Lease vs buy solar: which is cheaper?
Buying solar is often cheaper over the long run, but leasing or a PPA can cost less upfront. The best choice depends on your home, roof, utility rates, contract terms, and how long you plan to stay put.
Quick answer
If you want the lowest monthly upfront cost, a lease or power purchase agreement (PPA) can be appealing. You usually pay little or nothing at the start, but you make monthly payments and the provider usually keeps the federal tax credit.
If you want the best chance of lower total cost over time, buying with cash or a solar loan may be cheaper in many cases. You own the system, so you may get the tax credit and keep more of the long-term savings, but the upfront cost is usually higher.
There is no single winner for every home. Solar savings can vary a lot by state, utility, roof size, shading, system size, and contract terms.
How leasing and buying are different
With a lease or PPA, a solar company owns the equipment. You pay a set monthly lease payment or pay for the power the system produces. This can make solar easier to start, especially if you do not want a large down payment.
With buying, you own the solar system. That can mean a bigger upfront cost or a loan payment, but it may also mean more long-term value. Homeowners who buy may also be able to claim the federal tax credit if they qualify, while the provider usually claims it in a lease or PPA.
Some leases and PPAs include an escalator, which means your payment can go up each year. That is one reason it is important to get every number in writing and compare the full contract, not just the first month price.
When a lease or PPA may make sense
A lease or PPA may be worth looking at if you want lower upfront cost, you plan to stay in the home for a shorter time, or you want the provider to handle some maintenance. For some homeowners, that simpler start can be helpful.
Still, read carefully. Ask who owns the panels, who gets the incentives, what happens if you sell the home, and whether the payment can increase over time. Make sure you understand any fee for removing or transferring the system.
If a salesperson pressures you to sign fast, slow down. Do not sign on the spot. Compare at least a few offers and ask for the full terms in plain language.
When buying may be better
Buying may be a better fit if you plan to stay in your home longer and want more control over the system. In many cases, ownership can offer more long-term savings potential than a lease or PPA, especially after the system has been paid off.
Buying can also make it easier to benefit from incentives, but incentives and rules vary by state and utility. A solar loan can spread the cost over time, but the total cost will depend on the loan rate, term, and fees.
If you are comparing purchase options, ask for the cash price, loan APR, term length, fees, estimated production, and what is included in the warranty.
How to compare offers fairly
Try to compare offers using the same facts for each one. Ask each provider for the system size, estimated yearly production, total cost, monthly payment, contract length, and any payment increase over time.
A simple way to compare is to ask:
1. What is the total cost over the full term?
2. Who gets the tax credit and other incentives?
3. What happens if I move, refinance, or sell my house?
4. What maintenance, repair, and monitoring are included?
You can also use our solar guides and answer pages to learn the basics before you talk to providers. If you want help finding vetted local solar companies, get matched through our free service.
Leasing can cost less to start, but buying often costs less over time, so compare full contract terms before you decide.