Solar Lease vs. Buy ROI Comparator
Compare the 25-year net present value of five solar acquisition paths — cash purchase, solar loan, HELOC, lease, and power purchase agreement (PPA) — on a single apples-to-apples basis. The model applies EIA historical utility rate escalation (2.8%/yr over 2015-2024), NREL Tracking the Sun 0.5%/yr system degradation, lease and PPA escalation clauses, and incentive-capture differences between buy-side and lease-side owners. Cites NREL PVWatts, EIA Form EIA-861, and EnergySage Solar Marketplace Report 2024. Not financial advice — consult a licensed financial advisor before committing to any solar financing path.
- Net upfront
- $20,000
- 25-yr NPV
- $5,231
- Breakeven
- Year 10.22
- Net upfront
- $0
- 25-yr NPV
- $7,896
- Incentives captured
- None
Blue = owning (starts deep in the red by the net upfront cost, then climbs as savings accrue; it crosses zero at the buy breakeven year). Orange = leasing (no upfront, but each year banks only savings minus the escalating lease payment). The higher line at the end of the window is the path with the larger undiscounted net position.
A lessee forfeits all $4,000of buyer incentives, system ownership, and any home-value uplift — none of which appear on the lease’s monthly bill but all of which the owner keeps. That asymmetry is precisely why the comparison runs on NPV rather than on the headline monthly payment.
View the TypeScript implementation on GitHub: packages/calc/src/solar-lease-vs-buy-roi.ts · view tests
What this means
A solar lease and a solar purchase put the exact same panels on your roof producing the exact same electricity — so the energy savings are identical and cancel out of the comparison. What actually differs is who pays for the system and who keeps the upside. The buyer pays an upfront net cost and, in return, captures every incentive plus the asset itself; the lessee pays nothing upfront but hands the incentives, the ownership, and the home-value uplift to the installer, and takes on a monthly payment that compounds every year under the escalator clause.
In my experience, the lever that decides this comparison is almost never the lease’s headline monthly payment — it’s the incentive stack on the buy side and the escalator on the lease side. I’ve found that a modest-looking 2.9% lease escalator quietly doubles the payment over a 25-year term, while a strong state incentive can knock the buyer’s effective net cost down enough to flip the whole answer. That’s why this calculator puts both front and center as inputs you control, and why it runs on net present value rather than on the number the installer wants you to compare.
I’ve seen careful homeowners get caught by the “zero down” framing of a lease: it feels free because nothing leaves your account on day one, but at the end of the term you own nothing, you’ve forfeited the incentives, and you may have a contract encumbrance to untangle when you sell. Buying carries the opposite risk — a real lump sum up front that takes years to recover. The honest framing isn’t “which is better” in the abstract; it’s “given my incentive stack, my lease quote, and how long I’ll hold the home, which path has the higher NPV?” The arithmetic answers that; the cash-flow constraint is yours to weigh.
Worked example
A $24,000 system with $4,000 of buyer incentives, producing 11,000 kWh in year 1 at $0.16/kWh, compared over the default 25-year horizon (2.8% utility escalation, 0.5% degradation, 7% discount rate) against a $95/month lease escalating 2.9%/yr.
Savings stream. Year 1 avoids 11,000 × $0.16 = $1,760. Each year output drifts down 0.5% while the rate climbs 2.8%, so by year 25 the avoided bill has grown to $3,027.62. That stream is identical on both paths.
Buy side. Net upfront is $24,000 − $4,000 = $20,000, discounted savings sum to about $25,231, so buy NPV = −$20,000 + $25,231 = $5,231.47. The undiscounted cumulative position crosses zero at the 10.22-year breakeven.
Lease side. No upfront and no incentives. The year-1 payment is $95 × 12 = $1,140, escalating to $2,263.99 by year 25. Discounting savings net of those payments gives a lease NPV of $7,895.73.
Result: leasing wins this scenario by $2,664 in NPV ($7,895.73 vs $5,231.47) — the upfront cash drag on the buy side outweighs the incentive capture at these inputs. But watch the levers: push buyer incentives to $9,000 and the buy NPV jumps about $5,000 to roughly $10,231, flipping the answer to buying. Same panels, same savings — the entire decision swung on the incentive stack. That is exactly why the math, not the monthly payment, has to drive this call.
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.