Solar Lease vs Buy 2026 — Real Numbers, Honest Recommendation

Solar salespeople will pitch you both. Here's the honest comparison without the marketing spin: ownership wins for ~85% of homeowners. Leases make sense for a specific minority case — let's identify whether that's you.

The 4 financing options in 2026

1. Cash purchase

Pay $20,000–$35,000 upfront. Get ITC + state incentives. Own the system. Lifetime savings $40,000–$70,000.

2. Solar loan

Borrow $20,000–$35,000 at 5.99–9.99% APR over 12–25 years. Payments often lower than your old electric bill. Get ITC + state incentives. Own the system at end of loan term.

3. Solar lease

Lease company owns the panels, you pay $50–$150/month for 20–25 years. Lease company gets the ITC. Lower upfront cost (often $0 down). You don't own the system.

4. Power Purchase Agreement (PPA)

Lease company owns. You pay per-kWh produced (e.g. $0.18/kWh) instead of fixed monthly. Tracks your actual generation rather than amortized payment.

The numbers — 8 kW system in California, 25-year horizon

Option	Year 1 cost	25-yr total cost	25-yr electric savings	Net benefit
Cash buy	$24,800 (after $7,200 ITC)	$24,800	$92,000	$67,200
Solar loan (7%, 15-yr)	$0 (financed)	$36,500 incl. interest	$92,000	$55,500
Lease ($90/mo, 2.9% escalator)	$1,080	$36,200	$92,000 (you keep)	$55,800
PPA ($0.16/kWh, 2.9% escalator)	~$1,300	~$45,500	$92,000	$46,500

Assumes 11,000 kWh/year usage, $0.32/kWh utility rate rising 4%/year, 0.5%/year panel degradation.

Why ownership wins

You get the 30% federal ITC. Lease companies keep this. On a $32,000 system, that's $9,600 going to them, not you.
You get state incentives. NY-Sun, MA SMART, NJ SuSI all flow to the system owner. Lease company keeps these too.
No annual escalator. Cash purchase has zero escalation. Leases typically escalate 2.9–3.5% annually — over 25 years, that's a payment 2× the starting payment.
System is an asset, not a liability. When you sell your home, owned solar adds to value. Leased solar must be transferred (often complicated, sometimes a deal-breaker).
End of loan = free electricity. After year 15, you pay nothing for the energy a $30k+ asset produces. Leases continue charging until lease end.

When lease/PPA actually makes sense

You can't use the ITC. Retired with low income, on Social Security, or you've moved abroad — you have no federal tax liability to apply the credit. Carry-forward helps but if income stays low forever, you never use it. Lease company captures it instead.
You're going to move within 5 years. Solar payback typically takes 7–10 years. If you'll sell soon, a transferable lease is easier than selling a home with $30k of installed solar.
You can't qualify for a solar loan. Credit issues. Leases sometimes have looser approval criteria.
You absolutely cannot afford even the loan payment. Some areas have $0-down lease programs that produce slightly negative cash flow but still net out positive vs no solar.

Red flags in lease/PPA contracts

Annual escalator > 3%. Industry standard is 2.9%. Higher = worse for you.
Mandatory buyout if you sell home. Some leases require you buy out the system at then-fair-market-value before selling. Can be $15,000+ surprise.
UCC-1 lien on your home. Lease company files a lien — title insurance issues at closing. Not a deal-killer but adds friction.
Production guarantee with low threshold. Lease company guarantees ≥ 80% of estimated production, not the full estimate. They keep upside, you keep downside.
Termination fees. Some leases charge $5,000–$15,000 to break.

Who profits from leases?

Solar leasing companies (SunRun, Sunnova, Sunpower Financial, Tesla Solar Lease) finance fleets of systems via institutional debt + tax-equity partners. The tax-equity partners (banks, insurance companies, large corporates) buy the ITC. The lease companies operate the maintenance and customer relationship.

It's a legitimate business model — but the math means $1 the customer doesn't pay = roughly $0.30 ITC + $0.70 tax-equity capital. The customer captures just the residual savings. Ownership skips this layer.

What about solar loans?

Solar loans are the modern best-of-both-worlds: low upfront, you keep ITC + state incentives, you own the system at end. Rates 5.99–9.99% APR in 2026 (down from 11–14% in 2023).

Top loan providers: GoodLeap, Mosaic, Sunlight Financial, Dividend, EnerBank.

Bottom line — decision tree

Have $20k–$35k cash you don't need elsewhere? → Cash buy. Best ROI.
Don't have cash but have decent credit (680+) and stable income? → Solar loan. Same ITC + ownership benefits.
Have neither cash nor good credit and no federal tax liability? → Lease or PPA. Better than no solar, but watch the escalator.
Selling home within 3 years? → Skip solar entirely or use a transferable lease. Don't pay cash for solar that won't pay back.