The Great Solar Debate: Lease vs. Buy in 2026
As residential electricity rates continue to climb across the United States—often outpacing general inflation—the financial case for going solar has never been stronger. However, the mechanism you choose to finance your solar energy system can determine whether you save $5,000 or $50,000 over the lifetime of the panels.
With the extension of the Federal Investment Tax Credit (ITC) through the Inflation Reduction Act, buying a system outright (or via a loan) has distinct advantages. Yet, solar leasing companies continue to dominate the market with zero-down offers. This guide dissects the math behind the decision.
Option 1: Buying Solar (Cash or Loan)
Buying your solar system, either with cash from savings or through a specific solar loan, is generally the most financially advantageous route for homeowners who pay federal income taxes. You become the owner of the asset, which unlocks specific benefits.
The Federal Investment Tax Credit (ITC)
The crown jewel of buying solar is the 30% tax credit (Section 25D). If you buy a system for $30,000, you are eligible for a $9,000 credit against your federal income tax liability. Crucially, if you lease, the leasing company gets this credit, not you.
Home Value Appreciation
Multiple studies, including those by Zillow and the Lawrence Berkeley National Laboratory, have shown that homes with owned solar panels sell for a premium—often around 4%. Conversely, homes with leased solar panels can sometimes be harder to sell, as the buyer must qualify to take over the lease agreement.
Option 2: Solar Leasing (PPA)
In a Power Purchase Agreement (PPA) or Solar Lease, a third-party company installs panels on your roof for free. You simply agree to pay them for the electricity the panels produce, usually at a rate lower than your local utility.
The Hidden Cost: Annual Escalators
Most leases include an "escalator clause," typically 2.9% per year. This means your payment goes up every single year for 20 years.
Example: A $150 payment in Year 1 becomes ~$258 in Year 20. While this might still be cheaper than the utility company, it significantly erodes your savings compared to a fixed-rate loan where the payment never changes.
Net Metering 3.0 and Battery Storage
In states like California, recent changes to Net Energy Metering (NEM 3.0) have slashed the value of the solar energy you export back to the grid. This makes solar-only systems less profitable. To maximize ROI in 2026, homeowners increasingly need to pair solar with battery storage to store excess power for use during peak evening hours.
When buying, you can finance the battery and apply the 30% tax credit to the storage unit as well. Leases often bundle batteries, but the monthly premium can be steep.
Maintenance Myths
Lease proponents often argue that "maintenance is included" with a lease. While true, solar panels are remarkably durable solid-state technology with no moving parts. The most common failure point is the inverter, which usually needs replacement once every 12-15 years (costing ~$1,500 - $3,000). Modern micro-inverters often come with 25-year warranties, negating this risk entirely. Paying a premium for a lease just to cover maintenance is rarely mathematically sound.