​​​​Solar Leasing Guide 2023

Solar Leasing Guide 2023

In this EcoWatch guide on solar panel leasing, you’ll learn:

  • How solar leasing differs from a Power Purchase Agreement (PPA)
  • What the typical solar lease terms are
  • How buying solar panels compares to leasing them
  • What happens if you want to end your solar lease

This guide has helped thousands of homeowners go solar with confidence because they knew they made the best financing decision for their homes. Let’s get started!

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Solar power is among the most affordable renewable energy options, whether for businesses or homes. Companies that provide solar products are everywhere these days, but to take advantage of the benefits of solar energy, homeowners are faced with a major decision: solar leasing vs. buying panels outright.

A solar lease is a long-term contract between a customer and a solar panel provider. For homeowners seeking to fulfill their energy needs without high utility bills, but who don’t have the upfront capital to buy a system, solar leasing can seem like a viable option.

What is Solar Leasing and How Does it Work?

Solar leasing is a financing option through which customers pay a monthly fee for the panels and get to use the power the system produces. They do not, however, own the panels. It is an arrangement similar to leasing a car — the idea is to provide a convenient option for those who want to go green and reduce their electricity bills without the overhead of buying a solar energy system.

There are many benefits to going solar, but solar leasing also offers its own unique set of benefits. First, it reduces a customer’s upfront costs to install panels. Using a solar lease means the maintenance and liability to damaged panels rests on the solar company rather than the homeowner. However, because you do not own the panels, you miss out on incentives like local and federal tax credits.

Typical solar leases last for 20 years, and they include a solar lease escalator that increases the monthly installment once per year based on current market prices and the energy landscape. Many solar leases come with the option to buy the solar panels at a discounted rate at the end of the lease agreement (again, similar to a car).

Solar leasing was especially important in the early days of solar when systems were more expensive, but as the cost of solar panels has decreased, leasing doesn’t make as much sense as it used to.

Leasing vs. Power Purchase Agreement (PPA)

In many ways, solar leasing presents a competitive option compared with a solar power purchase agreement (PPA). For solar leasing, customers pay monthly rent for the panels; with a PPA, customers instead pay per kilowatt-hour (kWh) of energy generated.

In other words, the amount customers pay for a solar lease is determined based on the capacity of the panels, while a solar PPA are paid based on the actual generation.

This difference means that those with solar leases will have a more fixed price, benefit more during the sunny summer months and save even more money in the long run from reduced energy bills.

While both solar leasing and solar PPAs are contracts by which the customer doesn’t actually own the solar panels, the specifics of costs, reliability, savings and more differ and require consideration by the individual building owner.

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  • Most efficient panels on the market
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  • Great warranty coverage


  • Expensive
  • Customer service varies by local dealer
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Blue Raven Solar

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  • Industry-leading in-house financing
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  • Doesn't offer solar batteries (coming 2022)
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ADT Solar

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  • Industry-leading warranty coverage
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  • Some reported communication issues
  • No leases or PPAs

What Are the Typical Terms of a Solar Lease?

The terms of a solar lease are critical to understanding whether it’s the right route for you. Based on individual requirements, solar leasing companies can provide various lease terms, ranging from short to long periods. Typically, though, solar leases last 20 to 25 years.

Given that solar panels have an average lifespan in the range of 25 to 30 years, customers end up being able to utilize solar panels to their full lifetime potential. Different solar leasing companies will also offer opportunities for advanced services, including monitoring, lease payment and observation through mobile and web apps.

Included in these digital offerings are online portals through which customers can review their contract, make monthly payments and observe usage over time. As with the wider utility sector, solar customers are looking to choose companies with improved service and customizable solutions, all of which provide a better user experience.

Customers must also be aware that, typically, solar leases will require an annual payment escalator of 1 to 5% per month as a result of inflated electricity costs. These terms are spelled out clearly in the contract, though, so they should not come as a surprise.

Ending Your Solar Lease

Customers who choose to lease solar panels may find themselves in circumstances where they want to end their lease, such as if they are moving to a new home. Solar leasing companies try to make this process as easy as possible, providing the option to transfer the lease to the new owners of the home or break the contract and remove the panels.

Even if you don’t break your lease early, it will come to an end eventually. When this happens, customers can either renew the same lease or cease the solar contract. In the latter instance, the solar company will dismount and remove the panels.

A last option is that customers can purchase the solar panels at a discounted rate (a price that is sometimes outlined in the contract at the time of the original solar lease).

If you want to know for sure how many panels you need, you can click below to connect with an EcoWatch-vetted installer and get a free estimate.

Is a Solar Lease Right for You?

The decision of whether to lease solar, buy solar panels outright, engage in a PPA, or simply ignore solar as an option is a very personal and major decision. To help with such decisions, here are a few pros and cons of solar leasing to keep in mind:

Pros of Solar Leasing

Solar leasing comes with many natural benefits, including the following:

  • No need to pay high upfront costs of solar panel installation
  • Locks in energy prices for the future, when the market may be volatile
  • Avoid the headache of maintenance and monitoring of equipment
  • Significant utility bill savings
  • Reduced household carbon footprint
  • Power production guarantees in solar leases mean payments can decrease if the panel doesn’t produce as anticipated, minimizing the risk

Cons of Solar Leasing

Solar leasing is certainly not for everyone, though, as these contracts can come with a certain level of risk and concern as well:

  • As utility rates increase, the leasing price also increases each year and could undercut expected cost benefits.
  • Since you do not own solar panels, you are not entitled to the federal solar tax credit or local benefits.
  • Although there isn’t a high upfront cost, over the system’s lifetime, you’ll likely end up paying an equivalent or higher amount than what you would have if you bought the solar panels outright.
  • Leased solar panels don’t increase your home value like panels you own do, because they are not a part of the property you own.
  • Breaking your lease may be a hassle if you wish to move.
  • Leasing may not be economically feasible if you are in an area without net metering.

Watch Below: A real estate agent, familiar with the solar financing landscape, gives his take on whether leasing solar panels is worth it

Leasing Solar Panels vs. Buying Solar Panels

Earlier generations of solar panels were expensive, so leasing them was a more obvious choice. But the past decade has seen the cost of solar panels plummet, shifting that calculus and making it more accessible and profitable to outright own your own home solar system. Our solar leasing vs buying guide provides more detail on our thought on leasing vs buying solar energy.


FAQs: Solar Panel Leasing

Below are a few questions EcoWatch readers regularly send in about leasing their solar panels. If you have anymore, do not hesitate to contact us at contact@ecowatch.com!

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Article author
Matt Chester is a subject matter expert on energy, utilities, and sustainable practices who uses his engineering background from the University of Virginia to break down complex technical concepts for all audiences. He’s spent a decade as a consultant on teams advising the U.S. Department of Energy as well as diving into the world of clean energy, sustainable business practices and the future of the grid.
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Expert reviewer
Melissa is an avid writer, scuba diver, backpacker and all-around outdoor enthusiast. She graduated from the University of Florida with degrees in journalism and sustainability studies. Before joining EcoWatch, Melissa worked as the managing editor of Scuba Diving magazine and the communications manager of The Ocean Agency, a nonprofit that’s featured in the Emmy award-winning documentary Chasing Coral.

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    SunPower Panels
    25-year all-inclusive warranty

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