Solar Lease vs Buy vs PPA: The Real 25-Year Math

Cash beats everything on IRR

Cash purchases deliver the highest long-term return (typical IRR 9–13%) because there is no interest and you own every incentive — including SRECs and state credits. The downside is upfront cost, typically $15,000–$30,000.

Loans trade returns for convenience

Solar loans (5–25 years at 5.5–9.5% in 2026) let you go solar with $0 down, but interest adds roughly 1.5–3 years to payback. A loan still outperforms leasing in most cases because you own the system and the incentives.

Leases and PPAs: lowest long-term value

Leases/PPAs deliver day-1 savings (10–20% off your bill) with no upfront cost, but you never own the system — and in 2026 the commercial 48E credit goes to the lessor, not you. Over 25 years, lease payments plus escalators typically leave you with far less lifetime value than owning.

Is it better to buy or lease solar panels?

Buy if you can — cash has the highest IRR and you keep all incentives (SRECs, state credits). Lease if you cannot afford upfront and value simplicity over maximum savings.

What is a solar PPA?

A Power Purchase Agreement: you pay per kWh produced instead of buying the system. The provider owns the panels and claims the tax credits.

How much interest does a solar loan add?

Roughly 1.5–3 years of extra payback at 2026 rates of 5.5–9.5%, depending on term and your credit.