Lease, buy, or PPA: who owns the value on your roof
Three contracts put panels on the same roof. Buying means you own the equipment and its output. A lease means a company owns panels on your roof and rents them to you. A power purchase agreement, or PPA, means the company owns the panels and sells you the electricity they make. The hardware can be identical while the economics are not.
What each structure really sells
A purchase sells equipment and every kilowatt-hour it makes for 25-plus years, with maintenance risk on you. A lease sells convenience: a fixed-ish monthly payment, no upfront cost, maintenance included, and a production promise in decent contracts. A PPA sells per-kilowatt-hour pricing that starts below the utility rate and usually escalates each year. The product being sold in a lease or PPA is not solar; it is financing and risk transfer, priced into a very long contract.
| Buy | Lease | PPA | |
|---|---|---|---|
| Upfront cost | Full price, or a loan | Usually none | Usually none |
| Who owns panels | You | The company | The company |
| Who claims incentives | You, if eligible | The company | The company |
| Maintenance | Yours | Usually included | Usually included |
| Typical term | Equipment life, 25+ years | 20 to 25 years | 20 to 25 years |
| Main risk | Upfront cost and upkeep | Escalators and sale transfer | Rate escalator beating utility prices |
The escalator is the whole argument
A lease or PPA that starts 20% below your utility rate and rises 3% a year crosses the utility line surprisingly fast if utility inflation runs cooler than the escalator. The contract total, every payment across the full term, is the honest number to compare against the cash price. Sales presentations show year one. Read year fifteen.
Selling the house changes the answer
Buyers generally accept an owned system as an asset. A leased system must be transferred, bought out, or occasionally removed, and each path has paperwork and sometimes fees. If a sale inside ten years is plausible, transfer terms belong near the top of the contract review, not in the fine print.
How to compare the three offers on one page
Put the three structures on one sheet with the same roof and the same system size. For buying, write the cash price and who claims any incentives. For a lease, write the monthly payment, the annual escalator, the term, and the total collected across the full term. For a PPA, write the starting price per kilowatt-hour, its escalator, and what that price becomes in year fifteen. The example on this page shows why the total matters: a $150 monthly lease with a 2.9 percent escalator collects about $52,000 over 20 years for a roof that a cash buyer fits for $26,000.
Then add the two clauses that decide value after signing. The first is the escalator: any annual increase deserves to be read out loud and compared against the utility price history you can actually verify, because a contract that starts below the utility rate can cross it surprisingly fast. The second is the home sale clause: who approves a transfer, what it costs, and what happens if a buyer refuses. An owned system is generally treated as an asset at sale. A leased or PPA system has to be transferred, bought out, or occasionally removed, and each path belongs in writing before you sign.
Use the cash price as the baseline even if you already know you will not pay cash. Every lease or PPA should have to explain what its extra total buys: maintenance, a production guarantee, no upfront cost, or risk transfer. Those services can be worth real money. They are worth pricing, not assuming. Run your own quote through the estimator first so the benchmark conversation starts from a number, not a monthly payment.
- Compare full-term totals, not year-one monthly figures.
- Write down who owns the panels, the incentives, and the production guarantee in each structure.
- Get the home sale transfer path and its cost in the contract, not the brochure.
Worked example
On a $26,000 system, a cash buyer pays $26,000 and keeps all production value. A lease at $150 a month with a 2.9% annual escalator collects about $52,000 over 20 years for the same roof. A PPA at 22 cents per kWh looks cheap in year one and expensive in year twelve if the escalator outruns the utility rate. Neither alternative is automatically bad; the escalator and the transfer terms decide.
Checklist
- Ask who owns the panels, the roof warranty, and the production guarantee in each structure.
- Price a cash purchase even if you plan to lease; it is the baseline every other structure should be compared against.
- Read the escalator clause out loud. Any annual increase above utility inflation history deserves suspicion.
- Ask what happens at home sale, in writing, for each structure.
- Check whether incentives are claimed by you or by the company, and who keeps them.
Common questions
Are leases and PPAs always bad deals?
Often no. Many leases and PPAs include production guarantees and maintenance, which is real value. The problems are long escalators, sale friction, and paying several times the cash price over the term. Read the total collected over the full term, not the monthly figure.
Who gets the incentives in a lease or PPA?
Where a federal credit exists, only the system owner can claim it. In a lease or PPA the company owns the system, claims any incentives, and may or may not pass the value through in pricing. Ask explicitly who claims what; the answer is in the contract, not the brochure.
How long do leases and PPAs usually run?
Typical terms in the structures described on this page run 20 to 25 years, close to the equipment life of the panels themselves. That length is why the escalator and the sale transfer terms matter more than the starting payment. Read the total collected across the full term and ask what happens in year fifteen, not just year one.
What should I ask before signing a lease or PPA?
Ask who owns the panels and any incentives, what the annual escalator is, whether there is a production guarantee, and exactly what happens at home sale, including fees and buyer approval. Price a cash purchase for the same roof as your baseline. If a structure cannot explain its higher full-term total with services you value, the baseline has done its job.
Sources and verification
- U.S. Department of Energy, Homeowner's Guide to Solar: Explains ownership, lease, and PPA structures for residential solar. Checked October 4, 2026.
- DSIRE (Database of State Incentives for Renewables and Efficiency): Current incentive ownership and eligibility entries by state. Checked October 4, 2026.
Contract structures and incentive eligibility change, and the federal residential credit ended for systems placed in service after 2025. Your signed contract and current DSIRE entries govern, not this summary.