Compare all four solar financing options side-by-side: Cash Purchase, Solar Loan, Lease, and PPA. See 25-year projections, true cost of ownership, and break-even year for each financing path.
Choosing how to finance a solar system is often more important than the hardware decision. A homeowner who pays cash gets the full 30% federal Investment Tax Credit and owns the system outright. A homeowner who signs a lease or PPA transfers ownership, loses the ITC, but gains predictable monthly payments with no upfront cost. Understanding these tradeoffs is the difference between a closed deal and a lost opportunity.
This calculator models all four financing paths simultaneously: Cash Purchase (system cost minus ITC, net NPV), Solar Loan (PMT-based monthly payment, total interest paid), Lease (fixed monthly payment with optional escalator), and Power Purchase Agreement (per-kWh rate with escalator). All options are projected over 25 years, factoring in panel degradation, utility rate escalation, and export credit assumptions.
Use this tool during client consultations to present an objective side-by-side comparison. Clients make better decisions when they can see the total 25-year outcome for each option, not just the monthly payment.
All four financing options displayed simultaneously so clients can see monthly payment, total cost, and net savings at a glance without switching between views.
Every scenario is modeled year-by-year for 25 years with panel degradation at 0.5%/yr, utility rate escalation at 3%/yr, and configurable lease or PPA escalator clauses.
Goes beyond monthly payments to show total lifetime cost including interest, escalator impact, lost ITC value, and residual system equity for each financing option.
Present all financing options transparently during the first meeting. Clients who see the full comparison make faster decisions and feel more confident than those who receive only one financing option.
Use the 25-year projection outputs to populate the financial section of formal proposals. The break-even year and total lifetime savings are the two numbers clients remember most from a solar proposal.
When a homeowner asks "should I lease or buy?" run this calculator live with their actual numbers. Seeing the difference between $28,600 in cash savings versus $14,200 in lease savings makes the choice clear and data-driven.
Input the total system size in kW and the gross system cost before incentives. The calculator applies the 30% federal ITC automatically for cash and loan scenarios. Enter the installed price as quoted, typically $2.50-$3.50 per watt for residential systems.
Choose the installation state to apply the correct peak sun hours for annual generation estimates. This affects how much electricity the system produces and therefore how much each financing option saves annually.
Input the client's current utility rate in dollars per kWh. This is the baseline for calculating annual energy savings. The rate is escalated at 3% per year in the 25-year projection to model future electricity cost growth.
For Loan: enter interest rate and term in years. For Lease: enter monthly payment and annual escalator percentage. For PPA: enter the per-kWh rate and annual escalator. Toggle each option on or off to focus the comparison.
The calculator displays monthly payment, 25-year net savings, total interest or cost, and break-even year for each financing option simultaneously. Use the results table directly in client presentations.
All four financing scenarios share the same underlying energy production model but apply different cost structures. Here are the key formulas used for each calculation.
For each year Y (1 to 25):
Generation_Y = Annual_kWh x (1 - 0.005)^Y // 0.5%/yr degradation
Savings_Y = Generation_Y x Rate_Y
Rate_Y = Rate_0 x (1 + 0.03)^Y // 3% utility escalation
Export_adj = export_pct x export_rate_discountNet_Cost = System_Cost x (1 - 0.30) // 30% Federal ITC
NPV_Cash = Sum of (Savings_Y / (1+discount)^Y) - Net_Cost
Break_even = Year when cumulative Savings_Y >= Net_CostMonthly_Rate = Annual_Rate / 12
PMT = (Loan_Amt x Monthly_Rate) / (1 - (1 + Monthly_Rate)^-N_months)
Total_Interest = (PMT x N_months) - Loan_Amt
Net_Loan_Cost = System_Cost x 0.70 + Total_InterestFor each year Y (1 to contract_length):
Lease_Payment_Y = Monthly_Lease x 12 x (1 + escalator)^Y
Total_Lease_Cost = Sum of all Lease_Payment_YFor each year Y (1 to contract_length):
PPA_Rate_Y = PPA_Rate_0 x (1 + ppa_escalator)^Y
PPA_Cost_Y = Generation_Y x PPA_Rate_Y
Total_PPA_Cost = Sum of all PPA_Cost_YNet_Savings = Total_Utility_Savings_25yr - Total_Financing_Cost
Where Total_Financing_Cost:
Cash = System_Cost x 0.70
Loan = Net_Loan_Cost
Lease = Total_Lease_Cost
PPA = Total_PPA_Cost
Worked example: A 10 kW system in California ($0.28/kWh). Purchase: $35,000 upfront, $10,500 ITC credit → $24,500 net. Year 1 savings: $3,500. Payback: 7 years. 25-yr NPV: +$52,000. Solar lease: $150/month, 25-yr total payments: $45,000, no ownership. PPA at $0.14/kWh: saves $0.14/kWh × 14,000 kWh = $1,960/year — better than lease but worse than purchase long-term.
Calculations sourced from SurgePV’s Lease vs Buy vs PPA Calculator — surgepv.com/tools/lease-vs-buy-vs-ppa-calculator/
| Factor | Cash | Loan | Lease | PPA |
|---|---|---|---|---|
| System Ownership | Homeowner | Homeowner | Solar Company | Solar Company |
| Federal ITC (30%) | Yes | Yes | No | No |
| Monthly Payment | $0 | Fixed PMT | Fixed or escalating | Per-kWh rate |
| Down Payment | Full cost | $0-20% | $0 | $0 |
| Maintenance | Owner | Owner | Solar company | Solar company |
| Monitoring | Owner | Owner | Included | Included |
| System Removal | Owner pays | Owner pays | Company removes | Company removes |
| Contract Length | None | 5-25 years | 20-25 years | 20-25 years |
| 25-Year Outcome | Highest savings | Good savings | Moderate savings | Moderate savings |
In California under NEM 3.0, export credits are approximately $0.05-0.08/kWh versus $0.25-0.35 retail rate. Lease and PPA savings calculations must account for this reduced export value. Always use the effective bill savings, not gross generation times retail rate.
The true cost of cash is not the system price but the net present value after the 30% ITC and opportunity cost of capital. A $30,000 system becomes $21,000 after ITC. Compare NPV of cash savings against the best alternative use of that $21,000 capital.
A 2.9% annual lease escalator on a $150/month lease reaches $271/month by year 25. If utility rates don't escalate as fast, the lease becomes a bad deal. Always show clients the year-25 monthly payment, not just the year-1 payment, for leases with escalators.
Lease and PPA agreements must transfer when a home is sold. Some lenders allow assumption; others require buyout. For homeowners who may sell within 5-7 years, a loan or cash purchase almost always produces better outcomes than a third-party ownership agreement.
Both cash and loan result in system ownership and qualify for the 30% federal ITC. The difference is the cost of capital. A cash buyer gets the maximum lifetime savings but ties up capital. A loan buyer preserves liquidity but pays interest, typically 1-7% APR for solar loans. After accounting for ITC, the effective loan premium is often modest enough to justify preserving cash for other investments.
No. Under a lease or PPA, the solar company owns the system and claims the 30% Investment Tax Credit. The homeowner does not receive any ITC benefit. This is a significant financial disadvantage compared to ownership. A $30,000 system generates $9,000 in ITC the homeowner forfeits when leasing.
At lease end (typically 20-25 years), the homeowner usually has three options: renew the lease at a new rate, purchase the system at fair market value (often $1,000-$5,000 after 20+ years of depreciation), or have the company remove the system at no charge. Purchasing at end-of-lease is often the best option since the panels still produce 80-87% of original output.
A PPA escalator is a contractual clause that increases the per-kWh rate annually, typically 1-3%. If utility rates don’t increase as fast as the PPA escalator, the homeowner pays more than they would have for grid electricity. Always compare the PPA escalator to the historical utility rate escalation in that specific territory before recommending a PPA.
Yes. Solar loans can often be refinanced through home equity loans, HELOCs, or personal loan refinancing. Some solar lenders also offer direct refinancing programs. Refinancing to a lower rate reduces total interest and improves lifetime savings. This option is unavailable for lease or PPA contracts, which are fixed-term agreements.
Solar Renewable Energy Credits (SRECs) are tradeable certificates in states with SREC markets like New Jersey, Massachusetts, and Illinois. Each SREC represents 1 MWh of solar generation and can be sold to utilities. Only system owners (cash or loan) can receive SREC income. Lease and PPA customers forfeit SREC rights to the solar company. SREC values range from $10 to $400 per certificate depending on the market.
Owned systems (cash or loan) transfer with the home as an asset and typically add $15,000-$30,000 to appraised home value per Lawrence Berkeley National Laboratory research. Leased or PPA systems must either be transferred to the new buyer (who qualifies for the agreement) or bought out at the time of sale. Buyout costs can complicate home sales and negotiations.
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