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Buying solar panels exchanges an upfront purchase, or a loan, for ownership of the system and its future electricity production. Leasing exchanges a continuing payment for the right to use a system owned by another company. A power-purchase agreement is different again: the customer pays for electricity produced under the contract.
The lower initial payment does not settle which arrangement costs less. Compare the same expected production, utility tariff and period, including escalation, financing, roof work and the terms for selling the home. The figures below combine a dated DOE industry benchmark with clearly labeled contract examples; they are not offers for a particular property.
Key figures
- $19,200–$25,200 Example: 6-kW purchase, 2025 benchmark before extras
- $100 Example: fixed lease payment per month
- $24,000 Example: 20 years of lease payments, no escalation
Industry prices give a benchmark rather than a bid
DOE’s quarterly solar industry update reports residential system pricing of $3.2 to $4.2 per DC watt across modeled and reported methods in the first half of 2025. Different methods and projects contribute to that range. It is a historical industry comparison, not a statement that every installer now charges one of those prices.
Six kilowatts equals six thousand watts. Multiplying the benchmark by that capacity produces $19,200 to $25,200. The calculation refers to a DC panel capacity; it does not mean the system generates six kilowatt-hours every hour or operates at that output overnight.
| Comparison input | Amount | Basis |
|---|---|---|
| DOE residential benchmark | $3.2–$4.2 per DC watt | First half of 2025, several pricing methods |
| Example system capacity | 6 kW DC | Assumption for comparison |
| Benchmark-derived purchase range | $19,200–$25,200 | Capacity multiplied by reported price per watt |
| Example fixed monthly lease | $100 | Hypothetical contract payment |
| Fixed lease total over 20 years | $24,000 | $100 × 12 × 20 |
Source note: DOE publishes the historical per-watt range. Capacity and lease payment are examples. Taxes, finance charges, roof work, battery storage and future repairs are excluded from these figures.
An installer quote should identify panel capacity, expected annual generation, equipment, roof and electrical work, permitting and warranty terms. A battery can materially change the package price. Compare itemized scopes before calling a larger price a more expensive version of the same system.
A lease escalator changes the lifetime payment
A fixed hundred-dollar monthly lease totals twelve hundred dollars in its first year and twenty-four thousand over twenty years. If the same starting payment increases by a hypothetical three percent every year, the twenty-year total becomes about $32,244. The final year’s monthly payment is about $175.35.
That escalation example is a calculation, not a claim about a named solar company’s current offer. It shows why a contract’s starting monthly payment and annual increase have to be read together. An increase that sounds small can compound over a long term even when panel output does not increase with it.
FTC guidance distinguishes a lease payment from a power-purchase agreement payment. Under a PPA, the charge generally depends on the electricity generated and the agreed per-kilowatt-hour price. A hypothetical eight thousand kilowatt-hours at fifteen cents costs $1,200 in the first year, but future generation and price changes affect later totals.
Ask whether the contract has a production guarantee, how shortfalls are calculated and what happens during repair or roof removal. A promise about panel output is different from a promise about the utility bill, because the tariff, fixed charges and export compensation also matter.
Ownership includes financing and future service
A cash purchase at a hypothetical $22,000 has no loan interest, but the owner pays that amount before collecting savings. Financing spreads the cash flow while adding interest and possibly fees. Compare the cash price with the financed principal rather than assuming the two are identical.
For example, $22,000 borrowed over ten years at a hypothetical eight-percent fixed annual rate produces a payment of about $266.92 per month, assuming ordinary monthly amortization and no fees. The total payments are about $32,030. That is roughly $10,030 above principal; it is not an installer or lender quote.
System ownership also requires a plan for equipment service and roof work. A panel warranty is not necessarily coverage for removal and reinstallation, roof leaks, labor or every inverter repair. Ask who performs service, which costs are excluded and what happens if the original installer stops trading.
The former personal federal credit does not apply to 2026 installations
The IRS residential clean energy credit page states that the credit is unavailable for property placed in service after December thirty-first, 2025. Its former thirty-percent rate cannot simply be subtracted from a new system entering service in 2026. A page or sales calculation using the older phaseout schedule requires correction.
At a hypothetical purchase price of $22,000, incorrectly subtracting thirty percent would remove $6,600 and display a misleading $15,400 net cost. Keep the budget at the confirmed purchase amount unless a different current incentive is verified for the home, customer and installation date.
The tax treatment of a system owner, a leasing business and the resident is not interchangeable. A lessor’s possible benefit does not automatically become a personal tax credit for the customer. Ask the seller to distinguish its own assumptions from incentives the homeowner can claim.
Before signing a long solar agreement, have uncertain transfer, lien, buyout and tax provisions reviewed by the appropriate contract or tax professional. The financial examples here compare assumptions; they do not determine eligibility or the best financing arrangement for a household.
Utility savings and home-sale terms decide the comparison
Solar generation only produces the retail-rate saving when it replaces electricity that would otherwise be purchased at that rate. Exported electricity may receive a different payment. A fixed connection charge may remain even if the system supplies most annual consumption.
For a hypothetical eight-thousand-kilowatt-hour annual output, assume six thousand kilowatt-hours replace twenty-cent purchases and two thousand are exported at five cents. The annual energy value is $1,300: $1,200 of avoided purchases plus $100 of export compensation. Pricing every generated unit at twenty cents would overstate it by $300.
With that assumed value, a $1,200 first-year lease payment leaves only $100 before other charges and obligations. A $22,000 cash purchase has an energy-only simple payback of about 16.9 years before service costs and changes in output or rates. Neither result predicts a bill for an unassessed roof.
The solar-payback guide covers production and electricity value, while the time-of-use guide explains timing-sensitive tariffs. The home-energy plan helps compare solar with improvements that reduce consumption first.
Finally, ask what happens when the property is sold. FTC guidance highlights transfer and purchase options in solar agreements. Confirm whether a buyer must accept the contract, qualify financially or pay a buyout. A low first payment is less persuasive when the exit cost and home-sale obligations remain unclear.
Questions people ask
Does the DOE range quote a 2026 installation?
No. The $3.2–$4.2 per DC watt range describes first-half-2025 residential pricing across methods. It is a dated benchmark to compare with a current itemized bid.
How much does a fixed $100 lease cost over 20 years?
It totals $24,000 before any other fees. A hypothetical 3% annual increase raises that payment total to about $32,244.
Can a system placed in service in 2026 claim the former 30% personal credit?
The IRS says the residential clean energy credit is unavailable for property placed in service after December 31, 2025. Do not subtract it from a 2026 budget.
Is a solar lease the same as a PPA?
No. A lease usually charges for use of the system, while a PPA charges for electricity generated under its rate terms. Read escalation, output and transfer provisions for the offered arrangement.
Where these figures come from
- Quarterly Solar Industry Update: First-Half-2025 System Pricing US Department of Energy · energy.gov
- Solar Power for Your Home: Buying, Leasing and PPAs Federal Trade Commission · consumer.ftc.gov
- Residential Clean Energy Credit: End of Availability After 2025 Internal Revenue Service · irs.gov
Figures last checked October 2026.
