Solar Lease vs Buy (2025): Which Saves More Money?

[VERIFY] The decision between leasing and buying solar panels dramatically impacts your long-term savings. While both options reduce electricity bills, buying solar saves 3-4x more money over the system's lifetime by capturing the full 30% federal tax credit, avoiding escalating lease payments, and owning an asset that increases home value.

This comprehensive guide compares solar leasing and buying across every critical factor: upfront costs, monthly savings, total savings, tax credits, ownership, home sale implications, and contract terms. By the end, you'll understand exactly which financing option maximizes your return on investment.

Solar Lease vs Buy: Complete Comparison Table

[VERIFY] Here's a side-by-side comparison of the key metrics between leasing and buying solar panels:

What Is Buying Solar?

[VERIFY] Buying solar means purchasing and owning the solar panel system outright, either through cash payment or financed loan. You own the equipment, receive all federal and state incentives, keep 100% of electricity savings, and the system becomes an asset that increases your home value.

Two ways to buy solar:

• Cash purchase: Pay full cost upfront, no interest, maximum savings
• Solar loan: $0 down financing, own system from day one, payments typically lower than electricity savings

How buying works:

• Installation: System installed on your property
• Ownership: You own all equipment immediately (even with loan)
• Tax credit: You claim 30% federal tax credit ($4,500-9,000)
• Savings: You keep 100% of electricity cost reduction
• Maintenance: Your responsibility (minimal—panels last 25-30+ years)
• Home value: System adds 4% to home value

What Is Leasing Solar (or PPA)?

[VERIFY] Leasing solar means a solar company installs panels on your roof at no upfront cost, owns the system, and you pay them a monthly lease payment or pay-per-kilowatt-hour rate (PPA - Power Purchase Agreement). The company keeps all tax credits and incentives while you receive modest electricity savings.

Two similar structures:

• Solar lease: Fixed monthly payment regardless of production
• PPA (Power Purchase Agreement): Pay per kWh at rate lower than utility (but increases annually)

How leasing works:

• Installation: $0 upfront, company installs system on your roof
• Ownership: Company owns equipment for 20-25 years
• Tax credit: Company keeps the 30% federal tax credit
• Payments: Monthly lease or per-kWh payment (typically 10-20% less than utility)
• Escalator: Payments increase 1-5% annually for 20-25 years
• Maintenance: Company's responsibility
• Contract: 20-25 year commitment, early termination expensive

Buying Solar Pros and Cons

Leasing Solar Pros and Cons

Cost and Savings Comparison

[VERIFY] The financial difference between buying and leasing solar is stark. Let's compare real-world scenarios for a typical 6 kW system.

Buying Solar (Cash Purchase)

Costs:

• System cost: $18,000
• Federal tax credit (30%): -$5,400
• State rebate (example): -$1,000
• Net cost: $11,600

Savings (over 25 years):

• Annual electricity savings: $1,600
• 25 years total savings: $40,000 (accounting for grid rate increases)
• Maintenance costs: -$5,000
• Net 25-year savings: $34,400

ROI: 297% return on investment

Buying Solar (Zero-Down Loan)

Costs:

• System cost: $18,000
• Down payment: $0
• Loan: $18,000 at 4.99% for 20 years
• Monthly payment: $119
• Total paid over 20 years: $28,500
• Federal tax credit (applied to loan): -$5,400
• Net cost: $23,100

Savings (over 25 years):

• Monthly electricity savings: $133
• Monthly net savings (savings - payment): $14 (positive cash flow from day one)
• 25 years total electricity savings: $40,000
• Minus loan cost: -$23,100
• Minus maintenance: -$5,000
• Net 25-year savings: $11,900

ROI: Infinite (no money down) / 51% return after payments

Leasing Solar (PPA)

Costs:

• Upfront cost: $0
• Starting rate: 11¢/kWh (vs 14¢ utility rate)
• Annual escalator: 2.9%
• Year 1 cost: $990/year
• Year 10 cost: $1,300/year
• Year 20 cost: $1,700/year
• Total 25-year payments: $35,000

Savings (over 25 years):

• Grid electricity cost (25 years): $48,000
• Minus PPA payments: -$35,000
• Net 25-year savings: $13,000

ROI: Infinite (no money down), but minimal absolute savings

The Winner: Buying (Either Cash or Loan)

• Buy with cash: $34,400 net savings
• Buy with loan: $11,900 net savings
• Lease/PPA: $13,000 net savings

Buying with cash provides 2.6x more savings than leasing. Even buying with a loan provides similar or better savings while building equity.

The Tax Credit Difference: $4,500-9,000

[VERIFY] The single biggest financial difference between buying and leasing is who receives the 30% federal tax credit. This alone accounts for $4,500-9,000 in value that either goes to you (buying) or the solar company (leasing).

Buying: You Keep the Tax Credit

• $15,000 system: $4,500 tax credit to you
• $21,000 system: $6,300 tax credit to you
• $30,000 system: $9,000 tax credit to you

This credit directly reduces your tax bill dollar-for-dollar in the year after installation (or carried forward if needed).

Leasing: Company Keeps the Tax Credit

• Solar company receives full 30% tax credit
• You receive none of this value directly
• Company may pass on small portion through slightly lower rates, but keeps majority

Essentially, leasing means giving away $4,500-9,000 in federal tax credit value to the solar company.

Home Sale Implications

[VERIFY] How solar impacts home sales differs dramatically between owning and leasing.

Owned Solar: Increases Home Value

• Value increase: ~4% of home value
• Example ($400k home): $16,000 added value
• Buyer appeal: Major selling point, homes sell 20% faster
• Sale process: Simple—solar conveys with home like any fixture
• Marketing advantage: Low/no electricity bills attract buyers

Leased Solar: Complicates Home Sales

• Value increase: Minimal or none
• Contract transfer: Buyer must qualify and agree to assume 15-20 year remaining lease
• Credit check required: Buyer must pass solar company credit approval
• Deal breaker: Many buyers refuse homes with solar leases
• Buyout option: Pay $5,000-15,000 to terminate lease before sale
• Prepayment option: Pay remaining lease balance (all future payments)

Real estate agents consistently report that owned solar helps sales while leased solar complicates or kills deals.

The Escalator Problem with Leases

[VERIFY] Most solar leases and PPAs include 1-5% annual rate escalators, meaning your payments increase every year for 20-25 years. This erodes savings over time.

Example: 2.9% Annual Escalator Over 25 Years

• Year 1 payment: $90/month ($1,080/year)
• Year 5 payment: $103/month ($1,236/year) — 14% increase
• Year 10 payment: $119/month ($1,428/year) — 32% increase
• Year 15 payment: $137/month ($1,644/year) — 52% increase
• Year 20 payment: $158/month ($1,896/year) — 76% increase
• Year 25 payment: $181/month ($2,172/year) — 101% increase (doubled!)

Meanwhile, if you buy solar, your cost is fixed. You're paying the same effective rate in year 25 as year 1 (zero), while lease payments have doubled.

Which Should You Choose?

[VERIFY] For the vast majority of homeowners who can qualify for financing or have cash available, buying solar is dramatically superior to leasing. Here's when each option makes sense:

Buy Solar (Cash) If:

• You have $10,000-21,000 available cash after the 30% tax credit
• You want maximum savings ($25,000-60,000 over 25 years)
• You plan to stay in your home 7+ years
• You have sufficient tax liability to use the 30% credit
• You want to increase home value and build equity

Buy Solar (Loan) If:

• You have good credit (typically 650+ for best rates)
• You want $0 down with positive cash flow from day one
• You want to own the system and keep tax credits
• You prefer building equity over renting panels
• Monthly loan payment would be less than or equal to current electricity bill
• You plan to stay in home 7+ years

Lease Solar ONLY If:

• You absolutely cannot qualify for solar loans (poor credit, limited income)
• You have zero tax liability and can't use the 30% credit
• You need immediate savings with zero upfront cost and no loan
• You're okay with minimal savings (10-20% vs 40-70% with buying)
• You don't plan to sell home within the 20-25 year lease term

General recommendation: Avoid leases if at all possible. Buy with a 0% or low-interest loan if you can't pay cash. The long-term financial difference is massive.

Frequently Asked Questions

Is it better to buy or lease solar panels?

[VERIFY] Buying is better in virtually all cases. Buying saves $25,000-60,000 over 25 years vs $5,000-15,000 with leasing. You also receive the $4,500-9,000 federal tax credit, own an asset that increases home value by 4%, and avoid escalating lease payments. Even with $0 down financing, buying provides 2-3x more savings than leasing while building equity. Only lease if you absolutely cannot qualify for financing.

What happens to a solar lease when you sell your house?

[VERIFY] When selling with a solar lease, you must either: (1) transfer the lease to the buyer (requires their credit approval and agreement to assume 15-20 remaining years), (2) buy out the lease ($5,000-15,000 early termination fee), or (3) prepay all remaining lease payments. Many buyers refuse homes with solar leases, and real estate agents report it frequently complicates or kills sales. Owned solar, by contrast, increases home value by 4% and helps homes sell 20% faster.

Can you buy out a solar lease?

[VERIFY] Yes, you can buy out a solar lease, but it's expensive. Options include: (1) Early termination buyout: typically $5,000-15,000 depending on years remaining; (2) Prepayment: pay all remaining lease payments in full at once; (3) Fair market value purchase at end of lease (usually year 20-25). Buyout costs are often higher than buying a new system, and you miss out on current incentives. This is why buying from the start is financially superior.

Do solar leases have escalators?

[VERIFY] Yes, most solar leases and PPAs include annual escalators of 1-5% (typically 2-3%) that increase your payment every year for 20-25 years. A starting payment of $90/month with a 2.9% escalator doubles to $181/month by year 25. Meanwhile, utility rates may increase similarly, eroding your savings. Buying solar eliminates this problem—your effective rate stays at zero after payback. Always read lease contracts carefully to understand escalator terms.

Conclusion: Buy Solar for Maximum Savings

The comparison between leasing and buying solar is clear: buying provides 2-4x more savings, keeps the valuable 30% tax credit, builds home equity, avoids escalating payments, and simplifies home sales. Leasing offers the convenience of $0 upfront cost but sacrifices the majority of solar's financial benefits.

Key takeaways:

• Total savings: Buy saves $25,000-60,000, lease saves $5,000-15,000
• Tax credit: Buy keeps $4,500-9,000, lease loses it to company
• Monthly savings: Buy reduces bills 40-70%, lease only 10-20%
• Home value: Buy adds 4% value, lease adds none and complicates sales
• Payments: Buy is fixed, lease escalates 1-5% annually
• Flexibility: Buy owns outright, lease locks into 20-25 year contract

If you can qualify for a solar loan—even with $0 down and moderate interest—you'll save dramatically more money than leasing. The monthly loan payment is typically less than your electricity savings, meaning positive cash flow from month one while building equity. Only consider leasing if you absolutely cannot qualify for financing due to poor credit or insufficient tax liability.

Solar is one of the best investments you can make in your home. Make sure you capture the full financial benefit by buying rather than leasing. Your future self (and bank account) will thank you.