Solar Lease / PPA vs Solar Loan: 2026 Comparison
Three ways to go solar — which financing structure saves the most money over 25 years?
For 2026, the best financial choice depends on your situation. The residential Section 25D federal tax credit (IRS) expired for homeowner-purchased systems installed after December 31, 2025, so a solar loan or cash purchase no longer comes with a 30% federal credit. Leases and PPAs eliminate upfront cost and allow the installer to claim the 30% Section 48E credit (IRS), which they may pass through as a lower rate or price per kWh — but they cap your savings and can complicate home sales. State and utility incentives remain available regardless of ownership structure. Choose a lease or PPA if you cannot qualify for a loan, have no tax liability, or want truly $0 involvement; weigh a purchase against remaining state and local incentives to determine long-term return. This is general information, not tax advice.
Solar Lease / PPA vs Solar Loan — At a Glance
| Feature | Solar Lease / PPA | Solar Loan |
|---|---|---|
| Upfront Cost | $0 | $0 (most loans) |
| You Own the System | No | No (PPA same) |
| Federal ITC (Section 48E, commercial installs / leases & PPAs only) | Goes to installer | Goes to installer |
| Monthly Payment | Fixed lease payment | Per-kWh rate |
| Home Value Increase | No (leased equipment) | No (PPA) |
| Savings Cap | Fixed — market rate may exceed it | Rate escalates ~2–3%/yr |
| Home Sale Complication | Buyer must assume lease | Buyer must assume PPA |
| System Maintenance | Installer handles it | Installer handles it |
| Typical 25-yr Savings | $10,000–$20,000 | $12,000–$22,000 |
| Best For | No credit / no tax liability | Predictable rate desired |
When Solar Lease / PPA is the better choice
You have no federal income tax liability — since the residential Section 25D credit (IRS) expired for systems installed after December 31, 2025, this affects all 2026 purchasers equally, not just those with low liability. A lease or PPA can still lower your electricity bill, with the installer capturing the 30% Section 48E credit (IRS) and potentially passing savings through as a reduced rate.
You have poor credit or cannot qualify for a solar loan — lease and PPA underwriting is less stringent, often requiring only a 650 credit score.
You want zero maintenance responsibility — under a lease or PPA, the installer owns, insures, and maintains the system for the full 20–25 year term.
When Solar Loan is the better choice
Note that the residential Section 25D federal solar tax credit (IRS) expired for homeowner-purchased systems installed after December 31, 2025, so a 2026 purchase no longer qualifies for a federal credit. On a lease or PPA, the installer claims the 30% Section 48E credit (IRS) and may pass savings through as a lower rate — but the homeowner cannot claim it directly.
You want to maximize long-term savings — solar loan borrowers typically save $15,000–$25,000 more over 25 years than lease customers for comparable systems.
You plan to stay in your home or want to sell with a clean title — a leased system must be transferred to the buyer or bought out at sale, which can delay closings.
You want home value appreciation — studies show solar ownership adds an average of $15,000+ to resale value; leased systems do not contribute to this.
How they compare on 25-year total return
For a $20,000 6kW system: A solar loan at 6.99% over 12 years costs ~$22,400 total with payments, minus $6,000 ITC = $16,400 net cost. Your electricity savings over 25 years at $0.14/kWh average = ~$32,000. Net gain: ~$15,600 plus ~$15,000 in home value. A lease for the same system at $120/mo costs $36,000 over 25 years, saving $45,000 in electricity — net gain $9,000 with no home value increase. A PPA at $0.09/kWh rising 2.5%/yr: in year 25 you pay $0.16/kWh — above average utility rates — meaning savings evaporate in the final years. The solar loan wins on total return in almost every realistic scenario.
Pricing
Solar Loan — 6kW System
6.99% APR, 12yr term; claim $6K ITC
Solar Lease — 6kW System
Fixed 20yr; ITC goes to installer
PPA — 6kW System
Rate escalates 2–3%/yr for 20–25yr
Cash Purchase — 6kW System
Best return; claim full ITC upfront
Customer reviews and reputation
Solar leases and PPAs are offered by major national companies including Sunrun, SunPower, and Tesla Solar. Solar loans are provided by specialty lenders (GreenSky, Mosaic, Dividend) and some traditional banks. Leases and PPAs are recorded as UCC liens on your property — review this carefully before signing, as it appears in a title search and must be addressed at home sale.
Frequently Asked Questions
Common questions about Solar Lease / PPA vs Solar Loan.
Is a solar lease better than a solar loan?
For 2026, a solar loan or cash purchase no longer comes with a federal tax credit — the residential Section 25D credit (IRS) expired for systems installed after December 31, 2025. A lease or PPA transfers the 30% Section 48E credit (IRS) to the installer, who may pass some savings through as a lower rate. If you have no federal tax liability and want to reduce your electricity bill with no upfront cost, a lease or PPA may still make sense — but the financial advantage of ownership over a lease has narrowed on the federal credit side for 2026 purchasers.
What is the difference between a solar lease and a PPA?
A solar lease charges a fixed monthly payment regardless of production. A PPA (power purchase agreement) charges per kilowatt-hour of electricity actually produced. Both transfer system ownership to the installer.
Who gets the federal solar tax credit on a lease or PPA?
On a lease or PPA, the installer owns the system and claims the 30% federal commercial tax credit under Section 48E (IRS) — you do not own the system so you cannot claim it. With a solar loan or cash purchase in 2026, however, the residential Section 25D credit (IRS) has expired for systems installed after December 31, 2025, so a homeowner purchasing a system in 2026 is no longer eligible for a federal credit directly on their taxes.
What happens to my solar lease when I sell my house?
You must either transfer the lease to the buyer (requires their credit approval and the installer consent) or buy out the remaining lease value at closing. This can complicate or delay home sales.
Can I get a solar loan with bad credit?
Some specialty solar lenders require 640+ FICO. GreenSky and Mosaic offer programs down to 600 in some cases. Lease and PPA providers typically require 650–680. For credit below 640, a lease or PPA may be your only option.
Does a leased solar system add value to my home?
Generally no — appraisers and buyers view leased systems as a liability (transferred debt obligation) rather than an asset. Owned solar systems add an average of $15,000+ to home value per Lawrence Berkeley National Laboratory research.