Solar Lease vs. Buy: Which is the Best Option for You?

Disclaimer: This article is informational, not legal advice.

Overview

When deciding to go solar, one of the biggest choices you'll face is how to pay for the system. The main options are buying (with cash or a loan), signing a solar lease, or entering a Power Purchase Agreement (PPA). Salespeople often push the option that earns them the highest commission, which may not be the best financial choice for you. This guide breaks down the differences, risks, and red flags of each option.

Key Points

Buying a solar system makes you the owner, allowing you to claim the Federal Solar Tax Credit and increasing your home's value.
Leases and PPAs mean a third party owns the system; they claim the tax incentives, not you.
20-25 year leases can severely complicate selling your home, as buyers must agree to take over the contract.
Always calculate the total cost over the lifetime of the contract, not just the monthly payment.

Main Sections

Buying: Ownership and Tax Credits

When you buy a solar system, either with cash or a solar loan, you own the equipment. The primary benefit of ownership is that you are eligible to claim the Federal Solar Investment Tax Credit (ITC), which can significantly reduce your tax burden. Over the long term, buying typically yields the highest return on investment. Once the system is paid off, the electricity it generates is essentially free, completely eliminating that portion of your utility bill.

Solar Leases and PPAs (Power Purchase Agreements)

With a solar lease, you pay a fixed monthly fee to use the solar panels owned by a third-party company. With a PPA, you agree to purchase the power generated by the panels at a set rate per kilowatt-hour (kWh). In both scenarios, the solar company owns the system, meaning they get to claim the tax credit. These options are often marketed as "free solar" because there are zero upfront costs, but over a 20 or 25-year term, you will typically pay much more than the system is worth.

The Home Sale Complication

One of the biggest traps of solar leases and PPAs is what happens when you try to sell your home. Because the contract is for 20-25 years, the new buyer must agree to take over the lease payments and qualify for the credit requirements. Many homebuyers are hesitant to take on an expensive, long-term contract for aging solar panels. If the buyer refuses, you may be forced to buy out the remainder of the lease yourself, which can cost tens of thousands of dollars, just to close the sale.

When Does Buying Make More Sense?

Buying makes sense for the vast majority of homeowners who have sufficient tax liability to benefit from the federal tax credit and who plan to stay in their home for several years. Even if you need to finance the purchase with a loan, you build equity in the system and add value to your property.

Red Flags in Both Options

Lease/PPA Red Flags Escalator clauses that increase your payment by 2-3% every year; promises of "free" panels; salespeople who refuse to explain buyout terms.
Loan Red Flags High dealer fees (often 20-30% of the loan amount) hidden in the principal; pressure to sign documents electronically on the salesperson's tablet without reading them; promises that the tax credit is a guaranteed check in the mail (it is a non-refundable tax credit, meaning it only offsets taxes you owe).

Consumer Protection Insight

Got Screwed on Solar? Don’t Let the Next Person Who Makes Money From Your Problem Be Your Lawyer.

The solar salesperson was paid. The installer was paid. The finance company drafts money from your account every month. And when you look for a solar lawyer, the conversation often turns to retainers, hourly rates, and money upfront.

Before paying a lawyer out of pocket, there is a critical question worth asking:

“Could any applicable law, based on your facts and jurisdiction, allow attorney fees to be sought from the other side?”

Asking you to pay is simple. Evaluating potential statutory fee-shifting under state UDAP laws, TILA, and deceptive trade practices requires investigating your actual contract and disclosures.

Build My Solar Case → Confidential · 100% Free Case Dossier Organization · No Upfront Retainer Required

What To Do Next

Before signing any agreement, insist on seeing a cash price, a loan option, and a lease option side-by-side. Calculate the total cost over 25 years for each. Consult with a CPA or tax professional to ensure you actually qualify for the federal tax credit if you choose to buy. If a salesperson is overly aggressive or refuses to provide clear paperwork, walk away.

FAQ

Can I claim the tax credit if I lease my solar panels?

No. You must own the system (either by paying cash or using a loan) to be eligible for the Federal Solar Investment Tax Credit. The company that owns the leased panels claims the credit.

Is it hard to sell a house with a solar lease?

Yes, it can be very challenging. Buyers must qualify for the lease transfer, and many refuse to take on the liability. Sellers often end up having to pay a hefty buyout fee to remove the lien and close the sale.

What is an escalator clause in a PPA?

An escalator clause is a provision in a lease or PPA that automatically increases your monthly payment or your per-kWh rate by a certain percentage (often 2-4%) every year. Over 20 years, this can make the panels much more expensive than utility power.

Evidence-First Intake

Their Shortcut Is Your Wallet. Our Starting Point Is Your Evidence.

Why call Firm #1… then Firm #2… then Firm #3 repeating your story, uploading files over and over, and waiting to see who is interested?

The Old Way

“Please take my case. How much is your retainer?”

Homeowners get screened for how much money they can fund upfront before anyone reviews the disclosures.

The Informed Starting Point

“Here are the facts and documents I have. Is this something you can evaluate?”

Build your timeline and file once. Let participating firms review the documentation and decide whether to reach out.

Build My Solar Case File → Upload documents once · Direct review by participating consumer-protection firms

Related Resources

Review our comprehensive field guide to solar panel scams and rip-offs.
Review our guide on solar loan comparison guide.
Review our guide on deceptive solar financing traps.

Sources

Department of Energy (DOE) Homeowner's Guide to Going Solar
Federal Trade Commission (FTC) Guidance on Solar Purchases

Standardized Case Preparation

Understand the Possibilities Before You Pay to Proceed.

The solar company has lawyers. The finance company has lawyers. You should have an opportunity to understand your own situation too—before assuming you must fund all legal costs yourself.

Question Fee-Shifting

Asking for a retainer is simple. But state UDAP laws, TILA § 130, and consumer statutes often allow attorney fees to be sought from the fraudulent company.

Build Your Evidence

Not how much is in your bank account, but what did they promise? What did you sign? Did your electric bill drop as promised? Where are the texts and proposals?

Build It Once

Stop repeating your trauma to Firm #1, #2, and #3. Tell your story once, upload documents once, and let participating law firms evaluate whether to reach out.

Read the complete fee-shifting & legal cost explainer ▼

The solar salesperson may have been paid. The installer may have been paid. The finance company may be taking money from you every month. And now you have reason to believe something is seriously wrong.

So you Google: “Solar fraud lawyer.” And what happens next? You tell someone your story. They ask a few questions. And eventually, the conversation turns to: How are you going to pay for legal services? Retainer. Hourly rate. Money upfront.

Those arrangements may be appropriate in some matters. But before assuming that paying a lawyer is your only option, ask: “Could any applicable law, based on the facts and jurisdiction, allow attorney fees to be sought from the other side?”

The answer depends on the law, the contract, the claims available, the evidence, and the outcome. Asking you to pay is simple. Evaluating potential fee-shifting requires investigating your contract, financing terms, utility bills, texts, cancellation attempts, and consumer-protection statutes.

Their shortcut is your wallet. Our starting point is your evidence. Tell your story once. Upload your documents once. Build the timeline once. SolarPanelScams.com helps organize the information and prepare the matter for potential attorney review.

Let THEM decide whether to reach out. Then you decide whom, if anyone, you want to speak with.

BUILD MY SOLAR CASE →

You may already have paid the solar company, installer, or finance provider. Before committing additional money, make sure you understand what options may be available to you.

Disclaimer: SolarPanelScams.com is not a law firm and does not provide legal advice. It does not determine whether a claim exists, whether attorney fees may be recoverable, whether a matter qualifies for representation or whether any result is likely. Potential attorney-fee recovery and representation depend on applicable law, facts, claims, evidence, procedure and outcome. Participating law firms may decline to review or accept a matter. No result is guaranteed.