SolarToolsHow This Tool Works
The Solar Lease vs Buy Calculator compares the 20-year economics of leasing versus buying solar panels. Buying almost always wins financially — you keep the 30% tax credit, avoid lease escalators (2.9%/year typical), and build home equity. But leasing has advantages for homeowners who can't use the tax credit, don't have cash, or want zero maintenance responsibility.
With a purchase, you pay upfront (or finance), claim any state incentives, and keep all the savings. With a lease or PPA, you pay $0 upfront, the leasing company claims the ITC, and you pay a monthly fee that increases 2–3.9% annually. Over 20 years, the escalator can erase the "no money down" advantage.
This calculator shows the 20-year net benefit of each option and the difference. In most cases, buying saves $10,000–$20,000 more than leasing over 20 years. But if you can't use the tax credit (low income, retired, large deductions), leasing may be the better choice.
- Purchase price — total installed cost from your solar quote.
- Federal tax credit — 30% of purchase price. Only applies if you buy, not lease.
- Annual savings — from your Solar Savings Calculator result.
- Lease monthly payment — from your lease quote. Typically $100–$200/month for a 7.5 kW system.
- Lease escalator — annual payment increase. 2.9% is industry standard. Some leases offer 0% escalator for a higher upfront payment.
- Lease term — 20 or 25 years. Most leases.
- Electricity inflation — affects how fast your purchase savings grow.
The "Buy advantage" line shows how much more you save by buying vs leasing over the comparison period. In most cases, buying wins by $10,000–$20,000.
When to Use This Calculator
Why buying almost always wins
Three reasons: (1) Note: the federal ITC expired Dec 31, 2025. The Section 48E commercial credit (through 2027) goes to the leasing company in a lease/PPA structure, not the homeowner — with a lease, the leasing company claims it; (2) lease escalators (2.9%/year) compound — a $150/month payment becomes $262/month in year 20; (3) purchased solar increases home value by 4% on average (Zillow study), while leased solar can actually decrease home value or complicate sales.
The escalator trap
A $150/month lease with a 2.9% escalator costs $43,860 over 20 years. The same lease with a 0% escalator costs $36,000. That 2.9% difference costs $7,860 extra. Some leases offer 0% escalator for a slightly higher starting payment — usually the better deal. Always read the escalator clause.
When leasing makes sense
Leasing can be the right choice if: (1) you want zero maintenance responsibility, (2) you don't have cash or good credit for a loan, (3) you plan to move within 5 years (lease transfers are easier than selling a system), or (4) you want zero maintenance responsibility (the leasing company fixes everything). For everyone else, buying wins.
PPA vs lease
A Power Purchase Agreement (PPA) is similar to a lease but you pay per kWh produced instead of a flat monthly fee. PPAs typically charge $0.12–0.16/kWh vs your utility rate of $0.16–0.30/kWh. The savings are smaller than owning but there's no monthly payment if the system produces less (cloudy months). PPAs have the same escalator issue as leases.
Home value impact
Multiple studies (Lawrence Berkeley National Lab, Zillow) show that owned solar increases home value by 3–4%. On a $400,000 home, that's $12,000–$16,000. Leased solar has a neutral or negative impact — buyers must assume the lease, which can complicate financing. If you might sell within 10 years, buying is clearly better.
Maintenance: buy vs lease
With a purchase, you're responsible for maintenance — but solar systems need very little (no moving parts, 25-year panel warranty, 10–25 year inverter warranty). Typical maintenance: occasional panel cleaning ($0 if DIY, $150–$300 professional), inverter replacement at year 12–15 ($1,500–$3,000 for string inverters, $0 for microinverters under warranty). With a lease, the leasing company handles all maintenance — but you're paying for it via the monthly fee.
Buying at lease end
Most leases allow you to buy the system at the end of the term (year 20–25) at "fair market value," typically $2,000–$5,000. This can be a good deal — the system still has 5–10 years of productive life left. But you've already paid $40,000+ in lease payments. Buying upfront would have cost $17,500 (after ITC) and saved $40,000+ over 20 years.
Frequently Asked Questions
Buying is almost always better financially — you keep the 30% tax credit ($7,500+), avoid lease escalators, and increase home value 3-4%. Over 20 years, buying typically saves $10,000-$20,000 more than leasing. Lease only if you can't use the tax credit or don't have cash/credit for purchase.
An annual increase in your lease payment, typically 2.9% per year. A $150/month lease becomes $262/month in year 20. Over 20 years, the escalator adds $7,000-$8,000 to total lease cost. Some leases offer 0% escalator for a higher starting payment — usually the better deal.
No — the leasing company may claim the Section 48E commercial credit (through 2027). You get a lower upfront cost but don't own the system or its long-term savings. This is the biggest financial disadvantage of leasing.
Leased solar can decrease home value or complicate sales. Buyers must assume the lease, which adds a monthly payment and can affect financing. Owned solar increases home value 3-4% (Zillow study). If you might sell within 10 years, buying is clearly better.
Most leases run 20-25 years. At the end, you can: (1) buy the system at fair market value ($2,000-$5,000), (2) have it removed (at the leasing company's cost), or (3) renew the lease. Buying the system at lease end can be worth it — it still has 5-10 years of productive life.
A Power Purchase Agreement (PPA) charges you per kWh produced ($0.12-$0.16/kWh) instead of a flat monthly fee. You save the difference between your utility rate and the PPA rate. PPAs have the same escalator issue as leases and the provider claims the tax credit. Neither PPA nor lease is as financially advantageous as buying.
Further Reading
Deep-dive articles and guides related to this calculator.