Solar Lease vs PPA vs Loan: Which Way to Pay for Solar Makes Sense in 2026?
Solar lease vs PPA vs loan vs cash in 2026: how each works, 25-year costs, escalators, home-sale rules and what the end of the 25D credit changes.
Compare what paying cash, taking a solar loan, leasing or signing a power purchase agreement (PPA) leaves you with after 25 years. Enter your system, utility rate and each offer's terms to see net savings, payments and year-by-year running totals.
Results update as you type. Without JavaScript you see the worked example below.
A solar lease vs buy calculator adds up 25 years of bill savings, then subtracts what each option costs: the cash price, loan payments, lease payments or PPA bills. With the defaults, a 7.7 kW system nets about $41,397 if you pay cash, $18,160 with a loan, $16,998 with a lease and $19,017 with a PPA.
The system and your utility
The offers
You get each option's 25-year net savings and the loan's monthly payment. A line chart tracks each option's running total year by year, and a bar chart compares the four 25-year results. The schedule lists bill savings, loan payments, lease payments, PPA bills and each option's running total for all 25 years, with a CSV download. The scenario table compares your inputs, 0% lease and PPA escalators, and utility prices rising 2 points slower.
Output, year n = system kW × yearly output per kW × (1 − 0.5%)^(n−1)
Bill savings, n = output × rate × value factor × (1 + escalation)^(n−1)
Cash net = total bill savings − (cash price − rebates)
Loan net = total bill savings − total loan payments (on cash price − rebates)
Lease net = total bill savings − Σ lease monthly × 12 × (1 + lease escalator)^(n−1)
PPA net = total bill savings − Σ output × PPA rate × (1 + PPA escalator)^(n−1)
Assumptions that match the code:
Default inputs: 7.7 kW, 1,350 kWh per kW, 18.2¢, 3% escalation, 100% value, $23,100 cash price, 7.99% loan for 20 years, $110 lease and 13¢ PPA, both escalating 2.9%.
| Scenario (defaults) | Cash | Loan | Lease | PPA |
|---|---|---|---|---|
| Your inputs | $41,397 | $18,160 | $16,998 | $19,017 |
| 0% lease/PPA escalator | $41,397 | $18,160 | $31,497 | $32,665 |
| Utility prices rise 1%/yr | $27,116 | $3,879 | $2,717 | $4,736 |
Second example, a sunny net-billing market: 7.7 kW at 1,755 kWh per kW, 15.3¢, solar kWh valued at 70% of retail (an assumption for partial export credit), $27,720 cash price, $120 lease, 11¢ PPA, other inputs at default.
Cash wins when you have the money and no better use for it. A loan can still beat a lease if the rate is reasonable and there is no large dealer fee. A lease or PPA makes sense mainly when you cannot use ownership benefits or want no repair responsibility, and only if the escalator stays below likely utility price growth.
Read our guide to solar lease vs PPA vs loan and how solar loans work, and check the loan terms in the solar loan calculator.
This is an educational comparison, not financial or tax advice. It does not include upkeep, inverter replacement, insurance, home-sale transfers, buyouts, removal costs, production guarantees or discounting. Read each contract in full and compare total costs, not just monthly payments.
Buying with cash usually leaves you furthest ahead over 25 years, because you keep every dollar of savings and pay no interest or escalator. With the defaults, cash nets about $41,397, versus $18,160 for a loan, $16,998 for a lease and $19,017 for a PPA. Leases and PPAs need no up-front money and include maintenance, which matters if cash is not available.
It is a yearly percentage increase written into the contract. The default here is 2.9 percent; use the figure in your offer. Over 25 years it compounds: a $110 monthly lease becomes about $218 by year 25. Setting both escalators to 0 percent, as the second scenario does, raises the default lease result from $16,998 to $31,497.
With a lease, you pay a fixed monthly amount for the equipment regardless of output. With a PPA, you pay a set price for each kWh the panels produce. In both cases a company owns the system, maintains it and keeps any tax benefits, and you still pay your utility for the rest of your power.
No. The system owner may claim the §48E business credit, subject to construction deadlines and foreign-entity sourcing rules, and may or may not pass the value on in the price. For homeowners who buy, the 25D credit does not apply to installations completed after December 31, 2025, as of October 2026.
Yes, if the payments rise faster than your utility rates or the panels' power is worth less than you pay for it. In our Arizona-style example, where exports earn less than retail, the lease and PPA both end slightly negative over 25 years while paying cash still nets about $21,620.
You pay interest. With the defaults, $23,100 at 7.99 percent over 20 years costs about $193.07 a month, and $23,238 of interest comes off the 25-year result. A loan with a hidden dealer fee looks worse still; check yours in the solar loan calculator.
It scales the value of every solar kWh relative to your retail rate. Use 100 percent under full net metering. Under net billing, where exports earn less, a lower blend such as 50 to 80 percent is more realistic, depending on how much you use directly.
The escalator, the term, what happens if you sell your home, who handles roof work and removal, any production guarantee, and the end-of-term options. The FTC and Treasury's consumer guides list questions to ask before you sign.
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