Solar Lease vs. Buying in 2026: Cash, Loan, Lease or PPA Without the Federal Tax Credit

Buying a solar system with cash, or with a loan that has no hidden markup, avoids interest, yearly payment increases and a leasing company’s margin, and you keep any state or utility incentives. But in 2026 a lease or power purchase agreement (PPA) can come in cheaper than it used to: the 30% federal tax credit for homeowners is gone, while the company that owns a leased system may still claim a business tax credit and pass part of it on as a lower price. Neither option wins by default. Price the same system all four ways and compare total cost, not just the monthly payment.

This guide explains what changed, how each option works, and the numbers to check. For the cash-purchase math, see our solar payback guide.

What Changed in 2026

The IRS states that the Residential Clean Energy Credit (Section 25D) “will not be allowed for any expenditures made after December 31, 2025.” It treats an expenditure as made “when the original installation of the item is completed,” so a system finished in 2026 does not qualify even if you paid in 2025.

That credit was for homeowners who own their system. When a company owns the system and leases it to you, the company may instead claim a business credit, the Clean Electricity Investment Credit (Section 48E). EnergySage, a solar quote marketplace, reports that the share of installers on its marketplace quoting leases and PPAs (third-party ownership) rose from about 14% to about 41% in the first half of 2026.

That business credit has its own end date. Law firm analyses of the 2025 tax law (Public Law 119-21) say wind and solar projects keep the 48E credit only if construction began by July 4, 2026, or if they are placed in service by December 31, 2027. Treasury’s Notice 2025-42, issued August 15, 2025, narrowed how projects show construction has started, with an exception for solar facilities of 1.5 megawatts (AC) or less. This is the company’s tax credit, not yours. What it means for you: for projects that did not start construction in time, a lease price built on that credit may not be available on the same terms after 2027.

This is general information, not tax or legal advice.

The Four Options at a Glance

Sources: FTC, CFPB solar financing report (August 2024). Terms vary by contract.

Buying With Cash

You pay the full price when the system is installed and own it outright. The FTC notes buyers “might be eligible for federal, state-specific, or local tax credits” or other incentives. In 2026 the federal homeowner credit is gone, but state, utility and local programs are separate and vary.

For scale, EnergySage reports a median quoted price of $2.57 per watt before incentives in the first half of 2026. At that price, a 7 kW system would be about $17,990 (7,000 W × $2.57). That is a marketplace median, not a quote; your price depends on your roof, equipment and installer.

Cash avoids interest, financing fees and escalators. You also take on maintenance and repairs after the installer’s warranties run out. Ask for a lease or PPA price on the same system anyway: with the company claiming a business credit, it can sometimes beat the cash price over the contract term.

Buying With a Loan

You own the system and repay a lender. The FTC notes systems can be financed with a traditional home equity loan. Many installers instead offer solar-specific loans through partner lenders, and this is where the CFPB found problems.

Hidden dealer fees. The CFPB found that markup fees, which the industry calls dealer fees, “often increase the loan cost by 30% or more above the cash price,” and that advertised APRs often leave them out. Its example: a project with a $30,000 cash price financed as a $39,000 loan, where the lender pays the installer $30,000 and keeps the $9,000 fee.

Here is what that fee does to a payment, using the CFPB’s two amounts:

Assumptions: fixed rate, monthly payments, no prepayment. The rate and term are our illustration, not CFPB figures. At the same advertised rate, the fee adds $38.10 a month, about $11,430 over 25 years.

Tax-credit prepayment clauses. The CFPB also found loans that expect a large prepayment by a set date, equal to the tax credit the borrower was expected to receive. If you don’t pay it, the monthly payment can rise sharply. With no 25D credit for systems installed in 2026, a loan that still assumes a 30% credit is a red flag. Ask the lender to show the payment with and without any prepayment.

Liens. The CFPB notes lenders commonly file UCC liens on the panels; citing the Center for Responsible Lending, it says this is “technically not on the property, but it can muddy the title” when you sell or refinance.

Leasing

A company installs the system on your house and you pay it a monthly amount to use it. You don’t own the panels, and the FTC says incentives “go to the system’s owner.” The CFPB says typical solar leases last 15 to 20 years, require no down payment, and “in many cases the payments increase each year by a predetermined amount.” At the end of the term, the CFPB says, the lessor is responsible for removing the panels; check what your contract offers instead, such as renewal or purchase.

What an escalator does. Take a $120 monthly payment that rises 2.9% a year for 20 years:

• Year 1 payment: $120.00 a month
• Year 20 payment: $120 × 1.029^19 = about $206.57 a month
• Total over 20 years: about $38,302, compared with $28,800 with no escalator

Assumptions: increase applied once a year, 20-year term. The $120 and 2.9% are illustrations, not typical figures. Whether a lease saves money depends on how your utility bill would have changed, which no one can know in advance. If your utility’s rates rise more slowly than your escalator, your savings shrink each year.

Power Purchase Agreements (PPAs)

With a PPA, the FTC says, “you’re buying the power the system generates, at a price the PPA provider sets.” You pay per kWh produced rather than a fixed monthly amount, so your payment moves with production. The CFPB reports typical PPA terms of 6 to 25 years and escalators of 1% to 5% a year.

Compare the PPA price with your actual rate. A PPA at 15¢ per kWh with a 2.9% escalator would reach 18.3¢ after seven increases (15 × 1.029^7) and about 25.8¢ in year 20 (15 × 1.029^19). For comparison, the U.S. average residential price was 18.31¢ per kWh in July 2026, according to preliminary EIA data. Compare a PPA with the full per-kWh price on your own bill. Remember that your utility’s fixed monthly charges stay either way; our explainer on fixed charges and solar covers that.

How to Compare Quotes

Ask each installer to price the same system (same panels, inverter and size) as cash, loan, lease and PPA. Then line them up:

1. Cash price. This is the baseline that reveals any dealer fee in a loan.
2. Total of all payments for the loan, lease or PPA over the full term, including escalators.
3. Escalator and final-year payment for a lease or PPA.
4. Which incentives are assumed and who claims them. If a 2026 proposal subtracts a 30% federal credit from a system you would own, ask which credit it is.
5. Production estimate in kWh per year, and whether the company guarantees it.
6. Transfer, buyout and early-termination terms. The FTC suggests asking whether you can transfer the contract to a buyer and whether the buyer must meet credit requirements or pay fees.
7. Who services the system, and what happens if the installer closes. See our guide to what happens when a solar installer goes out of business.
8. Cancellation rights. The FTC suggests asking whether you have a right to cancel the financing and the deadline.

Our solar quote checklist covers the rest of the proposal, and our payback calculator can run the cash case.

Which Option Fits Which Household

• Cash fits households with savings who plan to stay long enough to recover the cost and want to own the system and its incentives.
• A loan fits buyers without cash who can get a home equity loan or a solar loan with no dealer fee. Compare the APR against the cash price, not the loan amount.
• A lease fits households that want no upfront cost and no repair responsibility, and accept paying for 15 to 20 years with possible yearly increases.
• A PPA fits the same households if they prefer paying only for power produced. It is easiest to judge when the PPA price is clearly below your utility’s per-kWh price after escalators.

If you might sell within a few years, ask the transfer and buyout questions first: they can matter more than the monthly savings.

Limitations

The lease, PPA and loan figures above are illustrations with stated assumptions, not typical prices. Contracts vary widely by company and state. The 48E deadlines are summarized from law firm analyses and Treasury guidance as reported; companies’ eligibility depends on facts we can’t see. Consult a tax professional about your own situation.

Sources and verification