Going solar: buy, finance, lease or PPA?

Key points

Owning your system (cash or loan) usually gives you the most long-term value, while leases and PPAs require little or no money up front.
How much you save depends on your electricity rates, sun exposure, system cost and your utility's rules for sending power back to the grid.
Get more than one quote and compare the same system size, equipment and warranties.

Solar can lower your electric bill for decades, but it is a big purchase and a long contract. How you pay for it matters as much as which panels you choose.

Four ways to pay

Cash purchase

You own the system outright. You keep all the bill savings and any incentives you qualify for. The trade-off is the large upfront cost.

Solar loan

You own the system and repay a loan over time. Compare the APR and total cost, not just the monthly payment. Some solar loans include dealer fees that are built into the system price, so ask whether the cash price and the financed price differ.

Lease

A solar company owns the panels and you pay a fixed monthly amount to use them. There is little or no upfront cost, and the company typically handles maintenance. You do not receive ownership incentives.

Power purchase agreement (PPA)

The company owns the panels and you buy the electricity they produce at a set rate per kilowatt-hour, often with a yearly increase called an escalator. Check that the starting rate and escalator still beat your utility's expected rates.

What affects your savings

Your electricity rates and usage. Higher rates generally mean more value from solar.
Sun exposure. Roof direction, shade and local climate all affect production.
Net metering or export rules. How your utility credits power you send back to the grid varies widely by state and utility, and these rules change.
Incentives. State, local and utility incentives vary and change often. The federal residential clean energy tax credit ended for expenditures made after December 31, 2025, so be wary of any quote that still assumes it. Confirm current incentives with a tax professional.
Roof condition. If your roof will need replacing soon, it may be cheaper to do that first.

Thinking about solar?

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What to check in a solar quote

System size in kilowatts and estimated yearly production in kilowatt-hours
Price per watt, so you can compare quotes of different sizes
Panel and inverter brands, and the equipment, performance and workmanship warranties
Who handles permits, inspection and connection to the utility
For leases and PPAs: contract length, escalator, buyout options, and what happens if you sell your home
The installer's license, which your state contractor licensing board can confirm

The bottom line

If you can afford it, owning your system usually delivers the most value over its life. If you cannot, a lease or PPA can still lower your bill, as long as the contract terms are fair. Either way, get multiple quotes, compare them on the same basis, and be skeptical of savings estimates that assume incentives you may not receive.