Solar lease vs power purchase agreement (PPA): how they work and what to check
Two ways to get solar with no money down. A lease is a fixed monthly payment; a PPA is a price per kWh. Someone else owns the panels either way.
With a lease you pay a set amount each month regardless of output. With a PPA you pay for each kWh the panels make, usually below your utility’s price at first. The owner handles maintenance.
For now, a third-party owner can still claim a federal business credit that homeowners buying outright cannot, if construction began by July 4, 2026 or the system is in service by the end of 2027. That can make leases and PPAs relatively cheaper this year.
The details decide whether it is a good deal: the annual escalator, the term (often 20–25 years), what happens when you sell your home, and the buyout price.
What this means for you: Compare the PPA rate with your utility’s price over 20 years, including the escalator. Above about 2.9% a year, escalators can outpace utility increases.