Solar Lease vs. Buy: Which Option Saves You More Money?

Solar Lease vs. Buy: Which Option Saves You More Money?

The Most Important Decision in Going Solar

Once you have decided to go solar, you face a second major decision: should you buy your system outright (or finance it with a loan) or lease it through a solar company? This choice has enormous implications for how much you save, whether you can claim tax incentives, and what happens when you sell your home. The short answer for most homeowners is that buying — even with financing — delivers significantly better long-term value than leasing. But leasing is not without its advantages, and understanding both options helps you make the right call for your situation.

No matter which path you choose, starting with an accurate solar cost estimator gives you the real numbers to compare against your current electricity costs.

What Is a Solar Lease?

A solar lease is an agreement where a solar company installs panels on your roof at no upfront cost. The company owns the system; you pay a fixed monthly lease payment — typically for 20 to 25 years — in exchange for the electricity the panels produce. The lease payment is usually set below your current electricity bill, creating immediate monthly savings.

A Power Purchase Agreement (PPA) works similarly but instead of a fixed monthly payment, you pay a per-kWh rate for the electricity the panels generate, usually at a discount to your utility rate. Both leases and PPAs are structured so the solar company captures the federal tax credit and other incentives, since they own the equipment.

What Does Buying Solar Mean?

When you buy a solar system — either by paying cash or taking out a solar loan — you own the equipment from day one. You claim the 30% federal tax credit on your next tax return, take advantage of any state credits or rebates, and the system is a permanent improvement to your home. After your loan is paid off, the electricity your system produces is essentially free.

The most common buying method is a solar loan: zero money down, typically 5 to 25 year terms, at interest rates ranging from 3.99% to 8.99% depending on creditworthiness. Many installers offer in-house financing or partner with specialized solar lenders.

Head-to-Head Comparison: Lease vs. Buy

Upfront Cost

Lease: Zero upfront cost in most cases. Some leases require a small down payment to reduce monthly payments.
Buy (cash): Full system cost upfront — typically $15,000 to $30,000 before incentives.
Buy (loan): Zero to low upfront cost, depending on loan structure. You pay monthly like a lease but own the system.

Federal Tax Credit

Lease: You do NOT receive the 30% federal tax credit. The leasing company claims it.
Buy: You claim the full 30% ITC, which can be worth $4,500 to $9,000 on a typical residential system. This single factor is often the deciding difference in total lifetime savings.

Monthly Savings

Lease: Immediate modest savings — typically $15 to $50 per month. Lease payments often escalate 1% to 3% annually.
Buy (loan): Savings may start small but grow over time as electricity rates rise and your loan payment stays fixed. After payoff, savings jump dramatically.

Long-Term Savings Over 25 Years

This is where the numbers diverge most significantly:

• Leasing: Typical 25-year savings of $10,000 to $20,000, depending on rate escalators and local electricity prices.
• Buying (loan): Typical 25-year savings of $25,000 to $50,000 after accounting for loan interest and the tax credit.
• Buying (cash): Typical 25-year savings of $35,000 to $60,000 — the best outcome if you have the capital.

The gap exists primarily because loan or cash buyers capture the tax credit and eventually pay off their loan, after which their electricity is free. Lease customers pay every month for the full lease term.

Home Sale Complications

This is one area where leasing creates real risk. When you sell a home with a leased solar system, you have two options: transfer the lease to the buyer (who must qualify and agree) or buy out the lease before closing. Buyers wary of inheriting a 15-year lease obligation may discount their offers, and in competitive markets, a lease can complicate or delay your sale.

An owned solar system, by contrast, typically adds value to your home. Studies by Lawrence Berkeley National Laboratory found that solar installations increase home sale prices by an average of $15,000, with buyers willing to pay a premium for homes with owned solar.

Who Should Consider Leasing?

Leasing is not always the wrong choice. It may make sense if:

• You have little to no federal tax liability, making the ITC less valuable to you.
• Your credit score makes solar loan interest rates prohibitively high.
• You want guaranteed maintenance coverage with no ownership responsibility — most lease agreements include full maintenance and monitoring by the solar company.
• You plan to move within 5 years and the market for owned solar in your area is uncertain.

The Bottom Line

For homeowners who can qualify for a solar loan and have sufficient tax liability to use the federal credit, buying is almost always the better financial choice. The difference in lifetime savings between leasing and buying can easily exceed $20,000 to $30,000 — a meaningful sum that compounds further if you invest those savings.

If upfront cost or maintenance responsibility is a barrier, a zero-down solar loan threads the needle: no out-of-pocket cost, full ownership, and the ability to claim the 30% tax credit. It combines the accessibility of leasing with the financial upside of ownership.

Use our free solar cost estimator to get a personalized estimate for your home.