Solar Lease vs Buy Calculator
Compare the true 20-year cost of leasing solar panels versus buying them outright with tax credits. Use this calculator before signing a lease agreement to see which option saves more money.
Last updated: September 2026
Formula below · 2 sources (nrel.gov, Wikipedia) · Updated Sep 2026
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About this calculator
Buying a solar system means paying the purchase price upfront, reduced by any tax credit you can claim: Net Purchase Cost = purchasePrice × (1 − taxCredit / 100). Note that the 30% federal Residential Clean Energy Credit ended for homeowner-owned systems installed after December 31, 2025 (One Big Beautiful Bill Act, July 2025), so enter 0 for a 2026 purchase unless a state credit applies. Leasing involves a down payment plus monthly payments that rise each year by the escalator. The total lease cost uses the future-value-of-a-growing-series sum: Total Lease Cost = downPayment + monthlyLease × 12 × [((1 + r)^years − 1) / r], where r = annualEscalator / 100; when r = 0 it collapses to downPayment + monthlyLease × 12 × years. The calculator returns Total Lease Cost − Net Purchase Cost, the buying advantage: a positive number means buying costs less over the horizon, a negative number means leasing costs less. Amounts are not discounted for the time value of money, and the purchase case excludes maintenance and inverter replacement, which a lease usually covers.
How to use
Assume a system costs $20,000, a 30% tax credit applies (the federal rate for systems installed through 2025), and the lease requires $0 down and $120/month with a 2% annual escalator over 20 years. Net purchase cost = $20,000 × (1 − 0.30) = $14,000. Total lease cost = $0 + $120 × 12 × [((1.02)^20 − 1) / 0.02] = $1,440 × 24.30 ≈ $34,988. Buying advantage = $34,988 − $14,000 = $20,988, so buying costs about $21,000 less over 20 years. With no tax credit (a 2026 purchase) the advantage is $34,988 − $20,000 = $14,988 — still in favor of buying.
Frequently asked questions
How does the federal solar tax credit affect the buy-versus-lease decision?
A tax credit lowers the net purchase cost dollar for dollar. The federal Residential Clean Energy Credit was 30% of installed cost, which turned a $20,000 system into an effective $14,000 — but the 30% federal Residential Clean Energy Credit ended for homeowner-owned systems installed after December 31, 2025 (One Big Beautiful Bill Act, July 2025). For a 2026 purchase, enter 0 unless your state offers a credit. When you lease, the leasing company owns the panels and claims any business tax credit itself, passing part of the value back through the lease price, so a lease can now carry a tax advantage that a cash purchase no longer has.
What is a lease escalator and how does it affect total solar lease cost?
A lease escalator is an annual percentage increase built into your solar lease contract, typically ranging from 0% to 3%. It is designed to mirror expected utility rate inflation so that your lease payment stays competitive over time. However, if utility rates rise more slowly than the escalator — or if you move before the lease term ends — the escalator can make leasing significantly more expensive than projected. A 2% escalator on a $120/month lease turns into roughly $175/month in year 20, and the compounding effect inflates total payments considerably compared to a fixed-payment lease.
When does leasing solar panels make more financial sense than buying?
Leasing is worth considering when you lack the upfront capital or sufficient federal tax liability to capture the ITC, since buying without the credit removes its biggest financial advantage. It can also be attractive if the lease includes free maintenance, monitoring, and performance guarantees that would otherwise cost money. Homeowners who plan to move within five to seven years may also prefer a lease, though lease transfers during home sales can complicate negotiations. In most other scenarios, purchasing — especially with a solar loan — tends to generate greater lifetime savings than leasing.