Solar Lease vs Buy Calculator

Should you lease or buy solar panels? Compare total 20-year costs for leasing vs buying and get a personalized recommendation.

Section 1: How to Use the Solar Lease vs Buy Calculator

The Solar Lease vs Buy Calculator is designed to help you make an informed financial decision by comparing the long-term costs and benefits of leasing versus purchasing a solar panel system. Follow these simple steps to get your personalized analysis:

Step-by-Step Instructions

Enter the System Purchase Price Before Incentives: Input the total cost of the solar system your installer quoted you. This is the full price before any tax credits, rebates, or incentives are applied. This figure typically ranges from $15,000 to $25,000 for residential systems, depending on your home’s size and location.
Enter the Federal Tax Credit Amount You Can Actually Claim: The federal Investment Tax Credit (ITC) allows you to claim 30% of your system cost as a tax credit, but only up to your total tax liability for that year. Enter the actual amount you can claim based on your tax situation, not simply 30% of the system cost. Consult your tax professional or use your previous tax return to determine this amount accurately.
Enter the Monthly Lease Payment: Input the monthly payment amount that your solar installer quoted for leasing the system. This is a fixed starting payment, though most leases include annual escalators that will increase this amount over time.
Enter Your Expected Monthly Savings From Solar Production: Estimate the average monthly savings you’ll receive from solar energy production. This should account for your current electricity costs, your system’s expected output based on your location and roof orientation, and any seasonal variations in production. Your installer can provide this estimate based on your energy usage history.
Enter the Annual Lease Escalator Percentage: Most solar leases include an annual escalation clause that increases your monthly payment each year, typically between 1% and 3%. Enter the percentage your lease agreement specifies. This accounts for inflation and ensures the lease provider maintains consistent returns over the 20-year term.
Click Compare Lease vs Buy: Once you’ve entered all five inputs, click the “Compare Lease vs Buy” button to generate your detailed financial comparison and recommendation.

Section 2: How the Lease vs Buy Comparison Works

The calculator uses a comprehensive financial model that projects costs and savings over a 20-year period, which is the typical lifespan of a solar panel system and the standard term for solar leases and loans.

The Buy Scenario

When you purchase a solar system, the calculator first determines your net cost by subtracting the federal tax credit from the full purchase price. This gives you your actual out-of-pocket investment. The calculator then projects your 20-year profit by multiplying your monthly savings by 240 months (20 years) and subtracting your net cost. This shows the total financial benefit of ownership, accounting for the fact that you keep all production savings and own an asset that increases your home’s value.

The Lease Scenario

For leasing, the calculator totals all lease payments over the 20-year period, accounting for the annual escalator percentage you entered. For example, if your starting monthly payment is $150 with a 2% annual escalator, the payments gradually increase each year. The calculator computes the complete payment obligation by year, then calculates your 20-year net result by subtracting total lease payments from your total projected savings over 240 months. This reveals whether your savings exceed your lease obligations.

Recommendation Logic

The calculator recommends whichever option produces better 20-year financial results. If buying yields a higher net profit, purchasing is recommended. If leasing results in greater net savings or lower net costs, leasing is the better choice. The recommendation also considers your specific financial situation, as different scenarios favor different options.

Section 3: Understanding Your Lease vs Buy Results

Once the calculator processes your information, it displays several key metrics that help you understand the financial implications of each option.

Key Result Metrics

Buy Net Cost After Tax Credit: This figure shows your actual out-of-pocket investment when purchasing the system. It represents the purchase price minus the federal tax credit you can claim. This is the amount of capital you need to invest upfront, though many buyers finance this through solar loans.
Buy 20-Year Net Profit: This is the total financial benefit of ownership over two decades, calculated as your total savings (240 months × monthly savings) minus your net cost after tax credits. A higher number indicates greater long-term financial advantage from purchasing.
Lease 20-Year Total Payments: This represents all the money you’ll spend leasing the solar system over 20 years, including all annual escalation increases. It shows your complete financial obligation under the lease agreement.
Lease 20-Year Net Result: This metric subtracts your total lease payments from your total projected savings over 20 years. A positive number means your savings exceed your payments; a negative number means lease costs exceed savings.
Recommendation: The calculator provides a clear recommendation of whether buying or leasing is better for your specific situation, based on which option produces superior 20-year financial results.

Section 4: Frequently Asked Questions

Who typically benefits most from leasing solar panels versus buying?

Leasing typically benefits homeowners with limited upfront capital, those planning to move within 7-10 years, or individuals who don’t benefit significantly from tax credits due to lower tax liability. Buying is ideal for long-term homeowners with sufficient tax liability to claim the full 30% federal credit, strong credit for favorable financing, and those wanting to maximize long-term financial returns and energy independence.

Can you sell your home if it has a solar lease attached to it?

Yes, you can sell your home with a solar lease, but the lease is typically transferred to the new owner as part of the sale. Most solar lease agreements include transferability clauses that allow the new homeowner to assume the lease under similar terms. However, you should disclose the lease early in the sales process, as it may affect buyer interest or financing approval. Some buyers welcome the lease and its energy savings, while others prefer systems they own outright.

Does leasing solar panels qualify for the federal 30% tax credit?

No, the federal Investment Tax Credit (ITC) is exclusively available to system owners, not lessees. When you lease solar panels, the leasing company claims the tax credit, not you. This is one significant financial advantage of purchasing over leasing. If you’re eligible for the full 30% tax credit and have the tax liability to claim it, purchasing may provide substantially greater financial benefits than leasing.