Solar Lease vs. Buy in 2026
Through 2025, the 30% federal tax credit made buying solar the clear winner for anyone with tax liability -- and made leases attractive for everyone else, since the leasing company claimed the credit and shared the savings. That credit expired December 31, 2025 -- the 2026 math looks different for both sides. This guide compares buying (cash or loan) against leases and PPAs on lifetime cost, escalators, and home-sale impact. Cost information only -- consult a tax professional about your situation.
Orange County, CA · Updated 2026 · Costs shown as ranges — your quote will vary by contractor and scope
How buying pencils out in 2026
A typical 7 kW California system costs $18,000-$24,000 before incentives in 2026. Without the 30% credit, the payback stretches: at 2026 utility rates and NEM 3.0 export values, cash buyers typically see 8-12 year paybacks instead of the 5-7 years the credit era delivered. Solar loans at 2026 rates add interest that stretches payback further -- run the loan's total cost, not the monthly payment.
Buying still wins on lifetime cost for most homeowners who can use the system for 15+ years: after payback, the electricity is nearly free for the remaining decade of panel life. Owned systems also add the most to home value -- appraisers and buyers treat owned solar as an asset, while leased systems are a contract the buyer must assume.
How leases and PPAs work now
In a lease you rent the system for a fixed monthly payment; in a PPA (power purchase agreement) you buy the electricity it produces at a set per-kWh rate. Both typically include $0 down, a 20-25 year term, and an annual escalator -- usually 2-4% -- that raises your payment every year while utility rates may or may not keep pace.
The 2026 twist: leasing companies also lost the 30% credit, so new lease and PPA offers are priced higher than 2025 vintages. Compare any offer against your utility's current rates AND its rate history: a 3.5% escalator beats a utility rising 6% a year, but it loses badly if utility rates flatten. Get the escalator in writing, not in the sales pitch.
The home-sale problem nobody mentions
Selling a house with a leased system means the buyer must qualify for and assume the lease -- and some buyers walk away rather than take on a 20-year contract they did not choose. Owned systems (especially paid-off) are a selling point; leased systems are a negotiation.
If you buy with a loan, the lien or UCC filing must be cleared or transferred at sale, which adds paperwork but rarely kills deals. Before signing anything, ask the company for its transfer process in writing: how long it takes, the buyer's credit requirements, and the buyout price at years 5, 10, and 15. The answers -- or the reluctance to give them -- tell you everything about the contract.
The decision framework
Buy (cash) if: you will own the home 10+ years, you want maximum lifetime savings, and you value the home-sale simplicity of an owned asset. Buy (loan) if: the loan's total interest still leaves payback under ~12 years and the monthly payment beats your current bill from day one.
Lease or PPA if: you want $0 down and immediate (if smaller) savings, you may move within 5-7 years and want no loan on the house, or you cannot use tax incentives yourself. Walk away if: the escalator exceeds ~3%, the company will not put transfer and buyout terms in writing, or the 'savings' require utility rates to rise faster than they have historically.
Lease vs. buy vs. PPA at a glance (2026)
| Factor | Buy (cash/loan) / Lease / PPA |
|---|---|
| Upfront cost | $18k–$24k (7 kW) / $0 / $0 |
| 30% federal credit (2026) | Expired for everyone |
| Annual escalator | None / 2–4% typical / 2–4% typical |
| Maintenance | Yours (inverter ~yr 12–15) / Included / Included |
| Home sale | Asset, adds value / Buyer assumes lease / Buyer assumes PPA |
| Lifetime savings | Highest / Lowest / Low–moderate |
| Best for | Long-term owners / $0-down savers / $0-down savers |
DIY vs. hiring a pro
Run the comparison yourself before any sales appointment. Get your last 12 months of kWh and your utility's rate schedule, then model three scenarios: buy (system cost / 25 years of production), lease (year-1 payment grown by the escalator for 25 years), PPA (year-1 rate times your usage, grown by its escalator). The company that will not give you the escalator and buyout schedule in writing has disqualified itself.
What drives the price up or down
- System size and your usage -- oversized systems waste money
- Financing -- loan interest stretches payback
- Escalator rate -- the lease's hidden price
- NEM 3.0 export values -- lower than the NEM 2.0 era
- Home tenure -- how long you will own the house
- Roof condition -- replace the roof BEFORE solar
How to keep the cost down
- Get the escalator, transfer terms, and buyout prices in writing
- Model 25-year totals, not year-1 payments
- Replace an aging roof before installing -- not after
- Compare loan APRs -- dealer fees hide in '0% down' offers
- Owned + paid-off beats every lease at home-sale time
- Get three quotes -- 2026 pricing varies more without the credit
Frequently asked questions
Is it better to lease or buy solar panels in 2026?
Buying usually wins on lifetime savings for homeowners staying 10+ years, even without the expired 30% credit. Leases and PPAs win on $0 down and simplicity but cost more over 25 years thanks to escalators. Short-term owners often prefer leases to avoid a loan on the house.
What happened to the 30% solar tax credit?
The 30% federal Residential Clean Energy Credit expired December 31, 2025, under the One Big Beautiful Bill Act. Systems installed in 2026 do not qualify -- and leasing companies lost it too, so 2026 lease and PPA offers are priced higher than 2025 deals. Consult a tax professional about your situation.
What is a solar escalator and why does it matter?
The escalator is the annual percentage your lease or PPA payment rises -- typically 2-4%. Over 25 years, a 3.5% escalator roughly doubles your payment. It matters because the 'savings vs. your utility bill' pitch assumes utility rates rise faster than your escalator, which is not guaranteed.
Can I sell my house with leased solar panels?
Yes, but the buyer must qualify for and assume the lease, which complicates some sales. Owned systems -- especially paid-off -- are simpler and generally add more value. Get the lease transfer process and buyout prices in writing before you sign.
How long do solar panels last?
Panels typically carry 25-year performance warranties and often produce for 30+ years at slowly declining output. Inverters are the shorter-lived part -- budget for a replacement around year 12-15, roughly $2,000-$3,000.