Lease vs. buy vs. PPA in 2026

Why this decision got more important

The 30% residential credit (Section 25D) expired at the end of 2025, so a homeowner who buys a system in 2026 gets no federal credit. But the commercial credit (Section 48E) still runs through 2027, and it applies to systems owned by someone else and installed on your roof. That's the crux: with a lease or PPA, the finance company owns the panels, claims the ~30% credit, and (with a reputable provider) passes a chunk of it back to you as a lower rate. Buy it yourself and that door is closed.

The four routes

Cash purchase

You pay the full cost upfront and own everything. Best lifetime return by a wide margin, no monthly payment, and the system adds to your home value. The downsides: the biggest upfront outlay, the slowest break-even (now a few years longer without the credit), and you own the maintenance.

Solar loan

You own the system but spread the cost over 10-25 years. Little or no money down, and you keep the ownership upside, but interest eats into savings, and in 2026 there's no credit to make a big early principal payment with. Watch the dealer fee baked into many "low-rate" solar loans; it can add 10-30% to the sticker price.

Lease

A third party owns the system; you pay a fixed monthly amount to use it, regardless of how much it produces. No upfront cost, no maintenance worries, and the provider's 48E credit can make the monthly number attractive. You don't own the asset, don't get the tax benefits directly, and typically save less over 25 years than owning.

PPA (Power Purchase Agreement)

Also third-party owned, but instead of a flat fee you pay per kWh the system actually produces, usually at a rate below your utility's. Payment tracks the value you receive, which some people prefer. Same trade-off as a lease: lower savings than ownership, and you're a customer rather than an owner.

The escalator trap

Most leases and PPAs include an annual escalator, often 2-3%, that raises your payment every year. If your utility rates rise faster, you still win; if they don't, a high escalator can erode or even erase your savings in later years. Always model the contract with its escalator, ask for a 0% option, and compare the 25-year total, not just year one.

Quick decision guide

• Have the cash and plan to stay put? Buying wins on lifetime savings, full stop.
• Want ownership but not the upfront hit? A loan, but scrutinize the dealer fee and APR.
• Want a lower bill with zero hassle and no upfront cost? A lease or PPA, taking advantage of the credit you can't claim yourself. Prefer a low or zero escalator.
• Lease or PPA between the two? Lease for a predictable payment; PPA if you'd rather pay only for what's produced.

Our calculator models the cash/ownership case, the clearest baseline. Get that number first; then when an installer quotes a lease or PPA, compare its 25-year total against owning to see how much of the credit they're really passing through.