Table of Contents:
Key takeaways
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Leasing solar panels comes with little to no upfront cost, but typically ends up costing more in the long run than buying.
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You don’t get many of the benefits of owning solar panels when you lease, such as adding value to your home.
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When you lease solar panels, you aren’t eligible for tax credits and other incentives.
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 use. This might seem like a good deal, since it reduces the upfront cost of solar panels. However, solar panel leasing has major downsides compared to buying.
In this article, we cover how solar panel leasing works and how much it costs. You’ll also learn the financial implications of leasing over buying, and why we discourage homeowners from entering a lease agreement for solar.
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How solar panel leasing works
Leasing solar panels gives you access to solar energy without the commitment of 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. This setup lets you benefit from renewable energy at your home without taking on the cost or responsibility of ownership.
Leasing solar panels: pros and cons
There are some notable upsides to solar panel leasing that can make it an attractive option for some. However, there are significant downsides to leasing that are important to consider. We’ve listed some of the key advantages and disadvantages in the table below.
| Pros | Cons |
|---|---|
| ✅ Low or no upfront costs | ❌ Doesn’t provide tax credits and other incentives |
| ✅ May include maintenance services | ❌ Won’t add value to a home and may actually decrease value and desirability |
| ✅ Installation costs often included at no additional charge | ❌ Higher cost over time than purchasing |
How much is a solar lease per month?
Our research shows that the average solar lease ranges from $50 to $250 per month. Your rental rate depends on a few factors that include:
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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. Expect the average lease rates to be higher in high cost-of-living areas than in less expensive parts of the country. The utility rates in your area can also be a factor.
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Credit score: Some companies may adjust your monthly payment amount based on your credit score, with homeowners that have lower scores tending to pay more.
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Term length: Longer lease terms tend to come with lower monthly payments than shorter ones, but will likely cost more over the life of the lease.
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Solar company: Leasing rates vary from one company to another, which is why we always recommend shopping around between a few different providers.
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 with leasing, under a purchase agreement a solar provider will install your equipment at no cost to you. However, that’s where the similarities end.
When you lease solar panels, you pay a monthly fee to the provider for the ability to use any or all of the energy it generates at no additional cost. Under a purchase agreement you don’t usually pay a monthly fee. However, you have to buy energy from the provider that installed and owns your equipment—even though the infrastructure that generates the power is attached to your home.
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 energy production risk | Those wanting potential savings tied to actual energy use |
System ownership stays with the leasing provider
One major disadvantage of leasing solar panels is that you don’t actually own the system installed on your home.
When you buy solar panels from a company like SunPower or Tesla, the panels become your property and an asset you can sell if you move. Owned solar panels also increase your home’s resale value because they transfer with the property.
On the other hand, if you lease your solar panels through a provider like Sunrun or Vivint Solar, the equipment belongs to the leasing company, not you. Since you don’t own the panels, they aren’t considered an asset and don’t contribute to your home’s value when it’s time to sell.
Lease terms and conditions to be aware of
Solar panel leases can come with a list of terms and conditions that are worth serious consideration. Some of these lease terms limit how you can use your solar equipment, or define ways you can violate your lease agreement and potentially be subject to penalties.
Other conditions may be related to the financial side of things. Your contract may list penalties for late or missed payments, for example. It can also include terms that enable your provider to raise your monthly rate. You may also find buyout clauses that dictate the fees and processes for buying your equipment from the provider.
Be sure to carefully read the terms and conditions in every solar lease agreement. You may find a few things that affect your decision that weren’t apparent at first.
You don’t get incentives and tax credits when leasing
If you’re deciding between leasing and buying solar panels, it’s important to consider how government incentives can affect your total costs.
Government tax credits and other incentives play a major role in making solar energy systems more affordable for homeowners across the United States. The federal solar tax credit, known as the Residential Clean Energy Credit (RCEC), allows you to claim up to 30% of the total cost of a solar installation on your federal tax return. On top of that, many states—including California, New York, and Texas—and local governments offer their own rebates and financial incentives. That said, you do get net metering benefits as a lessee.
However, you’ll only qualify for these valuable incentives if you purchase your solar panels outright or with a loan. If you lease the equipment, you can’t claim these tax credits or rebates. That means you’ll end up paying a lease based on the full system price, missing out on significant savings you’d get as a buyer.
These incentives can often make the difference if the upfront cost of purchasing solar panels seems too high at first. If you choose to lease instead of buy, you’re essentially giving up thousands of dollars in government-backed benefits that could make solar ownership much more affordable.
What’s the cost to buy out a solar lease?
Some providers offer the option to buy out your solar lease and take ownership of the equipment. The rates and conditions around buyouts vary between companies and depend on the time left on your lease term.
Companies tend to offer buyout prices at “fair market value” in their contracts, taking into consideration age, condition, and other factors. Even if that value seems reasonable, providers also typically require you to pay back the value of tax credits they got for purchasing the equipment, which could easily be thousands of dollars.
When you factor in the payments you’ve already made and the tax credits you may be liable for, buying out a solar lease is likely to be substantially more expensive than purchasing your equipment in the first place.
Impact on property value when selling a house with leased solar panels
Leased solar panels can complicate your home’s resale value and may even make it harder to sell your property.
Solar panels you own installed on your home can add to your property value, helping you fetch a better price when you decide to sell. But that’s not the case with leased panels. Since they aren’t yours to sell, they can’t be included in the total value of the property.
In addition, leased solar panels on your home may actually detract from its value or eat into your profits in other ways. Potential buyers may be turned away if they don’t want to continue your current lease agreement, especially if you’ve got many years left on the contract.
Even if your contract is coming to a close or you decide to buy it out, you’ll still have to remove the solar panels. A solar provider may cover the cost of removing the equipment, but even if they do, you’ll likely still need to make cosmetic repairs to your roof to get it back into pristine shape for the market.
Bottom line: Is solar panel leasing worth it?
For most homeowners, leasing solar panels simply isn’t worth it compared to other options. Leasing tends to cost more over time, doesn’t give you an asset of value, and may decrease the value of your home or make it more difficult to sell.
If you can afford to pay cash for solar panels, this is your best and most cost-effective option. Financing a solar energy system is more expensive due to interest costs, but it’s still a better option for most homeowners than leasing. That said, if you can only access high-interest loans or lease deals, think twice before getting solar.
FAQ about solar panel leasing
Below are a few frequently asked questions about solar panel leasing:
Is leasing solar a good idea?
If you can buy solar panels, it’s usually a smarter choice than leasing. Buying lets you claim federal solar tax credits and local incentives, while leasing often costs more over time and keeps those financial benefits with the solar company, not you.
How long is a typical solar panel lease?
A solar panel lease typically lasts 15 to 25 years, but panels usually last 30 years or more. After the lease is up, you can buy the panels, start another lease, or have them removed.
Can I get out of my solar panel lease?
You can often get out of a solar panel lease, but at a significant cost. Most providers offer a buyout clause that allows you to buy the solar equipment. However, the price is subject to what they deem fair market value and you may have to pay back tax credits on top of the sale price.
Is it harder to sell a house with leased solar panels?
It can be more difficult to sell a house with leased solar panels. This is because many buyers may not want to continue the current lease agreement, or deal with the expense and repairs needed to remove them.