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Leasing solar panels comes with little to no upfront cost, but in many cases the total payments over the life of a lease can exceed the cost of purchasing a system.
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You don’t get many of the benefits of owning solar panels when you lease, including eligibility for certain tax incentives.
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When you lease solar panels, federal and state incentives generally go to the system owner rather than the homeowner.
You don’t have to buy solar panels to get them for your home. Many providers offer lease agreements that allow you to rent their equipment to generate electricity. This can make solar accessible for homeowners who cannot afford the upfront cost of solar panels. However, solar panel leasing has trade-offs compared with purchasing or financing a system.
In this article, we cover how solar panel leasing works and how much it costs. You’ll also learn the financial implications of leasing compared with buying, and situations where leasing may or may not make sense for homeowners.
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How solar panel leasing works
Leasing solar panels gives you access to solar energy without purchasing the equipment.
Leasing solar panels works a lot like leasing a car. Instead of buying the solar panels outright, you rent them from a solar energy company by paying a fixed monthly fee. The provider installs and owns the system, while you pay to use it for the duration of the lease.
This setup lets you generate electricity at your home without taking on the full upfront cost or long-term maintenance responsibility. In most cases the leasing company handles monitoring, repairs, and warranty coverage during the contract period.
Most solar leases run 15 to 25 years, which is similar to the operating life of many solar financing agreements.
Leasing solar panels: pros and cons
There are some upsides to solar panel leasing that can make it an attractive option in certain situations. However, there are also limitations compared with owning a system.
| Pros | Cons |
| ✅ Low or no upfront costs | ❌ Federal and most state incentives go to the system owner |
| ✅ Maintenance and monitoring often included | ❌ Monthly payments continue for the duration of the contract |
| ✅ Installation costs usually included | ❌ Total payments may exceed ownership costs depending on system size and lease terms |
In general, leasing is most attractive to homeowners who want predictable payments and do not qualify for tax incentives or financing.
How much is a solar lease per month?
Our research shows that the average solar lease ranges from $50 to $250 per month depending on system size, location, and contract terms.
Monthly payments vary widely because solar systems are sized to match a home’s electricity usage. A small 4 kW system for a low-consumption home might fall near the lower end of that range, while a large 10 kW system designed to offset most household electricity use may be closer to the higher end.
Your rental rate depends on several factors:
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Capacity: The larger the energy capacity of your solar panel system, the more you can expect to pay each month on your lease
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Location: Market rates in different areas are a major factor in leasing prices. Higher utility rates can make solar more valuable, which sometimes influences lease pricing.
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Credit score: Some companies adjust monthly payment requirements based on credit history.
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Term length: Longer lease terms often reduce monthly payments but increase the total paid over time.
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Solar company: Leasing rates vary between providers, which is why comparing multiple offers can help clarify the real cost
Example lease scenario
Consider a home installing a 7 kW solar system.
Total lease payments = $150 × 12 × 25 = $45,000
In this scenario the total payments exceed the purchase price, although the homeowner avoided the upfront cost and maintenance responsibility. Actual outcomes vary based on utility rates, energy production, and contract terms.
Power purchase agreements vs. solar panel leasing
A power purchase agreement is another way to pay for solar panels without high upfront installation costs. Like leasing, a solar provider installs and owns the equipment.
The difference lies in how you pay for the electricity.
When you lease solar panels, you pay a monthly fee to use the system regardless of how much energy it produces.
With a power purchase agreement (PPA), you pay for the electricity generated by the system at a per-kilowatt-hour rate. Your monthly payment depends on how much solar power your system produces and how much of it your home uses.
Here's a more detailed look between the two:
| Feature | Solar Lease | Power Purchase Agreement (PPA) |
| Who owns it | Solar provider owns the system | Solar provider owns the system |
| Upfront cost | Usually $0 | Usually $0 |
| Monthly payments | Fixed monthly lease payment | Variable payment based on electricity usage (per kWh rate) |
| Payment structure | Pay for use of the system (not the energy) | Pay for the energy produced by the system |
| System maintenance | Handled by provider | Handled by provider |
| Contract term | Typically 20–25 years | Typically 20–25 years |
| Buyout option | Often available after 5–7 years | Often available after 5–7 years |
| Tax incentives | Claimed by provider (you are not eligible) | Claimed by provider (you are not eligible) |
| Electricity rate impact | May be insulated from utility rate hikes if fixed | Subject to escalation (often 2–3% annual rate increase) |
| End of term options | Return, renew lease, or buy the system | Return, renew PPA, or buy the system |
| Best for | Those wanting predictable payments without production risk | Those wanting payments tied to actual electricity production |
System ownership stays with the leasing provider
One major difference between leasing and buying solar panels is ownership.
When you buy solar panels from companies like SunPower or Tesla, the system becomes your property. Homeowners who own their systems may also qualify for tax incentives and can transfer the system with the home when selling.
If you lease solar panels through a provider like Sunrun or Vivint Solar, the equipment remains the property of the leasing company. Since you don’t own the panels, they typically aren’t considered a home asset in the same way owned systems can be
Lease terms and conditions to be aware of
Solar panel leases can include terms that affect how you use the system or exit the contract.
Common provisions include:
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Late payment penaltie
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Annual payment escalation clause
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Buyout options after several years
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Transfer requirements when selling your home
Reading the contract carefully can help you understand how the agreement works over its full term.
You don’t get incentives and tax credits when leasing
Government incentives play a major role in reducing the cost of solar energy systems in the United States.
The federal Residential Clean Energy Credit (RCEC) allowed homeowners to claim a tax credit equal to 30% of the cost of installing eligible renewable energy equipment, including solar panels. For example, a $30,000 installation could qualify for a $9,000 federal tax credit.
However, under P.L. 119-21, the reconciliation law enacted in 2025, the RCEC does not apply to installations completed after December 31, 2025. Installations finished before that date remain eligible, and any unused credit amount can be carried forward to future tax years if the taxpayer cannot use the entire credit in the first year.
Because leasing companies own the equipment in lease and PPA arrangements, they typically claim these incentives instead of the homeowner. This is one reason the economics of leasing and buying can differ.
You can still benefit from programs like net metering depending on your utility policies, which may allow excess solar electricity to be credited against your electricity bill.
What’s the cost to buy out a solar lease?
Some providers allow homeowners to buy out a solar lease and take ownership of the system.
Buyout prices typically depend on:
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The remaining years in the contract
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The system’s estimated market valu
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Contract-specific pricing formula
Companies often describe buyout pricing as fair market value, which reflects system age, condition, and expected performance. If you plan to buy out a lease, reviewing the pricing structure in advance can help you understand how costs may change over time
Impact on property value when selling a house with leased solar panels
Leased solar panels can sometimes complicate home sales.
Owned solar systems are typically transferred with the property when it is sold. Leased systems, on the other hand, may require the buyer to assume the lease contract or the seller to buy out the agreement.
In many real estate transactions the lease can simply be transferred to the new homeowner, but some buyers prefer homes without long-term energy contracts. Because of this, the impact on resale value varies by market and buyer preferences.
Bottom line: Is solar panel leasing worth it?
For some homeowners, leasing solar panels can be a practical way to access solar energy without paying upfront installation costs.
However, leasing typically means:
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The system is not an owned asset
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Incentives usually go to the provider
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Payments continue for the full lease term
If you can afford to pay cash for solar panels, ownership often produces the lowest long-term cost. Financing a solar energy system with a loan may also provide access to incentives and eventual system ownership.
That said, leasing can still be useful in situations where homeowners cannot claim tax credits or prefer predictable monthly payments instead of large upfront costs.
FAQ about solar panel leasing