Solar Financing Options Explained

How you pay for solar significantly affects your total savings and ownership benefits. Here's a breakdown of the four main options.

1. Cash Purchase

Paying upfront in cash gives you full ownership immediately, the highest total lifetime savings, and eligibility for any applicable state incentives. The downside is the large upfront cost — typically 5,000-0,000+ for a full system.

2. Solar Loan

A solar loan lets you finance the purchase while still owning the system outright, meaning you still qualify for state incentives and add the full value to your home equity. Interest rates typically run 5-9% depending on your credit. Monthly loan payments are often close to or lower than your previous electric bill, especially once the loan factors in your solar savings.

3. Solar Lease

Under a lease, a solar company owns the system and you pay a fixed monthly fee to use the power it generates. This requires no upfront cost, but you don't own the system, don't qualify for most incentives, and the arrangement can complicate a future home sale since the lease often needs to transfer to the buyer.

4. Power Purchase Agreement (PPA)

Similar to a lease, but instead of a fixed monthly fee, you pay for the actual electricity the system produces at an agreed rate per kWh — usually lower than your utility rate. Like a lease, you don't own the system or qualify for incentives, and PPAs can also complicate home sales.

Comparing the Options

Our Take

If you can afford it, cash purchase or a solar loan almost always produces better long-term financial outcomes than a lease or PPA, since you retain ownership, equity, and incentive eligibility. Leases and PPAs can make sense for homeowners who want to try solar with zero upfront cost and don't mind giving up ownership benefits.