Solar PPA vs Lease vs Buy Calculator

About the Solar PPA vs Lease vs Buy Calculator

There are three main ways to go solar: purchasing outright (cash or loan), signing a Power Purchase Agreement (PPA), or leasing. Each has different upfront costs, monthly payments, and total returns over the system's 25-year life.

A cash purchase requires the highest upfront investment but yields the greatest total savings because you own the system, receive all incentives, and pay no interest or monthly fees. A PPA lets you buy solar electricity at a fixed rate (usually below utility rates) with no upfront cost, but the provider owns the system and keeps incentives. A lease provides solar for a fixed monthly payment.

This calculator compares the total 25-year cost of each option so you can see which delivers the most value. The best choice depends on your budget, tax situation, and how long you plan to stay in your home.

Quantifying this parameter enables systematic comparison across facilities, time periods, and equipment configurations, revealing optimization opportunities that reduce both costs and emissions.

When This Page Helps

Choosing the wrong solar financing option can cost you thousands over 25 years. This calculator makes the comparison transparent by showing total costs and savings for each option side by side.

How to Use the Inputs

1. Enter your annual electricity production and utility rate.
2. For purchase: enter system cost, incentives, and annual O&M.
3. For PPA: enter the PPA rate per kWh and annual escalator.
4. For lease: enter the monthly lease payment and escalator.
5. Compare 25-year net costs across all three options.

Example Calculation

Tips & Best Practices

• Cash purchase always has the best financial return if you can afford the upfront cost.
• PPAs can be attractive for homeowners who can't use the ITC (low tax liability).
• Watch PPA and lease escalators — a 2.9% annual increase can make year-20 costs high.
• If you plan to sell your home within 5 years, a PPA or lease avoids transfer hassles.
• Solar loans offer ownership benefits (ITC, SRECs) with no upfront cost.
• Always read the fine print on lease/PPA transfer clauses and end-of-term options.

The True Cost of Each Option

Cash purchase: upfront cost minus incentives, plus minimal O&M. PPA: no upfront cost, but you pay $0.10–$0.14/kWh with annual escalators. Lease: no upfront cost, fixed monthly payment with possible escalation. Over 25 years, the cumulative differences are substantial.

When PPAs and Leases Make Sense

PPAs suit homeowners with low tax liability who can't use the ITC, renters (in community solar programs), or those unwilling to take on debt. Leases are similar but with fixed payments rather than per-kWh rates. Both eliminate maintenance responsibility.

The Solar Loan Sweet Spot

Solar loans combine the benefits of ownership (ITC, SRECs, home value increase) with no upfront cost. With a 20-year loan at 5–7% interest, total cost is higher than cash but significantly lower than a PPA or lease, while preserving ownership benefits.

Frequently Asked Questions

• What is a solar PPA?

  A Power Purchase Agreement lets a company install solar on your roof at no cost. You buy the electricity it produces at a fixed rate (typically below your utility rate). The company owns the system, maintains it, and keeps all incentives. Contracts are usually 20–25 years.

• What is a solar lease?

  A solar lease is a fixed monthly payment to "rent" solar panels on your roof. You don't own the system and don't get incentives, but you pay no upfront cost. Lease payments may include an annual escalator, usually 1–3%. The leasing company handles maintenance.

• Which option saves the most money?

  Cash purchase saves the most over 25 years because you avoid all interest and monthly payments, keep all incentives, and own a system that increases home value. PPAs save less but require no upfront investment. Leases typically save the least.

• What happens if I sell my home with a PPA or lease?

  You'll need to transfer the agreement to the buyer, who must qualify. Some buyers resist this. Alternatively, you can buy out the remaining contract, which adds to your selling costs. Owned systems generally transfer more smoothly and add home value.

• Can I use a solar loan instead?

  Yes, and solar loans are increasingly popular. They offer the benefits of ownership (ITC, SRECs, increased home value) with no upfront cost. Monthly loan payments often equal or are less than your utility bill savings, creating positive cash flow from day one.

• How do PPA escalators work?

  Most PPAs include an annual rate increase of 1–2.9%. Starting at $0.11/kWh with a 2.5% escalator, your rate reaches $0.20/kWh by year 25. If utility rates rise faster, you still save. If they don't, the PPA could become more expensive than the grid.