Solar lease vs buy: cash, loan, lease and PPA in 2026

Key takeaways

• With cash or a loan, you own the system. With a lease or power purchase agreement (PPA), a company owns it and you pay that company.
• The federal homeowner credit (25D) does not apply to systems installed in 2026 or later, so buying no longer comes with a federal credit. The company that owns a leased or PPA system may still be able to claim a different, commercial credit, but only under deadlines that are close.
• Whether any tax benefit reaches you as a lower price is up to the company and the contract. Ask for the full cost over the whole term and compare it with buying.
• We do not quote typical lease or PPA prices here because we have not verified a primary source for them. Get written numbers for your home.

The four ways to pay for solar

Rooftop solar is paid for in one of four ways. The U.S. Department of Energy describes the split this way: buying outright generally has a lower total cost than a loan, lease or PPA, while leases and PPAs often need little or no money down. In a lease you make fixed monthly payments. In a PPA you pay a set price for each kilowatt-hour the system produces.

How common is each? According to Wood Mackenzie, third-party ownership (leases and PPAs) was 45% of the U.S. residential solar market in 2024, its highest share since 2016, and loans averaged 43%. That is national data and says nothing about what is best for your roof.

Cash

Pros: no interest, and generally the lowest total cost of the four options. Cons: the largest upfront payment.

Loan

Pros: you own the system and can start with little upfront cost. Cons: interest adds to the total cost. Our calculator estimates the cost of buying with cash and does not include loan interest, so add the loan’s total repayment yourself when you compare.

Lease

You pay a fixed monthly amount to a company that owns the system. Pros: little or no money down. Cons: you do not own the system, you should check whether the payment rises over the term, and the contract must be handled if you sell your home.

Power purchase agreement (PPA)

You pay a set price per kilowatt-hour the system produces. Pros: little or no money down. Cons: you should check whether the price per kilowatt-hour rises over the term, you do not own the system, and you need to understand what happens if production falls short or you sell the home.

What changed in 2026: the tax credit picture

Until the end of 2025, buying meant the homeowner could claim the 25D residential clean energy credit, and that was the main tax argument for owning. The IRS states that the credit is not allowed for expenditures made after December 31, 2025, and that an expenditure counts as made when installation is completed, so a 2026 completion does not qualify even if you paid in 2025. Public Law 119-21 (section 70506) wrote that end date into the law. In this guide, and in our results, no federal credit is assumed for a system you buy.

Leases and PPAs run on different tax rules, and this is where the comparison has shifted:

• A company that owns the system can claim a business credit. That is the clean electricity investment credit in section 48E, not 25D. Public Law 119-21 (section 70513) added a denial for leased property of two types: solar water heating and small wind systems, which are the first and fourth items in the 25D definitions. Rooftop solar electric property, the kind that powers your home, is the second item, so it is not covered by that denial. Batteries are also outside it. The text is short; read the statute if you want to check it yourself.
• There are deadlines. For solar facilities, the 48E credit ends for systems placed in service after December 31, 2027, but that cut-off applies to facilities whose construction begins after July 4, 2026. IRS Notice 2025-42 explains how construction is judged to have begun, and it generally allows a facility that began construction in time to be placed in service within four calendar years after the year construction began. As of October 2026 that July 4, 2026 date has passed, so whether a given company qualifies depends on its own project timing, which you cannot see from the proposal.
• Energy storage is treated differently. The same section says the solar termination date does not apply to energy storage technology, so battery rules are not on the same clock. Ask whether a battery is included and how it is treated.

What this means for you: a third-party owner may have access to a credit you do not. Whether that makes the monthly payment or PPA price lower than the cost of buying is a pricing decision, not a legal guarantee. Tax law can change, and nothing here is tax advice, so check current rules with the company and a tax professional.

How to compare the four options

Put every option on the same footing, over the same number of years:

1. Total paid. For a loan, down payment plus all payments. For a lease, all payments including any increase each year. For a PPA, expected kilowatt-hours times the price, including the yearly increase.
2. Electricity you still buy. Unless the system covers all of your usage, you still pay your utility for the rest. See how your own rates work on the pages for FPL, Duke Energy Florida, TECO, PG&E, SCE and SDG&E.
3. What you own at the end. After a loan or cash purchase you own a system. After a lease or PPA you may renew, buy it, or have it removed, depending on the contract.
4. The unknowns. Maintenance, a failed inverter, roof work, and a home sale all cost different amounts under different structures.

The methodology page explains how our own estimate handles this. Because we have not verified market lease or PPA pricing, our lease and PPA comparison explains the structure rather than quoting prices.

Questions to ask before you sign

• What is the monthly payment or price per kilowatt-hour in year one, and how much does it rise each year?
• What is the contract length, and what does it cost to end it early or buy the system out?
• What happens if I sell the home? Can the buyer take over the contract, and is anything recorded against the property?
• Who maintains and insures the system, and who pays if the inverter fails or the roof needs work?
• What yearly production does the installer expect, and what happens if it falls short?
• What is the total I will have paid at the end of the contract compared with the cost to buy?
• Is there a fee for paying early or for transferring the agreement?
• Is this a fixed-payment lease or a per-kilowatt-hour PPA, and is that structure allowed where I live? Ask for the answer in writing.
• Does the company or lender expect to claim a tax credit, and does anything in the contract change if that credit is not available to them?

In California

California requires solar companies to give you a Solar Energy System Disclosure Document before a sale, financing or lease is completed. According to the Contractors State License Board, it must show the total cost and payments, including financing costs, explain how to file complaints, and describe your cancellation right. Compare that total with the other quotes you have. Our California calculator shows how net billing changes the value of the electricity a system exports.

In Florida

Florida homeowners can see how retail net metering affects payback in the Florida calculator. Ask each company to explain, in plain words, exactly what you are paying for each month.

Next steps

1. Get your own estimate in the Florida calculator or California calculator.
2. Request cash, loan, and (if offered) lease or PPA quotes in writing, with the same system size.
3. Read how to compare solar quotes and is solar worth it without the tax credit.
4. When you are ready, you can request quotes. Keep the total-cost comparison from this guide in hand when they arrive.