Solar Lease vs Buy vs PPA in 2026: Which One Costs Less Now That the Tax Credit Is Gone

For a decade, the solar financing math was simple: buy the system, claim the 30% federal credit, and let the panels pay for themselves. That playbook expired on December 31, 2025. Under the One Big Beautiful Bill Act signed in July 2025, the residential clean energy credit (Section 25D) ended for any homeowner-owned system installed in 2026 or later. Getting quotes now means no 30% federal discount on a system you own.

That change reshuffled the lease-versus-buy debate. Here is how the main options compare now, and the fine print that decides which one fits.

The three options in plain language

Buy (cash or loan). You own the panels. You pay for installation, keep the equipment, and pocket the full value of the electricity it produces. A loan trades the big upfront payment for monthly payments plus interest.

Lease. A solar company installs panels on your roof and owns them. You pay a fixed monthly amount, typically $50 to $250 per month at time of writing, for 20 to 25 years. Maintenance is the company's problem.

PPA (power purchase agreement). Like a lease, except you pay for the electricity the panels produce at a set per-kilowatt-hour rate instead of a flat fee. Your payment moves month to month with production and use. Recent 2026 guides cluster PPA rates around $0.10 to $0.18 per kWh, priced to undercut the local utility.

What 2026 changed

The credit that ended was the one claimed by homeowners. A separate commercial credit (Section 48E) is still available through 2027 to companies that own systems. So a leasing or PPA company can still claim a federal credit on your roof's panels and pass some of that value through in your monthly rate. You claim nothing yourself; any savings show up as a lower price from the company.

One warning: some 2026 quotes still subtract a 30% federal credit from owner-purchased systems. That number is wrong. Flag any quote that includes it.

An illustrative cost comparison

Take a typical 7 kW residential system. Installed prices at time of writing run roughly $2.50 to $3.50 per watt, putting the cash price around $18,000 to $25,000. Illustrative totals:

• Cash purchase: the full price upfront, then near-zero electricity bills. You own an asset that adds to home value.
• Solar loan: $0 down is common, but you pay interest for 15 to 25 years. Compare the lifetime interest, not just the APR.
• Lease: say $120 per month in year one with a 2% annual escalator, about $1,440 the first year, growing every year for the life of the contract.
• PPA: similar lifetime cost to a lease, except the monthly amount moves with production. The escalator still applies.

These are illustrative, not quotes. Ownership usually costs less over time because payments eventually stop. That assumes you have the cash or a reasonable loan, and that you plan to stay in the home.

Ownership, maintenance, and selling your home

This is where the options differ most:

• Owned systems add to resale value and transfer cleanly with the house. Panels have few moving parts and 25-year warranties are standard.
• Leases and PPAs must be transferred to the buyer, who has to qualify and agree. A buyer who does not want the contract can complicate or kill the sale. The solar company also files a UCC-1 lien on the property to protect its ownership interest, which your title company will flag.

If you might move in the next 10 years, ownership is much simpler. A lease or PPA with 15 years left can narrow your buyer pool.

Fine print that decides whether a lease or PPA is a deal

Circle the escalator: most contracts raise your payment 1.5% to 3.5% per year, so $100 in year one becomes about $130 by year 10 and roughly $180 by year 20. Compare that rising payment against your likely utility bill over the same period, at your local rates.

Also check buyout terms, the production guarantee, and what happens at end of term. Treat "free solar" pitches as a red flag: nobody installs a $20,000 system on your roof for free; the money comes from your monthly payments over two decades. If a salesperson will not show the full lifetime cost in writing, walk away.

Get competing quotes before you decide

Get several quotes for the same house and compare cash, loan, lease, and PPA offers side by side. EnergySage runs a free marketplace that collects competing installer quotes and shows the lifetime cost of each financing option for your address. It is the fastest way to see what each path actually costs in your utility territory, and it costs nothing to look.

Verdict by user type

Best for most homeowners who can swing it: buy, with cash if possible and a low-rate loan if not. You keep every dollar of savings after payback, and selling your home stays simple. The missing tax credit hurts, but ownership still wins on lifetime cost in most rate scenarios.

Best for $0-down simplicity: a solar loan with no prepayment penalty, from a credit union or a competitive installer lender. You get ownership without the upfront hit, as long as you compare total interest.

Best when you cannot or will not finance: a lease or PPA with a low or zero escalator and clean transfer terms. This fits if you want lower bills now with no upfront cost and no maintenance responsibility, and you are comfortable renting your roof for 20 years. Run the escalator math first.

Best avoided: any lease or PPA where the escalator exceeds your expected utility rate increases, the transfer terms are unclear, or the salesperson cannot show you the full lifetime cost in writing.

The credit made buying a no-brainer; without it, the decision comes down to your cash, your roof, your rates, and how long you plan to stay. Run the numbers for your house, in writing, before you sign anything.

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