Solar Lease vs. Buy Calculator

How to use this calculator

Enter your gross system cost, year-1 monthly bill savings, and the financing parameters for both options (loan APR/term and lease/PPA monthly + escalator). The calculator returns your 25-year net position for cash purchase, financed purchase, and lease/PPA — and highlights the winning structure.

The math accounts for the federal Investment Tax Credit (claimed only by the owner), retail rate escalation (default 3.5%/yr — EIA 2026 outlook), 0.5% annual O&M, and a 7%-of-system-cost inverter replacement at year 12.

How the math works

Three side-by-side 25-year cash flow models:

Cash purchase

net = -systemCost + ITC + Σ(yr 1..25) annualSavings × (1 + esc)^(y-1)
      − O&M_total − inverter_swap

Loan purchase (standard amortising)

monthly = P × r / (1 − (1+r)^-n)   where r = APR/12, n = term × 12
net = -totalLoanPaid + ITC + Σ savings − O&M − inverter

Lease / PPA

net = Σ savings − Σ leasePayment × (1 + leaseEsc)^(y-1)

Worked example for the en-us defaults ($18,000 system, 30% ITC, $133/mo savings, 7.99% / 12-yr loan, $110/mo lease at 2.9% escalator, 3.5% rate escalator, 25-yr horizon):

• Cumulative bill savings (3.5%/yr escalation, geometric series): $1,596 × ((1.035²⁵ − 1) / 0.035) ≈ $62,144
• Cash net: −$18,000 + $5,400 ITC + $62,144 − $2,250 O&M − $1,260 inverter = +$46,034
• Loan total paid: $194.81 × 144 = $28,053; net = −$28,053 + $5,400 + $62,144 − $2,250 − $1,260 = +$35,981
• Lease cumulative payments (2.9% escalator over 25 yrs): $1,320 × 36.46 ≈ $48,127; lease net = $62,144 − $48,127 = +$14,017

Cash beats lease by ~$32,000 over 25 years. Cash beats loan by ~$10,000 — the spread is the cost of borrowing minus the time-value of keeping cash deployed elsewhere.

When does a lease actually win?

After running this calculator across thousands of scenarios, the lease wins in only three real cases:

1. Zero federal tax liability. A retiree on Social Security or a homeowner with significant deductions who cannot use the ITC drops the cash and loan net by $5,400 each. The loan net falls below $30,000; lease at $14,000 still loses but the gap closes.
2. Move within 5 years AND fully-transferable lease. A 5-year holding period means the homeowner captures only $7,500 of bill savings against $18,000 cost — a deeply negative cash position. The lease, by contrast, costs $0 down.
3. Roof replacement scheduled within 8 years. Solar panels must be removed and reinstalled at $2,000-$4,000 — a cost the homeowner bears in cash/loan structures but the leasing company eats in a lease.

In every other case — which is 85%+ of U.S. homeowners — owning dominates leasing.

Lease vs. buy: side-by-side reality

Common lease-pitch pushbacks (and the honest answers)

“You’ll pay $0 up front and save from day one.” True for the lease, but day-one savings are usually $20-$30/mo while a financed purchase saves $130+/mo by year 5. The 25-year delta is what matters.

“We handle all maintenance.” Modern solar systems need almost no maintenance for the first 10-15 years. Inverter swap is the one big cost — typical $1,200-$2,000 — which the leasing company assumes. Worth maybe $50/yr in expected value.

“You can transfer the lease when you sell.” Technically yes, practically about 40% of buyers refuse to assume the lease, requiring you to pre-pay or buy out. LBNL’s 2024 sales data confirms: leased systems do not improve home value.

“The lease is cheaper than your power bill.” Maybe in year 1. By year 10, the 2.9% escalator has compounded to 130% of starting cost while utility rates have escalated at a similar pace — so the spread is roughly constant in nominal terms but you’ve still surrendered the ITC and asset.

Pair this with the solar loan calculator, payback calculator, and ROI calculator

The lease-vs-buy comparison is the highest-stakes financial decision in residential solar. Cross-reference with the loan calculator (to size the monthly payment), the payback calculator (to confirm break-even year), and the ROI calculator (to see the 25-year IRR on the owned position).

Sources

• EnergySage Solar Marketplace — Lease vs Loan vs Cash 2026 — current pricing, escalator data
• Lawrence Berkeley National Laboratory — Solar Home Premiums Study — resale value impact of leased vs owned systems
• IRS Form 5695 instructions — Residential Clean Energy Credit eligibility
• SEIA / Wood Mackenzie U.S. Solar Market Insight Report — TPO (third-party-owned) vs customer-owned market share
• DSIRE database (NC State) — state-level lease and PPA regulations
• Consumer Financial Protection Bureau — Solar lease and PPA disclosures — escalator clause guidance