Free tool

Lease, PPA, loan or cash: the same panels, paid for four ways

A free solar lease vs buy calculator. Enter one set of production and rate assumptions, then see what each way of paying costs, saves and is worth in today's dollars.

Use the comparison Payback estimator

Four different doors in a hallway, each with sunlight spilling underneath — The idea
Lease, PPA, loan or cash: four doors to the same sunlight, with very different rooms behind them.

Interactive comparison

Four ways to pay for the same sunlight

Enter the terms from your quotes. The comparison runs in your browser; nothing is sent anywhere.

Shared assumptions

First-year production (kWh)

Share used on site (%)

Retail electricity price ($/kWh)

Export credit ($/kWh)

Electricity price increase (%/yr)

Panel degradation (%/yr)

Years to compare

Discount rate for NPV (%)

Owner maintenance (cash and loan) ($/yr)

Cash

Cash price ($)

Loan

Financed price ($) Loan prices often include a dealer fee. Compare against the cash price.

APR (%)

Loan term (years)

Lease

First-year monthly payment ($)

Annual escalator (%)

Lease term (years)

PPA

First-year PPA rate ($/kWh) Residential PPAs are not offered in every state, and their status in Kentucky is unclear. Confirm availability before comparing.

Annual escalator (%)

PPA term (years)

Over the period	Cash	Loan	Lease	PPA

Cumulative net benefit by year

Net benefit = avoided utility cost minus everything you pay for the system. Lease and PPA savings stop when the agreement ends.

Nominal dollars, simplified. No tax effects, no buyout or transfer costs, no roof work. Not financial or tax advice. Want a reviewed comparison of your actual contracts? See the Proposal Second Opinion.

The panels on your roof can be identical under all four offers. What changes is who owns them, who claims the tax benefits, how the payments grow and what happens when you sell the house. This solar lease vs buy calculator puts a cash purchase, a loan, a lease and a power purchase agreement (PPA) on the same assumptions and shows which leaves you better off, in total and in today’s dollars. The default export credit is a rounded 7¢; KU’s current NMS-2 credit is 7.534¢ per kWh and LG&E’s is 7.089¢.

How the lease vs buy calculator works

Bill savings are calculated as in our payback estimator, the same for every option. Each year, production falls by the degradation rate. The share used on site is valued at your retail price, which rises by the escalation rate. Exported kWh earn the export credit, held flat unless you change it. Then each option’s payments are subtracted:

Cash: the full price on day one, then nothing.
Loan: a standard monthly payment on the financed amount at the stated APR and term, with no down payment.
Lease: the monthly payment, raised each year by the lease escalator.
PPA: the PPA rate times the kWh the system produces, with the rate raised each year by its escalator.

If a lease or PPA term is shorter than the analysis period, its payments and savings stop when the term ends; what follows is a contract question.

For each option you see first-year net cash flow (year-one savings minus payments; a cash price is shown separately as a day-one outlay), total paid, total bill savings, net benefit, net present value and the break-even year, when cumulative savings first cover cumulative payments.

The four structures

Cash

You own the system, every repair and every dollar saved. The federal 30% residential credit ended for systems installed after December 31, 2025, so for most homeowners the price on the proposal is now the price.

Loan

You own the system and repay a lender. Many solar loans include a dealer fee: the lender deducts it from what it pays the installer, and the installer covers it by raising the financed price. That’s why the default loan is $27,500 against a $24,000 cash price. The $3,500 difference is 14.6% on top, and it never appears as a line item. A 2024 federal consumer-finance report found such fees can raise loan principal by 30% or more above the cash price.

Lease

A provider owns the system and you pay a fixed monthly amount, usually with an annual escalator. Maintenance and monitoring are typically included. Because the provider owns the equipment, it may be able to claim commercial federal credits, within deadlines and sourcing rules set by the 2025 tax law.

PPA

A provider owns the system and you pay for every kWh it produces, at a rate that usually escalates. In Kentucky, the legal status of residential third-party PPAs is unclear, while leases are offered; the PPA option is here for readers in states where PPAs are sold. If you’re in Kentucky and hold a PPA offer, confirm with your utility and an attorney that it can be offered at your address. Note the word every: you pay the PPA rate on exported kWh too, but the utility credits them at the export credit. With the defaults, that’s 12¢ paid for each kWh credited at 7¢: on 4,000 exported kWh, about $200 lost in the first year, and more each year the PPA rate rises.

Escalator arithmetic

A 2.9% escalator compounds: after 24 increases, the $135 default payment is about $268 a month, nearly double. Over 25 years the lease payments total $58,295. The PPA rate climbs from 12¢ to about 23.8¢ per kWh by year 25.

Only the on-site share of your savings grows with utility rates; the exported share is flat in this model. So an escalator close to your expected rate increase still widens the gap every year.

When you sell the house

Cash: the system goes with the house. Kentucky’s net-metering statute lets the installation transfer to new owners at the same address once the utility is notified and confirms it meets safety standards.
Loan: many solar loans are secured by a filing that a title search will find. Expect to pay it off at closing.
Lease or PPA: a buyer usually has to qualify for and take over the contract, or you buy it out. Ask for the buyout schedule before you sign.

One Kentucky question deserves a written answer. The state’s net-metering statute describes an eligible customer-generator as a customer who “owns and operates” the system. Before you sign, ask the provider and your utility how a third-party-owned system will be enrolled. We don’t interpret the statute; we make sure the question gets asked.

Disclaimer

This comparison is a simplified, preliminary model for general information, not a quote or a promise of savings. It is not tax, legal or investment advice; confirm tax treatment with a tax professional. Results depend on your contract, equipment, usage and future tariffs. For a full worked case, read our illustrative Lexington lease vs cash scenario, or ask for a Proposal Second Opinion on your own documents.

Step by step

How to use it

You need the proposal or proposals, your last 12 bills and about fifteen minutes.

Set the shared assumptions once
Enter first-year production, your on-site share, retail price, export credit, escalation, degradation, analysis period and discount rate. These stay the same for every option, so the comparison is fair.
Enter each offer you actually hold
Use the cash price, the financed amount and loan terms, the lease payment and escalator, and the PPA rate and escalator from the documents. Leave out any option you weren't offered.
Ask for the missing cash price
If you only have a loan offer, ask the installer for the cash price of the same system. The difference is the dealer fee, and you can't see it any other way.
Read net benefit and NPV together
Net benefit adds up dollars across 25 years. NPV discounts later dollars back to today. When the two rank the options differently, the timing of the payments is driving the result.
Stress-test the winner
Rerun the leading option with 1% and 5% escalation and a 10-point lower on-site share. A choice that only wins under one set of assumptions is a fragile choice.

FAQ

Questions about the ownership comparison

Why can the NPV be negative when the net benefit is positive?

Net benefit counts a dollar in year 22 the same as a dollar today. NPV discounts it at the rate you choose, 5% by default. A cash purchase pays out on day one and earns its savings slowly, so discounting hits it hardest. A negative NPV means the option earns less than your discount rate, not that it loses money.

Does the comparison include maintenance and repairs?

No. Lease and PPA providers usually cover maintenance; owners pay for their own. If you are comparing ownership against a lease, subtract a realistic allowance from the cash and loan results, including a possible inverter replacement. The payback estimator has a maintenance input you can use for this.

Can a lease or PPA provider still get a federal tax credit?

Under current law, a third-party owner may be able to claim commercial clean-electricity credits, subject to construction-start and placed-in-service deadlines and foreign-sourcing rules. Whether any of that value reaches you depends on the price you're offered. This is general information, not tax advice; confirm details with a tax professional.

What discount rate should I use?

Use the return you could reasonably earn on the same money elsewhere, or the interest rate on debt you could pay off instead. 5% is a reasonable starting point. If your answer changes between 3% and 7%, the options are closer than they look.

Should I just pick the option with the highest NPV?

Not on that number alone. Ownership, roof timing, how long you'll stay and what happens when you sell all matter. The tool ranks the cash flows; it doesn't know your plans. We give estimates, not investment advice, and a licensed financial adviser can weigh the money against your other goals.