Solar Financing or Leasing. Which Option is Right for You?

Making the decision to go solar is a big one, and there is a lot of information to consider. When it comes to paying for the new solar system, homeowners have several options — from an outright cash purchase to a solar loan or third-party ownership with lease or power purchase agreements. Homeowners may have difficulty deciding if purchasing or leasing is the right choice. Understanding the difference between these two can help someone make an informed decision.

For homeowners wishing to maximize their lifetime solar system value, a cash purchase or financing can achieve that goal. Funding a solar system with a loan helps lock in a predictable cost with fixed payments throughout the term (ranging from five to 25 years). Since the energy produced by your solar system offsets what is normally purchased from the utility company, the loan payment typically offsets that monthly expense. And unlike utility costs that rise an average of 5-6% each year, the solar loan payments remain constant over the term of the loan.*  

Third-party ownership, also known as solar system leasing or power purchase agreements (PPAs), are widely available. This guide explains some of the questions to consider when making the decision.

While a solar loan provides consistent monthly payments with PPA or lease options, the cost can double over 25 years. Below is an example of the $/kWh price and monthly payment for a 25-year PPA with a 2.9% escalator.

Year 1: $0.19/kWh; $189.68/month  

Year 25: $0.3853/kWh; $338.45/month

Additionally, when leasing a solar system, there is no early payoff option in the first six years. If you are planning to stay in your home long term, this might not be a concern. If you are planning to move or want additional flexibility, this should be taken into account.

Purchasing solar with a zero-down solar loan allows homeowners to leverage the bank’s capital and may have an immediate return on investment with lifetime savings. Solar loans provide a variety of terms and rates that can fit almost any budget. A loan will provide a fixed monthly payment so you can lock in a predictable energy expense. Sungage Financial’s solar loan allows a homeowner to own their solar wealth.

Sungage Financial exists to help homeowners make the smart switch to solar by providing flexible and reliable financing options. We are happy to answer your solar financing questions at 844-SUNGAGE.


Information is provided for general informational purposes only. The terms and conditions of financing options vary by product and institution. It is recommended that you read any financing documents carefully for terms and conditions applicable to the particular product you are considering. Sungage does not currently offer leasing and all loans are issued through NBT Bank. Sungage does not provide financial advice or tax advice, and nothing herein should be construed as financial advice or tax advice.

*5-6% each year assuming current industry trends continue - not guaranteed.