Solar companies promote leases as an easy, $0-down way to go solar. But the financial reality is that purchasing delivers 2–3x better long-term return for most homeowners. Here's the complete comparison.
How Solar Leases and PPAs Work
Under a solar lease, you pay a fixed monthly fee to the solar company, which owns and maintains the panels on your roof. Your electricity savings offset the lease payment. Under a Power Purchase Agreement (PPA), you pay per kWh for the electricity the panels produce, typically at a rate below your utility rate.
Both structures have $0 upfront cost — but both have important downsides.
The Tax Credit Problem
The single most important disadvantage of leasing: you don't receive the 30% federal tax credit. The leasing company owns the system and claims the credit. On a $28,000 system, that's $8,400 that goes to the company, not you.
20-Year Financial Comparison
Purchase (cash or loan): Net cost after 30% credit: ~$19,600. Annual savings: $1,800. Over 20 years: ~$36,000 savings. Net benefit: ~$16,400.
Lease (typical terms): $100/month escalating at 2.9%/year. Over 20 years: ~$32,000 in lease payments. Savings offset: ~$36,000. Net benefit: ~$4,000.
The difference: $12,400 over 20 years — in favor of purchasing.
When Leasing Makes Sense
Leasing makes sense if: you have low tax liability and can't use the 30% credit anyway, you're unable to qualify for a solar loan, you prioritize simplicity and maintenance coverage over financial return, or you plan to move within 5 years (though lease transfers to buyers can be complicated).
The Loan Alternative
Solar loans (Mosaic, Sunlight Financial, GreenSky) offer $0 down like a lease — but you own the system and claim the 30% credit. Use the tax credit to pay down the loan principal in year 1, and the economics improve dramatically. This is the best option for most homeowners who can't pay cash.