Solar Financing Comparator
Compare cash purchase, solar loan, HELOC, power purchase agreement (PPA), and lease financing side-by-side on 25-year NPV, total cost of ownership, annual cash flows, and home-sale impact. Models interest costs, HELOC deductibility under IRC §163(h)(3)(B), lease/PPA escalation clauses, and the critical difference in incentive capture between ownership options and lease/PPA options. Cites NREL PVWatts, EIA Form EIA-861, EnergySage Solar Marketplace Report 2024, and IRC §163(h)(3)(B). Not financial or legal advice — consult a CPA, financial advisor, and real estate attorney before signing any financing agreement.
| Option | Upfront | Yr-1 net cash flow | 25-yr outlay | 25-yr savings | 25-yr NPV |
|---|---|---|---|---|---|
| Cash Purchase | $20,000 | $1,760 | $20,000 | $58,479 | $5,231 |
| Solar Loan | $0 | $-331 | $31,360 | $58,479 | $6,190 |
| Lease / PPABest NPV | $0 | $680 | $38,863 | $58,479 | $8,808 |
Ember bar = the option with the highest 25-year NPV. The lease/PPA bar reflects that a third party owns the system and captures every incentive — its NPV excludes the rebates the cash and loan paths keep.
Cash and loan both make you the ownerof the system — the incentives are yours, and so is the asset when you sell the home. A lease or PPA hands ownership (and the incentives) to the installer in exchange for zero upfront cost. The NPV gap you see between the ownership rows and the lease/PPA row is largely that incentive transfer plus the installer’s margin. Not financial advice — consult a CPA or financial advisor before signing.
View the TypeScript implementation on GitHub: packages/calc/src/solar-financing-comparator.ts · view tests
What this means
Three ways to put solar on a roof are not the same kind of dollar. A cash purchase and a solar loan both make you the owner of the system, which means the incentives are yours and so is the asset. A lease or power purchase agreement hands ownership — and every incentive — to the installer in exchange for no money down. That is why this calculator compares all three on net present value: it reduces a 25-year stream of savings and payments to one number, discounting future dollars because a dollar of bill savings two decades out is worth far less than a dollar today.
In my experience, the lease/PPA monthly payment is the most seductive number on an installer quote — it’s low, there’s nothing due at signing, and it feels like free solar. What that number hides is the incentive transfer. I’ve found that the single largest driver of the gap between owning and leasing isn’t the interest on the loan — it’s the rebates and credits the installer quietly keeps when they own the system. That’s why I made incentive capture an explicit, visible difference between the rows rather than burying it.
I’ve seen the loan-versus-cash answer flip depending on one input people rarely think about: the discount rate. When your loan rate sits below your discount rate, financing can actually beat paying cash on NPV — you keep your capital invested while a cheap loan pays for the panels. When the loan rate climbs above your discount rate, the interest drag dominates and cash wins. The honest framing isn’t “always pay cash” — it’s “match the financing to your cost of capital, your ability to qualify, and whether you want to own the asset.” The arithmetic settles the first part; the rest is yours. Not financial advice.
Worked example
A $24,000 system with $4,000 in owner-qualifying incentives, producing 11,000 kWh/year against a $0.16/kWh utility rate escalating 2.8%/yr, panels degrading 0.5%/yr, discounted at 7% over 25 years. Loan: 6.5% APR over 15 years, $0 down. Lease/PPA: $90/month escalating 2.9%/yr. Year-1 savings are 11,000 × $0.16 = $1,760.
Cash. Upfront is $24,000 − $4,000 = $20,000. With no payments, every year of savings is pure benefit; discounted back at 7%, the 25-year NPV is $5,231. Year-1 net cash flow is the full $1,760.
Solar loan. Financing $20,000 at 6.5% over 15 years amortizes to $174.22/month ($2,090.64/yr). Year-1 net cash flow is $1,760 − $2,090.64 = −$330.64(you’re slightly cash-negative while the loan runs), but because the 6.5% loan rate sits below the 7% discount rate, the NPV actually edges out cash at $6,190.
Lease / PPA. Zero upfront, but the installer keeps the $4,000 incentive and owns the system. Year-1 net cash flow is $1,760 − ($90 × 12) = $680, and the cheap, no-money-down payment carries the highest NPV here at $8,808.
Result: with these inputs the Lease / PPA wins on NPV — the low payment and zero upfront outweigh the forfeited incentive. But change the loan to a 12% rate with a 4% discount rate and the picture inverts: cash jumps to a $14,908 NPV while the loan falls to $2,883, and now cash is the clear winner. Same system, same roof — the financing structure and your cost of capital decide it. That’s exactly why the NPV math, not the monthly payment, has to drive the call. Not financial advice.
Frequently asked questions
The information and tools on this website are for general educational purposes only and do not constitute financial, investment, legal, or tax advice. Consult a licensed professional for decisions specific to your situation.