Solar Lease vs Buy in 2026

What this estimate does

The 2025 law change quietly rewrote the ownership comparison. A homeowner who buys a system in 2026 gets no federal residential credit. A company that owns a leased system or sells you power under a PPA may still claim the commercial clean electricity investment credit under §48E and pass part of that value through as a lower monthly price. That does not automatically make leasing the better deal — the provider owns the equipment, keeps the tax benefit, and typically writes an annual escalator into the contract — but it does mean the old 'buying is always cheaper' shortcut needs to be recalculated. This page puts all three structures on one 25-year basis.

How this is calculated

Cash purchase starts at −net cost and adds each year's bill savings minus maintenance. A loan applies a down payment, an amortized monthly payment at your APR for the loan term, and the same savings stream. A lease/PPA has no upfront cost: each year's net is the modeled bill saving minus production × your $/kWh PPA price × (1 + escalator)^(y−1). The homeowner claims no federal credit in any of the three. §48E belongs to the third-party owner and appears only indirectly, in the price they are able to offer — which is why the PPA rate field, not a tax-credit field, is the input that matters.

A worked example

At national-average defaults, a cash purchase nets roughly $12,700 over 25 years after a ~$17,000 upfront cost. A modeled PPA at 12 ¢/kWh with a 2.9% escalator produces a different 25-year net with zero upfront — and, importantly, a payment that grows every year while the panels produce slightly less every year. Change the PPA rate to the number in an actual proposal and compare. If the contract escalator exceeds your assumed utility escalation, the later years can turn negative even when year one looks attractive.

What this tool does not do

It does not model a lease buyout, a prepaid lease, transfer-on-sale clauses, roof-removal and reinstallation costs, a production guarantee, a lien on the home, the provider's credit risk, or the effect on a future sale. Read the contract; this is a financial comparison, not a contract review.

Practical checks before you compare quotes

• Ask for the PPA $/kWh, the escalator, and the 25-year total in writing.
• Compare against the cash price, not the financed monthly payment.
• Check the buyout and transfer-on-sale clauses before signing.
• If the proposal cites a 'federal tax credit' for your household in 2026, ask which code section they mean.

Common mistakes

• Comparing a lease payment to a loan payment without including the down payment.
• Ignoring the escalator.
• Assuming you can claim a credit on equipment you do not own.
• Forgetting that the provider, not you, owns the panels at year 25.