Is it better to lease or buy solar panels in 2026?

Buying usually wins long-term if you can use incentives and afford the upfront cost. Leasing got relatively more attractive in 2026 because leasing companies can still claim commercial tax credits the homeowner credit's end took away from buyers — but leases include 20-25 year escalators and complicate home sales.

What is a solar escalator clause?

An annual price increase built into most leases and PPAs, commonly 2.9 to 3.5% per year. A $150/month payment at 3% becomes about $271/month by year 20. Always compare the escalated payment against expected utility rates.

Solar Lease vs Buy — The Honest Math for 2026

Solar lease vs buy — the honest 2026 math

The end of the residential federal credit reshuffled this comparison. Here's how it actually breaks down now.

Buying

You own the system, the production, and the home-value bump.
2026 reality: no federal credit for new homeowner installs (Section 25D ended Dec 31, 2025). State and utility incentives still apply where they exist.
Best when: you have the cash or cheap financing, high electricity rates, and plan to stay 10+ years.

Leasing / PPA

$0 down, fixed (escalating) monthly payment; the leasing company owns, maintains, and monitors the system.
2026 twist: leasing companies can still claim commercial clean-electricity credits on the systems they own — value that can flow into lower lease pricing. This is the main reason leases got relatively more competitive.
Watch for: annual escalators (often ~3%/yr — a $150 payment is ~$270 by year 20), 20–25 year terms, and transfer hassles when selling the house.

The questions that reveal a bad deal

What is the total 25-year cost of the lease vs the purchase quote?
What is the escalator, and what happens if I sell the house?
Who handles warranty claims, and who pays if the roof needs work?
For a purchase: what is the $/watt, and how does it compare to the $3.36/W national average?

Get one purchase quote and one lease/PPA quote for the same system size, then run both through the payback calculator. The comparison takes ten minutes and it's the highest-value homework in this whole process.

A worked 25-year comparison

Take an 8 kW system quoted at $3.36 per watt, the national average figure used on this site. The purchase price is about $26,880 before any state or utility incentive. A lease for a similar system might start at $150 per month. In year one the lease costs $1,800, which looks painless next to $26,880. With a 3 percent annual escalator, though, that payment is about $203 per month in year 11 and about $271 per month in year 20, and the 25-year total of lease payments lands near $65,000. The buyer, by contrast, stops paying for the system once it is bought or financed off, and then owns the production outright. This is why the only honest comparison is total cost over the full term for the same system size, not the first monthly payment against the full purchase price.

Selling the house is where leases get expensive

An owned system is an asset a buyer can value. A leased system is a contract a buyer must agree to assume, with a credit check by the leasing company and a payment that has been escalating for years. Some buyers accept the transfer without comment. Others ask for a price reduction, or walk away, especially late in the lease when the escalated payment is close to a utility bill. If there is a realistic chance you will sell within the term, ask the leasing company, in writing, how transfers work, whether a buyout is allowed and at what price schedule, and what happens if a buyer refuses the transfer. Get those answers before signing, not during an escrow deadline.

Roof age, maintenance, and who carries the risk

Buying a system for a roof that needs replacing in five years means paying to remove and reinstall the panels. Lease contracts usually include that handling, at a cost or on a schedule set by the company, which is a real advantage for an older roof and a real reason some households lease knowingly. Ownership flips the maintenance picture after warranties expire: inverter replacement, monitoring, and repairs are yours. A fair comparison adds a reserve for one inverter replacement to the purchase side, and checks exactly which repairs the lease actually covers rather than assuming everything is included.

When leasing is the rational choice

Leasing can be right when you cannot use purchase incentives, expect to move before a purchase would pay back but can transfer the lease in a market where that is normal, have a roof or electrical panel the leasing company will handle as part of the deal, or value a predictable bill with no maintenance responsibility more than long-term return. It is the wrong choice when it is sold on the first-year payment alone, when the escalator is above expected utility rate growth, or when nobody can show you the full 25-year payment schedule. Run both offers through the payback calculator linked above and keep the printout with the contracts.

Content reviewed October 2026. Tax rules and incentives change; confirm current federal, state, and utility treatment before signing.