Compare the net present value of a solar PPA, lease, and cash purchase over 25 years. Find the best solar financing option for your home.
There are three main ways to go solar: purchasing outright (cash or loan), signing a Power Purchase Agreement (PPA), or leasing. Each has different upfront costs, monthly payments, and total returns over the system's 25-year life.
A cash purchase requires the highest upfront investment but yields the greatest total savings because you own the system, receive all incentives, and pay no interest or monthly fees. A PPA lets you buy solar electricity at a fixed rate (usually below utility rates) with no upfront cost, but the provider owns the system and keeps incentives. A lease provides solar for a fixed monthly payment.
This calculator compares the total 25-year cost of each option so you can see which delivers the most value. The best choice depends on your budget, tax situation, and how long you plan to stay in your home.
Quantifying this parameter enables systematic comparison across facilities, time periods, and equipment configurations, revealing optimization opportunities that reduce both costs and emissions.
Choosing the wrong solar financing option can cost you thousands over 25 years. This calculator makes the comparison transparent by showing total costs and savings for each option side by side. Precise quantification supports regulatory compliance and sustainability reporting, ensuring that energy data meets the standards required by auditors and industry certification bodies.
Purchase NPV = -(System Cost - Incentives) + ∑(Annual Savings) over 25 years PPA Cost (25yr) = ∑(Annual kWh × PPA Rate × (1 + escalator)^n) Lease Cost (25yr) = ∑(Monthly Payment × 12 × (1 + escalator)^n)
Result: Buy: $36,000 net savings; PPA: $10,000 savings; Lease: $8,500 savings
Over 25 years at $0.15/kWh (no escalation for simplicity): Utility cost = $37,500. Purchase net cost = $14,000, yielding $23,500 net savings. PPA at $0.11/kWh costs $27,500 — saving $10,000 vs utility. Lease at $120/month costs $36,000 — nearly the same as the utility bill. Cash purchase wins financially.
Cash purchase: upfront cost minus incentives, plus minimal O&M. PPA: no upfront cost, but you pay $0.10–$0.14/kWh with annual escalators. Lease: no upfront cost, fixed monthly payment with possible escalation. Over 25 years, the cumulative differences are substantial.
PPAs suit homeowners with low tax liability who can't use the ITC, renters (in community solar programs), or those unwilling to take on debt. Leases are similar but with fixed payments rather than per-kWh rates. Both eliminate maintenance responsibility.
Solar loans combine the benefits of ownership (ITC, SRECs, home value increase) with no upfront cost. With a 20-year loan at 5–7% interest, total cost is higher than cash but significantly lower than a PPA or lease, while preserving ownership benefits.
A Power Purchase Agreement lets a company install solar on your roof at no cost. You buy the electricity it produces at a fixed rate (typically below your utility rate). The company owns the system, maintains it, and keeps all incentives. Contracts are usually 20–25 years.
A solar lease is a fixed monthly payment to "rent" solar panels on your roof. You don't own the system and don't get incentives, but you pay no upfront cost. Lease payments may include an annual escalator, usually 1–3%. The leasing company handles maintenance.
Cash purchase saves the most over 25 years because you avoid all interest and monthly payments, keep all incentives, and own a system that increases home value. PPAs save less but require no upfront investment. Leases typically save the least.
You'll need to transfer the agreement to the buyer, who must qualify. Some buyers resist this. Alternatively, you can buy out the remaining contract, which adds to your selling costs. Owned systems generally transfer more smoothly and add home value.
Yes, and solar loans are increasingly popular. They offer the benefits of ownership (ITC, SRECs, increased home value) with no upfront cost. Monthly loan payments often equal or are less than your utility bill savings, creating positive cash flow from day one.
Most PPAs include an annual rate increase of 1–2.9%. Starting at $0.11/kWh with a 2.5% escalator, your rate reaches $0.20/kWh by year 25. If utility rates rise faster, you still save. If they don't, the PPA could become more expensive than the grid.