Solar Lease vs Buy in 2026

Overview

For a decade the standard advice was to buy: you owned the equipment, claimed the federal credit, and kept 25 years of production. The credit is gone for 2026 purchases, and the remaining federal benefit now belongs to whoever owns the equipment — which, in a lease or PPA, is not you. That does not flip the answer to leasing, but it does mean the comparison has to be done properly rather than by reflex. This guide works through ownership, cash flow, contract risk and resale in the order that actually affects a decision.

Who owns what

In a cash or loan purchase you own the array, claim any state credit available to you, keep the production, and carry maintenance and insurance risk. In a lease you pay a fixed (usually escalating) monthly amount for the right to use a system someone else owns. In a PPA you buy the kWh it produces at a set $/kWh, also usually escalating. In both third-party structures the provider owns the equipment, claims available commercial credits, and typically handles maintenance. You do not claim a federal credit in any of the three.

The cash-flow difference

A purchase has a large negative cash flow in year zero and positive net cash flow thereafter. A loan replaces the upfront cost with 10–20 years of payments. A lease or PPA has no upfront cost and a smaller annual net benefit, because the provider keeps a margin. Over 25 years, an owned system usually produces the larger cumulative net result — but only if the purchase price is honest and the export tariff is favorable. The lease wins when the provider's cost of capital and tax position let them offer a price low enough to offset your lost upside.

The four contract lines that decide it

Get the PPA $/kWh or lease monthly amount; the annual escalator (2.9% is common and compounds to roughly double over 25 years); the term and buyout option; and the transfer-on-sale clause. A 2.9% escalator against a utility rate rising 3% is one thing; against 1% it is another. Meanwhile panel output falls 0.5% a year, so the amount of energy your payment buys declines while the rate climbs. Model that explicitly rather than comparing year-one numbers.

Resale, roof work and liens

An owned system may add to home value, though appraisals vary. A leased system can complicate a sale because the buyer must accept the agreement, and a UCC-1 fixture filing may be recorded against the property. Removing and reinstalling an array for roof replacement is expensive in either structure, but the contract determines who pays. Ask for those clauses before signing, not at listing.

A practical decision sequence

First, get three cash quotes with $/W stated. Second, get your utility's export rate in cents. Third, run the owned scenario through a 25-year cash flow with no federal credit. Fourth, take an actual lease/PPA proposal and put its real rate and escalator into the same model. Fifth, read the buyout, transfer and roof-removal clauses. If a provider will not put the escalator and the 25-year total in writing, that is your answer.

Key figures worth keeping

• 2.9% — a commonly quoted annual PPA escalator; compounded over 25 years it roughly doubles the rate.
• $0 — the homeowner's federal credit in all three ownership structures in 2026.
• Section 48E — the commercial credit a third-party owner may claim, never the household.
• 0.5% — the annual production decline applied to both the owned and the PPA scenario.
• Three — the minimum number of cash quotes worth collecting before comparing a lease.

How this shows up in a real estimate

Put real numbers on the choice. At national-average defaults an owned system has a roughly $17,000 upfront cost and a 25-year net near $12,700. A PPA at 12 cents per kWh with a 2.9% escalator starts with no upfront cost and a smaller annual benefit, and the payment grows while production shrinks. The crossover depends almost entirely on the rate you are offered and the utility escalation you assume. Run both with the same bill, the same array and the same export credit; if you change an assumption to make one look better, the comparison has stopped being a comparison.

Checklist before you decide

• Get the cash price, the financed price and the PPA rate as three separate numbers.
• Write the escalator and the 25-year total into your working sheet.
• Read the buyout formula rather than assuming a fair-market purchase later.
• Read the transfer-on-sale clause before listing a home.
• Confirm who owns the renewable energy certificates.