Solar / Guides
Lease, loan or cash for solar in 2026
Run on the same house — a 9.54 kW system in Austin, Texas, on a $200-a-month bill — paying cash returns $41,080 over 25 years, a 20-year loan returns $22,875, and a lease returns $14,668. The lease wins on exactly one line: the upfront cost, which is zero.
That ranking holds in 11 of the 11 states we publish. It comes from one engine, on published data, with every assumption on the table — and it changes with your bill, your state's export rules and the price you are quoted. The calculator runs it for yours.
How each option works
- Cash
- You pay the installed price up front, less any state credit, and keep every dollar the system saves. The engine sizes the system to cover your annual use and deducts $150 a year for operations and a $1,800 inverter in year 12.
- Loan
- Same system, same savings, financed: 20 years at 6.99% APR with $0 down, a level payment of $164 a month on this house. You own the system and any state credit; you also pay $18,205 of interest.
- Lease or PPA
- Someone else owns the panels. You pay for every kilowatt-hour they produce — modelled at 70% of your retail rate, rising 2.9% a year — whether you use it or export it. Nothing up front; the owner keeps the federal credit and the equipment.
Assumptions from finance/defaults.json, verified 2026-09-04; each is a slider in the calculator and a row on the methodology page.
Who gets the federal credit in 2026
A buyer in 2026 receives a federal credit of 0%: 25D unavailable for property placed in service after 2025-12-31 (One Big Beautiful Bill Act). The owner of a leased system claims 30% under IRC 48E (Clean Electricity Investment Credit), because One-megawatt exception: a facility with maximum net output under 1 MW AC is entitled to the increased credit rate without meeting prevailing-wage and apprenticeship requirements (26 CFR 1.45Y-3). Residential arrays are 5-15 kW, far under the threshold.IRC 25D (expired) — IRS, read 2026-09-05; eCFR, read 2026-09-04.
That asymmetry is the whole 2026 story, and it cuts both ways: it is why a lease can be priced below retail, and why the lease line in the model does not move when the buyer's credit disappears — the owner's tax position is not an input, only the offered rate is. The tax-credit page has the statute, the risks and the timeline.
Same house, three ways to pay
A 9.54 kW system in Austin, Texas, on a $200-a-month bill: 15.94¢/kWh (EIA 2026-06), 1483 kWh per kW a year (city:austin-tx), $2.22/W (EnergySage 2026), export at 90% of retail (varies by utility or retail provider).
| How you pay | 25-year net | Upfront | Year 1 | Payback / cash flow | Federal credit to you |
|---|---|---|---|---|---|
| Cash | $41,080 | $21,187 | $1,971 | 9.8 yr | $0 |
| Loan $164/mo · 6.99% APR · 20 yr | $22,875 | $0 | $1 | cash-flow neutral from year 1 (+$1/yr) | $0 |
| Lease / PPA | $14,668 | $0 | $542 | immediate (+$542 in year 1) | $0 |
The 30% federal credit goes to the system owner, not to you. It is reflected in the rate you are offered. The owner claims it at 30% under IRC 48E.
Where each option stands, year by year
Cumulative position: the running total of what each way of paying has cost or saved. Cash starts $21,187 in the hole and crosses zero in year 10; the loan and the lease start at zero and stay close to it for years — which is exactly why their year-one figures mislead.
Table view
| Year | Cash | Loan | Lease / PPA |
|---|---|---|---|
| 0 | −$21,187 | $0 | $0 |
| 5 | −$10,903 | $436 | $2,752 |
| 10 | $521 | $2,012 | $5,608 |
| 15 | $11,404 | $3,047 | $8,558 |
| 20 | $25,475 | $7,270 | $11,584 |
| 25 | $41,080 | $22,875 | $14,668 |
Year one is not the verdict
A zero-down loan has nothing to pay back, so "payback" means nothing for it; the engine reports a cash-flow verdict instead. On this house the loan is cash-flow neutral from year 1 (+$1/yr) and the lease is immediate (+$542 in year 1), while cash pays back in 9.8 yr. Read those three side by side and the loan looks like the winner. It is not: its 25-year net is $22,875 against $41,080. A one-dollar margin in year one is called neutral, never immediate, for exactly this reason; "immediate" needs at least 10% of the annual bill in year-one savings.
Which option wins where
The same $200-a-month bill in every state we publish, 2026 policy, 25-year net for each way of paying. The best option is bold.
| State | Cash | Loan | Lease / PPA | Export at | Lease cash flow |
|---|---|---|---|---|---|
| New York | $54,330 | $43,790 | $23,997 | 100% | immediate (+$1,072 in year 1) |
| Massachusetts | $50,567 | $36,794 | $18,997 | 100% | immediate (+$677 in year 1) |
| New Jersey | $48,720 | $33,359 | $18,997 | 100% | immediate (+$677 in year 1) |
| Maryland | $47,154 | $30,447 | $18,996 | 100% | immediate (+$677 in year 1) |
| Pennsylvania | $46,886 | $29,950 | $18,997 | 100% | immediate (+$677 in year 1) |
| Connecticut | $46,443 | $29,126 | $18,997 | 100% | immediate (+$677 in year 1) |
| Florida | $46,082 | $28,455 | $18,997 | 100% | immediate (+$677 in year 1) |
| Texas | $41,404 | $23,477 | $14,668 | 90% | immediate (+$542 in year 1) |
| Illinois | $40,755 | $18,550 | $18,997 | 100% | immediate (+$677 in year 1) |
| Arizona | $27,237 | $12,015 | −$2,647 | 50% | never |
| California | $24,525 | $16,272 | −$13,471 | 25% | never |
When a lease loses money
A lease charges for production; the grid pays for exports. Where exports are credited at the full retail rate, the two roughly cancel and the lease saves the difference. Where they are credited well below retail, every exported kilowatt-hour is bought from the provider at 70% of retail and sold back for less — and the customer pays for the privilege.
On a $200 bill that is the modelled outcome in Arizona (−$2,647, export at 50%), California (−$13,471, export at 25%). Two literature defaults decide the size of that loss — the lease price at 70% of retail and self-consumption at 40% without a battery — so the state pages mark it as directional until it is checked against real quotes. A battery raises self-consumption to 75% and is the lever that changes the sign; the battery page runs it.
What to ask a provider
- The rate and the escalator. The model assumes 70% of retail rising 2.9% a year; ask for both in writing and put them into the calculator.
- Whether you pay for production or for use. A contract that charges for every kilowatt-hour produced is what makes a lease lose money under low export credits.
- The three conditions on the owner's credit. Systems whose construction begins after 4 July 2026 fall under different termination rules. Systems placed in service after 31 December 2027 face restrictions. Equipment sourcing must satisfy the foreign-entity-of-concern (FEOC) rules. If the owner loses the credit, ask who carries the cost. eCFR, read 2026-09-04.
- What the lease is worth against buying. Compare the 25-year net, not year one: on your state page the lease line sits beside cash for one house; the calculator does it for your bill.
Change one assumption
The answer above is one house at one set of defaults. Move one thing at a time and watch which option wins. Bill size first — Austin, Texas, 2026 policy, quoted prices, 25-year net, best option in bold:
| Monthly bill | System | Cash | Loan | Lease / PPA | Cash minus lease |
|---|---|---|---|---|---|
| $100 | 4.47 kW | $16,278 | $7,756 | $6,867 | $9,411 |
| $150 | 7.01 kW | $28,676 | $15,313 | $10,764 | $17,912 |
| $200 | 9.54 kW | $41,080 | $22,875 | $14,668 | $26,412 |
| $300 | 14.62 kW | $65,883 | $37,994 | $22,469 | $43,414 |
| $400 | 19.7 kW | $90,686 | $53,114 | $30,271 | $60,415 |
Then the financing terms themselves, on the $200 bill. Cash is $41,080 in every row: none of these touches it.
| Assumption | Value | 25-year net | Year 1 | Cash flow |
|---|---|---|---|---|
| Loan APR (20 years, $0 down) | 5% | $28,710 | $293 | immediate (+$293 in year 1) |
| Loan APR (20 years, $0 down) | 6.99% | $22,875 | $1 | cash-flow neutral from year 1 (+$1/yr) |
| Loan APR (20 years, $0 down) | 9% | $16,518 | −$316 | positive from year 19 |
| Lease price, share of retail | 60% | $22,261 | $767 | immediate (+$767 in year 1) |
| Lease price, share of retail | 70% | $14,668 | $542 | immediate (+$542 in year 1) |
| Lease price, share of retail | 80% | $7,075 | $316 | immediate (+$316 in year 1) |
| Lease escalator, a year | 0% | $30,617 | $542 | immediate (+$542 in year 1) |
| Lease escalator, a year | 2.9% | $14,668 | $542 | immediate (+$542 in year 1) |
| Lease escalator, a year | 5% | −$2,321 | $542 | immediate (+$542 in year 1) |
The middle row of each block is the default from finance/defaults.json; every one is a slider in the calculator.
Questions
- Is it better to buy or lease solar in 2026?
- On the house this page runs (a 9.54 kW system in Austin, Texas, on a $200-a-month bill), paying cash returns $41,080 over 25 years, a 20-year loan at 6.99% returns $22,875, and a lease returns $14,668. Buying wins on total value in 11 of the 11 states we publish; a lease wins on total value in 0. The lease wins only on the upfront cost, which is zero.
- Does the homeowner get the federal credit on a lease?
- No. In 2026 a buyer gets 0% (IRC 25D (expired)); the owner of a leased system claims 30% under IRC 48E (Clean Electricity Investment Credit) and prices the contract with it. Source: https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFRe427f958a26c8f4/section-1.45Y-3, read 2026-09-04.
- Why does the loan return less than cash if the monthly savings are the same?
- Interest. The engine models a 20-year loan at 6.99% APR with $0 down: $18,205 of interest on a 9.54 kW system in Austin, Texas, on a $200-a-month bill, which is roughly the gap between $41,080 and $22,875.
- What does a lease actually cost?
- The engine models a PPA at 70% of the retail electricity rate for every kilowatt-hour the system produces, rising 2.9% a year — literature defaults, published on the methodology page. You pay for production, not for what you use: under net-billing rules that pay little for exports, that is how a lease turns negative.
- Can a lease lose money?
- Yes. In Arizona, California the modelled lease has a negative 25-year result on a $200 bill: the PPA charges more for each exported kilowatt-hour than the utility credits for it. The page shows the mechanism and the caveat; the export rules behind it still await verification against the tariffs.
- Do state credits apply to leases?
- Where the state's own source says so. New York's credit applies to lease and PPA customers and accrues on the payments up to its cap — $5,000 over the agreement on this bill. Other modelled state credits go to buyers only.
- Does the size of my bill change which option wins?
- Not on this house: cash wins at every bill from $100 to $400 a month. The gap between cash and the lease grows with the bill, from $9,411 at $100 to $60,415 at $400, because a bigger system saves more per year while the lease keeps its share of every kilowatt-hour.
- What if my loan is at 5% or 9% instead of 6.99%?
- On the $200 bill, the loan's 25-year net is $28,710 at 5%, $22,875 at 6.99% and $16,518 at 9%; cash stays at $41,080 in every case. Every percentage point of APR is worth about $3,048 over the life of this loan.
- Is "immediate" payback on a zero-down loan a good sign?
- Only if the margin is real. A zero-down loan has nothing to pay back, so the engine reports cash flow instead: on this house the loan is cash-flow neutral from year 1 (+$1/yr) — the 25-year net, $22,875 against $41,080 for cash, is the number to compare.
This is general information computed from published data and statute, each cited with the date it was read. It is a screening estimate, not a quote, and not financial or tax advice: confirm the figures against real quotes and with a professional before you rely on them.
Published 5 September 2026. Data last verified 5 September 2026. About the author.