Your top questions about solar leasing, answered

"Should you lease your solar panels?”

It's one of the most common questions we receive in 2026, and honestly, one of the most misunderstood. Solar leasing, or what's called third-party ownership (TPO), gets a bad rap in a lot of corners of the internet. But the truth is more nuanced than the loudest voices on either side would have you believe.

For years, leasing was the less popular option for most homeowners, mainly because buying or taking a loan on your own system meant claiming the federal solar tax credit, which knocked 30% off the cost. But that changed when the federal government cut the residential solar tax credit for systems installed after 2025, ending one of the biggest financial advantages of ownership. Now, leasing—specifically pre-paid leases—and power purchase agreements (PPAs) are a bigger part of the conversation than they've been in years, as the math is becoming more compelling.

To get straight answers, we sat down with Erik Holvik, EnergySage's Director of Corporate Development and Strategy. Below, we cut through the noise on the questions homeowners are actually asking about renting solar panels or purchasing pre-paid solar leases.

This article is for informational purposes only and should not be considered finance or tax advice. Please consult with a qualified finance or tax professional about your specific situation.

When you buy a solar panel system with cash or a solar loan, you own it. You're responsible for maintenance, but all the long-term financial benefits belong to you—things like electric bill savings, any tax incentives and rebates, as well as the value the system adds to your home if you sell.

When you lease, a financing company owns the panels—not you—and installs them on your roof. You pay a monthly fee to use the electricity they produce, which should be lower than what you’d pay your utility company for grid-produced energy. There's no big upfront cost, you get to enjoy a predictable monthly electric bill, and if something breaks, the financier handles it for the life of the lease—typically 25 years. Or, you can opt for a pre-paid lease and buy your panels after six years (more on that later).

That maintenance coverage is a real perk. "You don't have to worry about your system," said Holvik. "For someone who doesn't have upfront capital, and wants to save on their electric bill, leasing can make a lot of sense."

The trade-off is that you don't own the asset. Ownership can add up to $20,000 to your home's value, and a leased system doesn't move the needle the same way. There are also some complications if you sell your home (more on that below).

Sort of. Congress eliminated the residential solar Investment Tax Credit (ITC) for systems installed after 2025, but commercial systems still qualify until the end of December 2027. When you lease, the financing company—a commercial entity— owns your system, so they can still claim the 30% credit. Whether they pass any of that savings along to you depends entirely on the company.

Some newer lease products are structured to return a portion of the tax benefit to customers in the form of lower monthly rates. Others aren't. We highly suggest you ask about how those savings will reach you before signing any paperwork (EnergySage Advisors can help with this).

If you own your system—bought with cash or a solar loan—the ITC is no longer available to you for new installations after 2025. That changes the financial comparison between owning and leasing more than it has in years past.

Most solar leases include annual price increases called escalators—typically 2–3% per year. That means payment doesn't stay fixed; it increases on a compound schedule over the life of the contract.

Say you start at $100 per month. At a 3% escalator, you're paying $103 the next year, then more the year after that. Stretched over 20 years, that adds up in ways that can be easy to miss when you're focused on the initial monthly number.

Holvik's advice: Don't just compare starting payments. "Look at what that escalator is, and do the math on what your total payments would be in 10 or 20 years," he said. "That compound interest adds up over time. And if an installer isn't being transparent about those numbers, that's a red flag."

When you're comparing lease quotes, ask each company for a year-by-year payment schedule. It's a reasonable ask, and the providers worth working with will provide it.

As long as you understand the terms of your lease escalator, you can prepare for it within your budget. It’s a lot more predictable than rising electric bills, which are projected to rise by roughly $21 a month by 2027 and double by 2055.

Both are third-party ownership models, but they bill you differently.

With a lease, you pay a fixed monthly amount—subject to escalators—regardless of how much electricity your system actually produces. With a PPA, you pay per kilowatt-hour your panels generate, so your bill fluctuates with seasons and weather.

Which one works better often comes down to where you live. Consistent sun exposure makes a predictable lease payment easier to plan around. In cloudier climates like the Northeast or Pacific Northwest, where production swings significantly month to month, a PPA can mean noticeably lower bills in winter when output dips.

It's also worth knowing that PPAs are only available in 29 states and Washington, D.C. Depending on where you live, a lease may be your only third-party option.

Yes. In fact, you can even buy-in to a pre-paid solar lease if you know that’s what your future holds. Most leases include buyout options at the six-year mark, the 12-year mark, and the 20-year mark. At those points, you can purchase the system at fair market value as determined by the financing company.

A few things to understand going in: The financier sets the fair market value—not you, not your installer. They're running a business, and the price reflects that. By the time you hit year six, you've also already made six years of payments, so work through whether a buyout actually pencils out.

For prepaid solar leases specifically, Holvik recommends planning for a buyout from day one. "If you don't buy out after that six-year mark, there are annual fees you're paying to the financier that can be anywhere from $300 to $1,000 a year," he said. "With a prepaid lease, it generally makes the most financial sense to buy out at year six."

For a standard lease, the math is different—you should generally expect to stay in the contract for the full term.

One note: The six-year window isn't arbitrary. IRS rules govern when a financier can legally sell a leased solar panel system to a homeowner. That threshold is six years. If you have questions about how this affects your tax situation, a licensed accountant is the right person to talk to.

This is where leasing gets complicated. If you own your solar energy system, the panels transfer with the home and may add meaningful resale value. But if you're leasing, the buyer has to agree to take over the lease terms—an extra step that not every buyer will welcome.

"It's not that it doesn't add value, but it doesn't add value the same way ownership does. And it makes the sale process more complicated,” Holvik said,

If there's a real chance you'll move within the next few years, think carefully before signing a 25-year lease. Options do exist, though—you can buy out the system before selling, or the financier can remove the panels at the end of the lease—but none of them are as straightforward as owning the asset outright.

The financing company does, not the installer. The financier owns the system and contracts with service providers to handle repairs. For most homeowners, that's a genuine advantage—if something goes wrong, it's not their problem. (Although it’s worth mentioning that most solar energy systems need very minimal maintenance.)

That said, it does introduce some risk worth knowing about. When large solar financing companies run into financial trouble, their customers and leased systems become assets in bankruptcy proceedings. We've seen this play out in the industry. It's not a reason to rule out leasing, but it is a reason to pay close attention to who you're entering a 25-year contract with. Look at the company's track record, financial health, and customer reviews before you sign.

Somewhat. Financing companies work from an Approved Vendor List (AVL)—a set of pre-approved manufacturers they'll allow in a lease deal. That list is often shaped by federal restrictions on equipment primarily manufactured in certain countries, which, in practice, incentivizes USA-manufactured solar products. The downside is that domestic equipment tends to cost more, which can push up the overall price of a leased system.

Buy with cash, and there's no approved vendor list. You can choose from a wider range of equipment, including lower-cost options that may not appear on a financier's list. That said, most reputable lease providers do include competitive products—Tesla Powerwall batteries, Enphase IQ systems, Qcells panels—so you won't be stuck with bottom-of-the-barrel gear. Your options are just more limited.

There's no universal right answer, and anyone who tells you otherwise probably has something to sell you.

"Compare, compare, compare," Holvik said. "Get a cash option. Get a loan option. Get a lease option. And don't just look at the monthly payment—look at the 20-year cost, and figure out the payback period for each one."

Here's a rough framework:

• Leasing probably makes the most sense if you want to start saving right away without a large upfront investment, you don't live in an area with strong solar incentives, you prefer a hands-off option, or your credit doesn't qualify you for a competitive loan rate.

• Buying probably makes the most sense if you have the capital to pay upfront or can secure a favorable loan rate, you live in an area with great solar incentives or net metering policies, and you want to maximize total savings over your system's lifetime.

One more thing on loans: Solar loan interest rates have been running high. If you're leaning toward financing over cash or a lease, it's worth exploring a home equity line of credit (HELOC) as an alternative to a solar-specific loan, as the rates can be meaningfully better.

The tax credit landscape has leveled the playing field between leasing and buying in a real way. That doesn't mean leasing is automatically the right move, but it does mean it deserves a fair look instead of being dismissed out of hand.

"Solar is a great solution no matter how you slice it," Holvik said. "Cash, finance, or lease—it depends on who you are, what your finances look like, how long you're staying in your home, and what your goals are. The good news is there are options."

On EnergySage, you can compare cash, loan, and lease quotes side by side from pre-vetted installers. And if you want a second set of eyes on the numbers, our Energy Advisors can walk you through your financing options with no sales pitch attached.