Short answer
Solar panel lease cost is a fixed monthly payment to the company that owns the panels on the roof, usually for 20 to 25 years, and most leases raise that payment by a set percentage every year through an escalator clause. The monthly figure in a sales pitch is the first year's payment, not the average over the whole term.
- A solar lease usually has no upfront cost, because the leasing company pays for the system and recovers that money through the monthly payments.
- The leasing company keeps the tax credits and incentives tied to the equipment, so the homeowner's savings come only from a lower utility bill.
- An escalator of a few percent a year compounds, so the final years of a long lease can cost far more per month than the first year.
- Selling a home with leased panels usually means the buyer must qualify to take over the lease or the seller must buy it out, which can slow a sale.
How a solar lease works
A solar lease is a rental agreement for equipment. A company installs panels on your roof, keeps ownership of them, and charges you a fixed amount every month to use them. The company usually handles monitoring and repairs, and you pay the same amount whether the panels produce a lot that month or very little.
That last point is what separates a lease from the two other common ways to get solar:
- Power purchase agreement (PPA). The company also owns the panels, but you pay for the electricity they produce at a set rate per kilowatt-hour. Your bill moves with the weather and the season.
- Solar loan. You own the system and repay a loan. The payment is fixed, but the equipment, the warranties and any tax credits belong to you.
Lease terms usually run 20 or 25 years. Because the company owns equipment attached to your house, it typically records a filing on your property, often a fixture filing under the Uniform Commercial Code. It shows up in a title search and has to be dealt with when you sell or refinance. Our main guide to solar panel problems and contract warning signs explains how to tell which of the three agreements you have.
How much to lease solar panels: what sets the monthly payment
There is no standard price for a solar lease. The monthly payment on your quote is built from a handful of inputs, and you can ask the salesperson to show every one of them:
- System size. A bigger system costs the company more to install, so the payment is higher. The size should be based on a year of your utility bills, not a guess.
- Your local electricity rates. Leases are priced to come in a little under what you pay the utility today. High-rate areas tend to get higher lease payments.
- Incentives the company can claim. Tax credits, state rebates and renewable energy certificates go to the owner of the system. The company prices those into the lease, which is one reason there is usually nothing to pay up front.
- The term and the escalator. A longer term and a higher annual increase let the company start the payment lower. A zero-escalator lease, where one is offered, usually starts higher.
- Prepaid or monthly. Some companies offer a prepaid lease, where you pay the whole term at signing in exchange for a lower total.
The number that matters is not the lease payment on its own. It is your new utility bill plus the lease payment, compared with the utility bill you have now. Ask for the company's estimate of your bill after solar, in writing, with its assumptions about production, utility credits and future utility rates.
The escalator clause: why year 25 costs more than year 1
Most solar leases include an escalator, an automatic increase in the monthly payment each year, commonly somewhere between 1 and 3 percent. It sounds small. The catch is that it compounds. A payment that rises by about 3 percent a year roughly doubles over a 25-year term. A 2 percent escalator raises the final year's payment by about 60 percent over the first year's.
Sales presentations justify the escalator by assuming utility rates will rise at least as fast, so the lease stays cheaper than the grid. Utility rates do tend to rise, but not on a fixed schedule, and in some years they flatten or fall. If the utility's rate increases come in below the escalator for a stretch of years, the lease can end up costing more than the power it replaces, and the contract does not adjust for that.
Two things to ask before you sign:
- Is there a zero-escalator version of this lease, and what does it start at?
- Can you show me the payment for every single year of the term, in a table, and the total of all of them?
A company that cannot produce that table is asking you to sign a 25-year contract without saying what it costs.
What the lease costs over the full term
The honest way to compare a lease with buying, or with doing nothing, is to add up every payment over the term and set that against the electricity the panels are expected to replace. When you run that comparison, a few things the pitch tends to leave out show up:
- Production falls while the payment rises. Panels lose a small amount of output every year as they age. Under a lease, the payment goes up on schedule anyway.
- Net metering rules change. How much your utility pays for the power you send back is set by your state and your utility, and several states have cut those credits in recent years. A lease signed under one set of rules can run for decades under another.
- Roof work costs extra. If your roof needs repair or replacement during the lease, the company will usually remove and reinstall the panels for a fee set in the contract. Our guide to water damage and homeowners insurance covers who pays when a roof penetration fails.
- Insurance may change. Some homeowners policies ask you to list a rooftop system, and the leasing company may require a certain level of coverage. Check with your insurer before the panels go up.
- The system is never yours. After 25 years of payments, you still own nothing unless you buy the panels at the end.
None of this makes every lease a bad deal. For a homeowner who cannot use a tax credit, does not want to borrow and plans to stay put, a low-escalator lease can work out. The point is to do the arithmetic with the real numbers.
Leasing versus buying: the tax credit and home value
The biggest financial difference between a lease and a purchase is who gets the incentives. When you buy, any federal or state credits for the system belong to you. When you lease, they belong to the company, and the lease payment reflects that the company has already pocketed them.
Federal solar tax credits have changed recently. The credit for systems homeowners buy themselves was scheduled to end for systems installed after 2025, while leasing companies may still be able to claim a separate business credit on systems they own. That shift is one reason lease offers have become more common. The rules depend on timing, so a tax professional is the right person to confirm what applies to you.
Home value works the other way. A system you own outright is generally treated as an improvement to the house. Leased panels are a contract the next owner has to take over, and appraisers usually give them little or no value. Some buyers see a long lease as a reason to walk away, which is a factor the sales pitch rarely mentions.
Selling a home with leased solar panels
This is where leases cause the most trouble, because the contract outlives most people's time in a house. There are generally three ways to deal with it:
- The buyer takes over the lease. The leasing company has to approve the transfer, which usually means a credit check on the buyer and some paperwork. The buyer must be willing to accept the remaining payments and the escalator.
- You buy out the lease. Most contracts include a buyout schedule that sets a price for ending the lease early in a given year. That price can be substantial, especially early in the term.
- You prepay the remaining term. Some contracts let you pay the rest of the lease so the buyer gets the panels with no monthly payment.
Start the transfer process as soon as you decide to sell, because the leasing company's paperwork can take weeks and hold up closing. The property filing mentioned above will also appear in the title search and has to be released or acknowledged before closing.
If you are selling to a cash buyer or an instant-offer company, expect the lease to come up early. Some cash buyers will not take on a solar lease at all, and others price the buyout into a lower offer. Cash offers are often below open-market value in any case, so compare several against an agent's estimate. Our guides to selling a house for cash and selling a house fast explain how those buyers work.
What happens when the lease ends
Most leases give you three choices at the end of the term, and the contract should spell out each one:
- Renew for a shorter period, often at a new monthly rate.
- Buy the system at its fair market value at that point, which the company determines.
- Have it removed. Most contracts say the company removes the panels at its own cost and restores the roof, but check the wording, because some put part of that cost on the homeowner.
By then the panels and inverter are old technology, so the buyout and renewal options are often less attractive than they sound in year one.
What to check before you sign
A solar lease is a long contract, and the time to read it is before the tablet comes out. Go through these items with the full agreement in hand:
- Term, starting payment and escalator. Get the year-by-year payment table and the total of all payments.
- Production estimate. How many kilowatt-hours a year the system is expected to produce, and what assumptions sit behind that figure.
- Production promise. Many leases promise a minimum output, often called a production guarantee, but it does not cover every shortfall. Check how a shortfall is measured, when it is paid, and what is excluded, such as shading from trees that grow later.
- Roof terms. The fee to remove and reinstall panels for roof work, and whether the company covers leaks at its penetrations and for how long.
- Transfer and buyout. The rules for passing the lease to a buyer and the buyout price in each year of the term.
- Property filings. Whether the company will record a filing against your home, and how it gets released.
- Insurance requirements. What coverage the lease requires you to carry. Our guide to how homeowners insurance is priced explains what can move your premium.
- Your right to cancel. Under the federal cooling-off rule, many sales made at your home can be cancelled in writing within three business days, and most states have their own rules for home solicitation sales, some of them longer. If you signed recently and want out, that window is the cleanest exit there is.
A few sales practices are warning signs on their own: a system described as free, a promise that your electric bill will go to zero, a push to sign on a tablet right away, or a refusal to leave a full copy of the contract. Our main guide lists the warning signs in a solar sale in more detail.
If the lease is not what you were told
If the payments, the production or the terms differ from the pitch, collect the contract, the sales proposal, any texts or emails, and your utility bills from before and after the installation. Write down what you were told, by whom and when, then contact the leasing company in writing and keep a copy.
Complaints about solar sales go to your state attorney general or consumer protection office and to the Federal Trade Commission. If a loan rather than a lease is involved, the Consumer Financial Protection Bureau takes complaints as well. Depending on the facts, homeowners sometimes get terms corrected, negotiate a change to the contract, or potentially recover money through a complaint process, a negotiated settlement or legal action where the sale was misrepresented. No outcome is certain. Our comparison of how to get out of a solar contract walks through the routes, from the installer to the state to a lawyer.
Whatever you do, keep making the lease payments while you sort it out. Missed payments can lead to late fees, collections and credit damage, and the contract may let the company enforce its filing against the property or remove the system. State law and your own lease decide what the company can actually do, so get advice before changing anything.
How we're paid: HomeownerPedia publishes free guides for homeowners. The next step on this page takes you to our comparison of your options. Companies on that page, including our partner, Stonegate Firm, a consumer firm that reviews solar contracts and pursues relief when a sale was misrepresented, pay us for referrals. If you continue to a partner's website from there, what you enter goes directly to it, not to us. You decide whether to move forward. HomeownerPedia is an independent guide, not a law firm. What you can do about a solar contract depends on your agreement and your state.
Questions homeowners ask
Is it worth it to lease solar panels?
A solar lease is worth it only when the lease payment plus the new utility bill stays below the old utility bill for the whole term, after the escalator is counted. That depends on your local rates, the size of the system, the escalator, how long you plan to stay in the home and whether you could use a tax credit by buying instead. Add up every year's payment before deciding, and compare the total with a purchase quote and with doing nothing.
How much is a solar lease per month?
The monthly payment depends on the size of the system, your local electricity rates, the incentives the leasing company can claim, the length of the term and the escalator. Leases are usually priced to start a little below your current utility bill, and then rise each year. Ask for the payment for every year of the term rather than relying on the first-year figure.
What happens after a 20 or 25 year solar lease?
At the end of the term, most leases let you renew for a shorter period, buy the system at its fair market value, or have the company remove it. The contract sets the details, including who pays for removal and roof restoration. By that point the equipment is old, so the buyout and renewal options are often less appealing than they sound at signing.
Is it worth buying a house with leased solar panels?
Buying a home with leased panels means taking over the seller's contract, including the remaining payments, the escalator and the transfer approval by the leasing company. Whether that is worth it depends on the remaining term, the payment schedule and how the panels perform compared with the home's utility bills. A buyer can ask the seller to buy out the lease instead, or negotiate the price to reflect the obligation.
What is the downside of a solar lease?
The main downsides are that the payment rises every year while the panels slowly lose output, the homeowner never owns the system or the tax credits, and the lease has to be transferred or bought out when the home is sold. A lease can still make sense for someone who cannot use a tax credit and does not want to borrow, as long as the full-term cost is understood before signing.
