- Lowest lifetime costCash purchase
- Watch in leases/PPAsAnnual escalator ~1.9–2.9%
- Watch in $0-down loansEmbedded dealer fee
- Cleanest at resaleOutright ownership
Four ways to get a system, not two
“Lease versus buy” is the usual framing, but there are really four arrangements in the Sacramento market and the differences between them are substantial. We do not earn more from one than another, and this guide makes no recommendation — the right answer depends on your tax position, your cash position and how long you plan to stay.
| Cash purchase | Solar loan | Lease | Power purchase agreement | |
|---|---|---|---|---|
| You pay | Full price up front | Monthly loan payment | Monthly rent for the equipment | Per kWh for the power produced |
| Who owns it | You | You | Finance company | Finance company |
| Who maintains it | You | You | Provider | Provider |
| Annual escalator | — | No | Common (~1.9–2.9%) | Common (~1.9–2.9%) |
| Lifetime cost | Lowest | Middle | Higher | Higher |
| Effect on home sale | Conveys with the house | Usually settled at closing | Buyer must assume, or you buy out | Buyer must assume, or you buy out |
| Term | — | Commonly 10–25 yrs | 20–25 yrs | 20–25 yrs |
What changed in 2026, and why it matters here
The comparison above used to be dominated by one factor: the 30% federal residential clean energy credit, which was available to owners and not to lessees. For a taxpayer who could use it in full, that credit was often decisive in favour of ownership.
That credit ended. Section 25D was terminated for expenditures after 31 December 2025. Third-party-owned systems sit under different provisions claimed by the system owner, not by you, and whether any of that benefit is passed through into your rate is a matter for the specific contract.
The practical effect is that the ownership-versus-third-party comparison is more genuinely open than it was, and more dependent on your own circumstances. It is also a comparison where a great deal of currently circulating advice is out of date. See our 2026 incentives guide.
Buying: cash or loan
What you get
The system is a capital improvement to your property. It conveys with the house on sale, it has no ongoing payment after the loan is settled, and it produces free electricity for the remaining fifteen or twenty years of its life. Lifetime cost is the lowest of the four routes.
What you take on
Maintenance and repairs are yours, though manufacturer warranties cover the equipment for decades and the workmanship warranty covers the installation. The practical reality is that a solar array needs very little — the inverter is the component most likely to need attention. See maintenance.
The dealer fee question
Most $0-down solar loans carry a dealer fee, often a substantial percentage, built into the system price rather than disclosed separately. The test is simple: ask what the cash price would be. The difference between the cash price and the financed price is the fee. It is frequently large enough to make a credit union loan the better option.
Leasing
You pay a fixed monthly amount to use equipment the finance company owns. Maintenance and repairs are the provider’s responsibility, which is a genuine benefit — provided the provider is still trading in year fifteen.
Watch the escalator. A lease starting at $120 a month with a 2.9% annual escalator is paying about $208 a month in year twenty. Over the full term that compounding is substantial and it belongs in any comparison.
Power purchase agreements
You buy the electricity the system produces at an agreed per-kilowatt-hour rate rather than renting the equipment. The attraction is that you only pay for what it generates; the risk is the same escalator question, plus the possibility that the contracted rate overtakes your utility’s rate later in the term.
What happens when you sell
This is where the routes genuinely diverge, and it is the part most often glossed over.
- Owned outright: the system simply conveys with the property. Research consistently finds owned solar adding resale value.
- Loan: typically settled from the proceeds at closing, like any other secured debt. Some solar loans attach a UCC filing to the property, which your title company will pick up.
- Lease or PPA: the buyer must qualify and agree to assume the agreement, or you buy the contract out at closing. Plenty of such homes sell without difficulty, but any agent will tell you it is a conversation to start early rather than three days before close.
The one number that makes every comparison possible
The cash price and the price per watt of the system being proposed. With that you can evaluate any financing offer against the actual value of the hardware. Without it, you are comparing monthly payments — which is exactly what a weak offer needs you to do. We will give you that number for any system we design, whatever route you eventually choose.
Written by the Sacramento Solar team for Sacramento-area homeowners. We install solar; we are not tax advisers, accountants or financial advisers. Figures are ranges current as of early 2026 and are offered as orientation, not as advice about your own situation. Verify current programme rules with your utility, the relevant agency or a qualified professional.