or a bad one. A PPA bill moves with production. Both are called “third-party ownership.” According to Lawrence Berkeley National Laboratory (LBNL), third-party ownership was about 40% of U.S. residential installs in 2025, up from 23% in 2023.

Who gets the federal tax credit now

This is the biggest change for 2026.

• If you buy (cash or loan): the 30% Residential Clean Energy Credit (Section 25D) ended for systems whose installation was completed after December 31, 2025. Paying a deposit in 2025 does not count. The IRS FAQ is explicit about this. A 2026 cash or loan quote that subtracts 30% is wrong. See our guide to the federal solar tax credit in 2026 and the red flag on quotes that still claim the 30% credit.
• If you lease or sign a PPA: the provider can still claim the business credit under Section 48E, generally 30% for residential-size systems, sometimes more with bonus adders. As of October 2026, solar must generally be placed in service by December 31, 2027 (unless construction began by July 4, 2026), and the equipment must pass new foreign-supplier rules.

You never see that credit directly. It shows up, if at all, in the price you’re offered. EnergySage’s H1 2026 marketplace report found prepaid leases were 39% cheaper per kWh than buying with cash, and prepaid PPAs 57% cheaper. But a regular PPA with no prepayment was 33% more expensive per kWh than cash. So the credit is being shared with some customers, and not with others.

Watch out: “Sign now before the tax credit deadline” is a pitch that mostly protects the provider’s credit, not your savings. The deadline matters to you only if the company shows, in writing, how the credit lowers your price.

A worked 25-year example

These numbers are illustrative assumptions, not a quote. Use the lease vs. buy tool or the main calculator with your own address and bill.

Shared assumptions:

• 8 kW system (close to the 2025 U.S. median of 7.7 kW)
• Produces 1,300 kWh per kW in year one, so 10,400 kWh. Check your own roof with the production checker.
• Output falls 0.5% per year as panels age
• Electricity is worth 18¢ per kWh in year one (the U.S. residential average was 18.3¢ in July 2026, per EIA) and rises 3% a year, close to the 2005 to 2025 national average
• Every kWh the panels make is worth the full retail rate. This is generous. In net billing states like California, exported power earns much less. See net metering explained.
• Over 25 years the panels produce about 245,000 kWh, worth about $63,800 at these rates

Option-specific assumptions:

• Cash: $24,000 ($3.00 per watt, LBNL’s 2025 median for cash purchases). Plus one $2,500 inverter replacement in year 12.
• Loan with dealer fee: $32,000 borrowed at 3.99% for 20 years. The $8,000 difference from the cash price is the hidden dealer fee. Payment: $194 a month. Same $2,500 inverter replacement.
• Lease: $125 a month in year one, rising 2.9% a year. Provider handles repairs.
• PPA: 15¢ per kWh, flat for 25 years (no escalator). Provider handles repairs.

Results

	Cash	Loan with dealer fee	Lease, 2.9% escalator	PPA, no escalator
Upfront	$24,000	$0	$0	$0
Year 1 payment	none	$194/mo	$125/mo	about $130/mo
Year 25 payment	none	none (paid off year 20)	$248/mo	about $115/mo
Total you pay over 25 years	$26,500	$49,000	$54,000	$36,700
Value of power produced	$63,800	$63,800	$63,800	$63,800
Net savings, 25 years	$37,300	$14,800	$9,800	$27,100
Net savings in today’s dollars (6% discount rate)	$5,100	$2,400	$5,000	$11,300
Year 1 cash flow	−$24,000 upfront, then +$1,872	−$450	+$370	+$310
Federal credit goes to	Nobody	Nobody	Provider	Provider

The PPA’s monthly cost falls slightly over time because it pays per kWh and the panels produce a little less each year.

What the table shows

• Cash wins on total dollars. It saves about $37,000 over 25 years. Payback takes about 13 years in this example. Read more in solar payback period.
• The dealer fee eats more than half of the loan’s savings. The $8,000 fee plus interest turns $37,000 of savings into about $15,000, and the first year runs cash-negative. See solar loan dealer fees.
• The escalator does real damage to the lease. The payment doubles from $125 to $248. Total paid ($54,000) is more than double the cash price.
• “Today’s dollars” changes the ranking. Money you spend now is worth more than money you save in year 20. Discounted at 6% (roughly the cost of a home equity line), the flat-rate PPA comes out ahead because you put nothing down and your price never rises. Cash and the lease end up close. This is why “cash always wins” is too simple.

What if electricity prices rise slower?

Rate growth is the assumption that moves everything. Here’s the same example with slower growth:

Utility rates rise	Cash	Loan with fee	Lease 2.9%	PPA flat
3% a year	$37,300	$14,800	$9,800	$27,100
1.5% a year	$26,300	$3,800	−$1,200	$16,100
0% a year	$17,600	−$4,900	−$9,900	$7,300

With flat rates, the escalating lease and the dealer-fee loan both lose money over 25 years. Cash and the flat PPA still come out ahead. A product whose price rises on a fixed schedule is betting that your utility rates rise at least as fast. See solar escalator clauses and check your local history with the electricity rate history tool.

Maintenance, insurance and risk

If you own (cash or loan):

• You handle repairs after the installer’s workmanship warranty ends. Workmanship warranties are often 10 years. Panel and microinverter warranties run 25 years but usually come from the manufacturer, not the installer.
• A string inverter will likely need replacing once, typically $1,500 to $3,000. See solar panel lifespan and warranties.
• The system usually goes on your homeowners policy. You may need to raise your dwelling coverage. See solar, property taxes and insurance.
• If the installer goes out of business, you keep the panels but may lose the workmanship warranty. Several large installers failed in 2024 to 2026, including SunPower, Sunnova and Freedom Forever. See what to do if your solar company goes out of business.

If you lease or sign a PPA:

• The provider normally monitors, insures and repairs the system for the whole term. Read the contract to confirm this, including who pays for roof leaks caused by the installation.
• Most contracts include a production guarantee. Check how it pays. Many pay a small per-kWh credit after a look-back period, which rarely makes you whole.
• If the provider goes bankrupt, the contract usually stays in force and is serviced by someone else. When Sunnova filed for bankruptcy in 2025, its lease and PPA contracts continued, with servicing moved to a new company. Service quality during a handoff can suffer.
• If you need to re-roof, removing and reinstalling the panels follows the contract’s terms. Some providers charge for it. See replace your roof before solar.

Selling your home

	What happens at sale
Owned outright	Panels transfer with the house. They may add some value. See does solar increase home value.
Loan	Most secured solar loans must be paid off at closing. Many lenders file a UCC-1 fixture filing that shows up in the title search.
Lease or PPA	The buyer must apply and pass the provider’s credit check to take over the contract. Otherwise you may need to buy out or prepay the remaining payments.

Leases and PPAs can make a sale slower and sometimes cost you leverage in negotiations, especially with a high escalator. That doesn’t mean they make a house unsellable. Read selling a house with solar and estimate the costs with the selling a home with solar tool. If you’re on the buying side, see buying a house with leased solar.

When a lease or PPA can actually make sense

Leases get a bad reputation, often earned by aggressive door-to-door sales. But they aren’t always a bad deal. A lease or PPA can be a reasonable choice when:

• You don’t have the cash, and the loan you’d qualify for has a big dealer fee. In our example the lease and the dealer-fee loan end up in roughly the same place over 25 years, and the lease has no upfront risk of repair bills.
• The provider passes the 48E credit through in the price. A PPA rate well below your utility rate, a prepaid lease, or a contract with no escalator are signs of this. Compare the effective price per kWh against a cash quote with compare quotes.
• There’s no escalator, or it’s 0.99% or less. A flat-rate contract that starts below your utility rate keeps saving more as utility rates rise.
• You want someone else responsible for repairs. This matters more for retirees and people who don’t want to manage a contractor 15 years from now. See solar for retirees.
• You couldn’t use incentives anyway. Before 2026, many low-tax households couldn’t use the homeowner credit. Now no owner can. That shift is a big reason third-party ownership is growing.

A lease or PPA is usually a poor choice when:

• The escalator is 2.9% or higher and the starting price isn’t much below your utility rate
• You expect to sell within a few years
• You have cash or access to a no-fee loan at a fair rate
• The salesperson won’t give you the full contract, the buyout schedule, or the transfer rules before you sign

For a deeper look, read is a solar lease a bad idea and solar lease buyouts.

Loans: how to avoid the expensive kind

A loan gives you ownership without the upfront cost. The trouble is how many solar loans are priced. A “1.99% APR” or “3.99% APR” loan usually comes with a dealer fee that raises the price. The CFPB found these fees typically run 10% to 30% of the cash price and sometimes exceed 50%. LBNL found loan-financed systems cost a median $4.50 per watt in 2025, compared with $3.00 for cash.

Ways to borrow without a dealer fee:

• A home equity line of credit (HELOC). The national average was about 7.3% as of October 2026, per Bankrate. Rates are usually variable, and your home is the collateral.
• A home equity loan (about 8.7% for a 10-year term as of October 2026)
• A credit union or bank personal or “green” loan with no fee, often 6% to 10% for good credit

Always ask for the cash price before discussing financing. Run the numbers with the solar loan calculator and the dealer fee calculator. For every option side by side, see solar financing options.

Bottom line: If you have cash and plan to stay, buying usually wins. If you don’t, a no-fee loan is next. A lease or PPA can beat a dealer-fee loan, and sometimes beats buying in today’s dollars, but only with a fair starting price and a low or zero escalator. Compare every option on total cost and price per kWh, never on monthly payment alone.

Questions to ask before you choose

1. What is the cash price, and what is the price per watt?
2. For a loan: what dealer fee is included, and what is the payment if I don’t prepay anything?
3. For a lease or PPA: what is the escalator, and what is the payment or rate in year 25?
4. Who claims the tax credit, and how does it lower my price?
5. What happens if I sell the house in year 5? In year 12?
6. What is the buyout price schedule?
7. Who repairs the system and the roof if the installer closes?

Not ready to decide? Our compare options tool runs cash, loan, lease and PPA scenarios side by side for your home.