Solar Lease vs Buy: Cash, Loan, Lease and PPA Compared

There are four common ways to pay for rooftop solar: buy with cash, buy with a loan, lease the system, or sign a power purchase agreement (PPA). The first two make the household the owner. The last two leave a company as the owner and the household as a customer. Which one costs less over time depends on the price, the interest rate or monthly payment, the contract terms and how long the household stays in the home.

What each option means

The Federal Trade Commission describes the choices as buying a system, leasing a system, or signing an agreement to buy solar power. Under a lease, a company installs the system on the house and the household signs a contract to use it, typically for a long term, with some lasting 20 years. The household uses the power the system makes, and the company is probably responsible for maintenance.

A PPA is different. The household buys the power the system generates at a price the provider sets, rather than paying to use the equipment. The Department of Energy adds that a lease has fixed monthly payments calculated from the estimated electricity the system will produce, while a PPA sets a price per kilowatt-hour of electricity produced. Both can mean no money down.

What each option costs: Berkeley Lab data

Berkeley Lab’s 2026 Data Update reports installed prices for systems installed in 2025, in 2025 dollars per watt, before incentives. The figures cover host-owned systems only. Third-party owned systems, meaning leases and PPAs, are excluded because the household does not pay an up-front price for them.

• All host-owned residential systems: median $3.6 per watt, down from $4.1 in 2024.
• Known cash purchases: median $3.0 per watt, down from $3.6.
• Known loan-financed systems: median $4.5 per watt, down from $4.8.

Berkeley Lab notes that loan-financed systems were considerably higher priced than cash purchases, potentially due in part to loan origination fees rolled into the up-front price. The loan figures do not include ongoing interest payments, so the true cost of a loan is higher than the table suggests. The cash and loan figures come from the subset of systems (about 45% of host-owned systems) where financing type could be determined with high confidence.

As an illustration only, a hypothetical 7 kW system at the cash median would be priced near $21,000, and at the loan median near $31,500, before interest. Real quotes vary widely with the installer, state, roof and equipment.

The Department of Energy states that, in general, a purchased system can be installed at a lower total cost than a system installed through a loan, lease or PPA. Lease and PPA prices are not in the Berkeley Lab host-owned data, so they must be compared through the contract itself: the monthly payment or per-kilowatt-hour rate, the escalator, and the length of the term, multiplied across the whole contract.

Berkeley Lab also reports that the residential share of third-party owned systems rose slightly from 2024 to 2025, following a sharp rise in 2024, and that lower income adopters were more likely than higher income adopters to use third-party ownership, while loans and cash purchases were more common among higher income adopters.

What changed with the end of the federal credit

Until the end of 2025, a homeowner who bought a system could claim the 30% Residential Clean Energy Credit under Section 25D. The IRS states that the credit covers property installed from 2022 through December 31, 2025, and is not available for any property placed in service after that date. The statute says the same: the credit does not apply to expenditures made after December 31, 2025.

For a cash or loan buyer in 2026, that means no federal credit on the system cost. A purchase price near the Berkeley Lab medians is the full out-of-pocket amount, apart from any state or local incentive.

The FTC notes that when a company owns the system, tax credits and incentives go to the owner, not the household. Before 2026 this gave leases and PPAs a clear side of the comparison, since the owner claimed a credit and could reflect it in the price. Whether it still does depends on Section 48E, the business credit for clean electricity facilities.

Does Section 48E still apply to leased systems?

The text of Section 48E on the Cornell Legal Information Institute site, which lists the July 2025 amendments (Public Law 119-21), points to the following:

• A new subsection denies the credit for leased wind and solar property only for property described in Section 25D(d)(1) and (4). Those paragraphs define solar water heating property and small wind property. Solar electric property, the kind that makes electricity from panels, is defined in paragraph (2) and is not named in the denial. On the statute’s text, leasing rooftop solar panels is not what this rule blocks.
• A new termination rule says Section 48E does not apply to qualified property placed in service after December 31, 2027, that is part of a facility using solar energy to produce electricity. The amendment applies to facilities whose construction begins after the date 12 months after July 4, 2025, which is July 4, 2026. Energy storage technology placed in service at such a facility is excepted.

In plain terms, a lease or PPA system whose construction began before July 4, 2026 appears to stay eligible under the statute’s general rules, and one that began later appears to need to be placed in service by the end of 2027. Two points are not confirmed from the sources opened for this guide: how the IRS applies the beginning-of-construction test to a single residential rooftop system, and whether a given provider claims the credit at all. A tax professional or the provider’s written terms are the places to confirm both. The credit also benefits the household only if the provider passes any of it on in the price.

Questions to ask before signing

The FTC lists terms to check in a lease or PPA contract against what advertising, proposals and salespeople said:

• How long the contract lasts, and how much is paid per month (lease) or per kilowatt-hour (PPA).
• Whether payments will increase, when, and by how much. The FTC notes that lease payments may rise over time.
• Whether there are other costs or fees.
• Whether the contract guarantees a minimum level of power, and how the company pays if the system falls short.
• Who handles maintenance and repairs, and who pays.
• Who gets the tax credits, other incentives and renewable energy certificates.
• What must be done to keep the contract in good standing, such as notifying the company before a home sale.
• Whether there are early termination fees.
• Whether the contract can be renewed, whether the system can be bought, or whether it can be removed at the end, and what each costs.

For a home sale, the FTC asks whether the contract lets the system move to a new home and at what cost, whether it can be transferred to the buyer and whether written notice is required, and whether the buyer must meet credit requirements or pay fees. The FTC also advises asking what happens if the roof needs repair after installation, and warns that future utility rates are hard to predict, so a projected bill comparison from a company should be checked against the contract terms.

If a problem arises, the FTC points consumers to ReportFraud.ftc.gov and their state attorney general.

Choosing among the four

Cash is the lowest priced route on the Berkeley Lab data and carries no financing cost, but it ties up the most money and has no federal credit in 2026. A loan spreads the cost, though the medians suggest it comes at a higher price per watt and adds interest on top. A lease or PPA reduces the up-front cost to little or nothing and moves maintenance to the owner, in exchange for a contract that can run 20 years and can complicate a home sale. Comparing total payments across the whole term, including any escalator, is the way to put the four on equal footing.