Leasing vs. Buying Solar Panels: Make the Best Choice for You

With energy prices rising, home solar panels can be a great way to take control of your electricity bills. Any savings you see can last 25 years or longer.

When you go solar, you usually buy or lease. Both can be right for you, depending on your goals. Since a key tax credit for purchasing panels has expired, leasing may grow even more popular. See how the two options compare.

What are solar leases and PPAs?

When you go solar with a solar lease the company that installs your solar panel system retains ownership, and you make monthly payments for their use, just like a car or apartment lease. The company is responsible for installation and maintenance. With a lease, you typically don’t pay any upfront costs for the residential solar installation, only the monthly "rent." 

A solar power purchase agreement, or PPA, is like a solar lease, but your monthly payment is for the power generated by the solar panels on your roof at an agreed upon price per kilowatt-hour (kWh).

What are the differences between a solar lease and a solar PPA?

• Solar lease: You make fixed monthly payments to the company for the duration of the lease, regardless of how much electricity you use.
• Solar PPA: You pay a fixed rate for the amount of electricity generated, which can vary from month to month, though some companies charge flat monthly fees for PPAs.

Is it better to buy or lease solar panels?

Whether leasing or buying solar panels is the best decision for you depends on your situation, especially your finances and long-term housing plans.

• Buying a solar energy system outright or through a solar loan may be more suitable if you’re looking to take advantage of buyer-specific incentives, enhance the long-term value of your home for a future sale, and don’t mind dealing with maintenance issues that might crop up.
• Solar leasing might be perfect if you can budget for a flat monthly fee but don't have the money to buy the system outright or can't secure a loan. Leases also suit homeowners who want a completely hands-off experience.

Pros and cons of buying solar

Purchasing solar panels comes with benefits and drawbacks.

Pro: Long-term savings

A big reason for buying solar is the potential for long-term savings. Solar panel systems can generate electricity for 25 years or more, which can reduce your monthly electric bills from the start and give you years of savings once you’re through the solar payback period, the time when the amount of money you have saved equals the amount of money you paid. According to data from real world Palmetto installations, typical payback periods range from about six years in states like California, up to 17 years in places like Oklahoma.

If you pay cash, you won’t have monthly payments. If you finance, once you pay off the loan, all the additional savings are yours.

(With the expiration of one key tax credit in 2025, solar leases may be a better option for an increased number of people. Explore your options.)

Pro: Fewer steps to sell your home 

When you own a solar panel system, it’s yours. That means fewer steps to selling your home.

Pro: Increased property value

Research has shown that owned solar panels can increase the value of a house. 

Pro: Tax credits and incentives

Although the federal solar tax credit that homeowners could claim expired at the end of 2025, some state tax credits that can lower the cost of solar panel installation, can only be claimed by the system's owner. (In some cases, like New York, for example, homeowners who lease can claim the state tax credit.)

Pro: Fewer fossil fuels

When you’re using clean energy, you’re avoiding dirty electricity from the grid, reducing your overall carbon footprint.

Con: Maintenance requirements

When you buy a solar panel system, any maintenance is your responsibility. If there is an issue, you have to pay to have it fixed. That said, some companies offer real-time system monitoring and maintenance plans.

Con: Higher upfront investment

If you want to purchase a solar panel system, the initial expense is higher than with a lease, which can be zero. If you decide to look into a solar loan, you typically need good financial health to qualify and you’ll probably end up paying interest.

Con: More insurance coverage needed

To protect your solar energy system, you may have to increase your property coverage. That can mean higher premiums, which can increase your budget.

Pros and cons of solar leasing

Leased solar panels have benefits and drawbacks.

Pro: No upfront cost

One big advantage of leased solar panels is that the solar company bears the full cost of installation.

Pro: Benefit from federal tax credits

Although 2025 saw the expiration of the federal tax credit available to homeowners who purchased solar panels, key tax credits still remain available to leasing companies. That means when you lease panels, the leasing company can use the tax credit to lower your lease payments.

The older advice, that leases are a good choice if you don’t have enough tax liability, still stands.

Pro: No maintenance responsibilities

Since the solar company retains ownership of the system, it is fully responsible for ongoing monitoring and maintenance costs. 

Pro: Electricity bill savings

Leasing solar can help you save on your utility bill. If your new monthly electricity costs and lease payment add up to less than your old utility bill, you’ll see immediate savings.

Pro: Fewer fossil fuels

When you use clean energy from your solar power system, you draw less power from the electricity grid, which means you use fewer fossil fuels.

Con: No increase in property value

Since the solar installer owns the solar panels, your home likely doesn't get any additional value for having them on your roof.

Con: Extra steps when selling a home

Once you enter a solar lease, you have to involve the company if you sell your house before the lease is up.

You can buy the lease out to make it easier to sell your home, or the home buyer can agree to assume the lease. A solar company should work with you to easily transfer the lease, but it will require a few extra steps.

Pros and cons of a solar PPA

Pro: No upfront cost

Like with a lease, there’s typically no upfront cost with a PPA, just the monthly payments over the length of your contract.

Pro: Tax credit benefits

Again, the company that owns the panels still has access to federal tax credits and can use that value to reduce your monthly payments.

Pro: Zero maintenance costs

System maintenance is the company’s responsibility. They monitor the system and fix any issues, so you can use solar power in your home without worrying about ongoing maintenance

Pro: Reduced bill

You can lower your energy bill with a solar PPA. The electricity created by the solar panels means you’re paying less to the utility company.

Pro: Cleaner energy

Because solar panels create green energy, you’re using fewer fossil fuels from the electricity grid.

Con: Long-term agreement 

No matter how you get them, solar panels are typically most valuable over the long term. If you’re wary of signing a multi-year contract, even with options to buy out your system after a few years, a PPA may not be for you. Solar PPAs can last for 25 years, though terms may vary.

Con: Selling your house can require extra steps

A solar PPA can make selling your home a more complex process. Like with a lease, you may need to buy out the remainder of your contract or find a buyer who wants to take on the PPA. A PPA also doesn’t increase your home value.

Con: Variable payments (sometimes)

With a PPA, you pay for the electricity your solar panels generate. That means in higher-production summer months, your payments might be higher. Some PPAs are predictable, which means you get flat payments every month, regardless of actual production.

Savings and tax credit eligibility may vary. Consult your own tax and accounting advisors.

Should you lease or buy solar panels?

When it comes to leasing vs. buying solar power, you should consider three things: budget, timing, and ownership. 

• Budget: If you don't want to pay cash and/or you can’t get a solar loan, then leasing a solar system may be your best option, as you pay little or no upfront cost and it can deliver real electric bill savings.
• Timing: How long you plan to stay in your home can affect your decision. Understand how purchasing or leasing solar panels will affect your home value and electric bills in the near and long term.
• Ownership: When you lease, the solar installer retains ownership of the system. If you wish to have total control of what happens to the system, you must purchase it.

If you’re still not sure whether buying or leasing is right for you, talk to the solar experts at Palmetto to help you evaluate your options and make the right decision. See what solar can do for you today.

Frequently asked questions

Can I rent solar panels?

You can lease solar panels in most states. Solar leases or PPAs are typically longer-term agreements, lasting up to 25 years. With a lease, you pay a fixed monthly amount to use the system. With a PPA, you pay per month for the electricity your panels generate. Increasingly, you can also lease battery storage, with or without solar panels.

How much does it cost to buy solar panels?

The cost of a residential solar panel system depends on many factors like system size, available incentives, your roof’s specifications, your financing terms, and whether you’re buying battery storage. The average cost of solar panels in the US in 2025 was $2.36 to $3.24, depending on the area, according to a Palmetto analysis of real world installation data.

Do you really save money with solar panels?

Many people can save money with solar panels, whether they buy, lease, or enter into a PPA. The amount you’ll save depends on how much electricity you use, your home’s suitability for solar, and how electricity prices change over time.

Does leasing solar panels provide tax benefits?

Tax benefits go to the company that owns the panels you’re leasing. That company could pass that benefit on by decreasing your monthly payment, but your savings will be indirect and likely to be only a portion of the full incentive, credit, or rebate. Some state tax benefits are available to people who lease solar panels.

Is leasing solar worth it?

Solar leasing can definitely be worth it. A solar lease can reduce your overall cost of electricity, especially if your local cost of utility electricity increases rapidly. It’s always wise to consider all your options, but a lease can be the best for some people.

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.