Leasing solar panels means a solar company installs and owns the system on your home, while you pay a monthly fee to use it. Lease terms commonly run 10 to 20 years. The company often handles monitoring, maintenance and repairs. You use the electricity the panels produce, then draw power from the utility grid when solar production falls short.
The IRS says the Residential Clean Energy Credit is not available for qualifying clean-energy property placed in service after December 31, 2025. Tax rules and state incentives can change, so check the current rules before signing a lease.
A solar lease can reduce your upfront cost. You do not own the panels, however, and you usually cannot claim incentives tied to system ownership. Selling your home may also require you to transfer, buy out or otherwise resolve the lease.
Solar Panel Leasing at a Glance
| Feature | How a solar lease usually works |
|---|---|
| System owner | Solar company or financing provider |
| Upfront cost | Often low or zero, depending on the contract |
| Your payment | Fixed monthly lease payment, sometimes with an annual increase |
| Electricity | You use the solar power generated at your home |
| Utility bill | You continue paying the utility for electricity bought from the grid |
| Maintenance | Usually handled by the system owner, but check the contract |
| Contract length | Commonly 10 to 20 years; some agreements last longer |
| Tax credits and incentives | Generally claimed by the system owner, not the homeowner |
| End of contract | Renewal, purchase, removal or another option stated in the agreement |
What Happens When You Lease Solar Panels?
A typical lease works like this:
The solar company evaluates your home. It reviews your roof, shade, electricity usage, local utility rules and available installation space.
The company designs and installs the system. The installation may include solar panels, an inverter and related equipment.
The solar company keeps ownership. Unlike a cash purchase or solar loan, you pay to use the equipment rather than buying it.
You make monthly lease payments. The payment usually covers use of the photovoltaic system. Some contracts include an annual increase called an escalator.
The panels generate electricity. Your home uses solar power while the system is producing it. When production is too low, the home automatically draws electricity from the utility grid.
Extra electricity may go to the grid. If the panels produce more power than your home uses, the utility may provide bill credits under its net-metering or distributed-generation rules. These rules vary by utility and state.
The company monitors and services the system. Many leases include monitoring, maintenance and repairs. The contract determines exactly what the company must handle.
Because the solar company owns the system, it may use available tax benefits, rebates or renewable energy certificates. The Federal Trade Commission says homeowners who lease a system or sign a power purchase agreement generally cannot claim the system owner's tax credits or renewable energy certificates.
How Does a Solar Lease Differ From a Solar PPA?
A solar lease charges for use of the equipment. A power purchase agreement, or PPA, charges for the electricity the system produces.
| Solar lease | Solar PPA |
|---|---|
| You pay a monthly equipment-use charge | You pay for each kilowatt-hour generated |
| The payment may be fixed | The monthly bill changes with solar production |
| You use the system's electricity | You purchase the system's output |
| You may still receive utility credits for exported power | Treatment of exported power depends on the contract and utility rules |
The U.S. Department of Energy describes a lease as a fixed payment for use of the photovoltaic system. A PPA sets a price per kilowatt-hour for the electricity the system generates.
Do You Still Have an Electricity Bill With Leased Solar Panels?
Usually, yes. Solar panels do not produce all of a home's electricity at every hour of the day.
You may still receive a utility bill for:
- Electricity used at night
- Power used during cloudy or low-production periods
- Electricity used when your home needs more power than the panels are producing
- Utility delivery, connection or fixed customer charges
- The difference between the value of exported electricity and the electricity you later buy
Your total energy cost is usually:
Solar lease payment + remaining utility bill = total monthly energy cost
Any savings estimate should include both amounts. Comparing only the lease payment with your previous utility bill can make the financial benefit look larger than it is.
Who Pays for Solar Panel Maintenance?
The solar company often pays for maintenance under a lease, but the contract controls which costs it covers.
Check whether the agreement includes:
- Panel and inverter repairs
- System monitoring
- Labor and replacement parts
- Roof penetrations and water damage
- Damage caused by storms, fire or other events
- Tree trimming needed to prevent shading
- Removal and reinstallation if the roof needs replacement
- Performance guarantees and remedies if the system underperforms
The U.S. Department of Energy notes that maintenance duties vary between solar lease programs. Some make the leasing company responsible, while others leave certain repair or maintenance costs with the homeowner.
Can You Claim a Tax Credit If You Lease Solar Panels?
The homeowner generally cannot claim the solar equipment's ownership-based tax credit when the solar company owns the system. The system owner usually receives the applicable tax benefits and incentives.
The IRS says the Residential Clean Energy Credit applies to qualifying clean-energy property costs incurred by the taxpayer. The IRS also says the credit is not available for residential clean-energy property placed in service after December 31, 2025. Tax rules can change, and state incentives differ, so review the current rules with a tax professional before signing a contract.
A lease may still reduce upfront spending and transfer some maintenance responsibilities to the solar company. Without homeowner ownership incentives, though, leasing may cost more over time than buying in some situations.
What Happens When the Solar Lease Ends?
The contract should state what happens when the lease ends. Common options include:
- Renewing the lease
- Purchasing the system for a stated price
- Having the solar company remove the equipment
- Extending the agreement under new terms
The contract should also say who pays for removal, roof repairs and property restoration. The Federal Trade Commission advises homeowners to review end-of-term and early-termination provisions because ending a long-term agreement early can be difficult or expensive.
What Happens if You Sell a House With Leased Solar Panels?
A leased solar system can add work to a home sale. The buyer may need to:
- Assume the existing lease
- Qualify for the lease transfer
- Pay a transfer or administrative fee
- Require the seller to purchase the system or pay an early-termination amount
- Wait for the solar company to remove the system
A lease transfer can add paperwork and may affect whether a buyer wants, or qualifies, to purchase the home. Before listing the property, ask the solar provider for the lease payoff, transfer requirements and purchase-option terms.
What Should You Check Before Signing a Solar Lease?
Before signing, review these terms carefully:
- Monthly payment: Confirm the starting payment and whether it increases each year.
- Total contract cost: Add all lease payments over the full term.
- Expected production: Check the system size, estimated annual output and performance guarantee.
- Utility assumptions: Review the assumptions about electricity prices, net metering and exported power.
- Maintenance responsibility: Identify who pays for repairs, roof work and equipment replacement.
- Insurance requirements: Confirm whether your homeowners insurance must approve the installation.
- Home sale provisions: Understand transfer, buyout and removal requirements.
- End-of-term options: Look for clear purchase, renewal and removal terms.
- Battery treatment: Determine whether battery storage is included and who owns it.
- Cancellation rights: Check the deadline and any fees for canceling before installation.
The Federal Trade Commission recommends getting detailed bids from multiple providers. Compare the system brand, size, expected performance and contract terms instead of focusing only on the advertised monthly payment.
Is Leasing Solar Panels Worth It?
Leasing can make sense if you want solar with little upfront spending and prefer the solar company to own and maintain the equipment. Buying may be a better fit if you want the lowest potential lifetime cost, ownership incentives or more flexibility when selling your home.
A lease may suit you when:
- You do not want to pay the installation cost upfront
- You prefer predictable monthly payments
- You do not want to manage system maintenance
- You expect to remain in the home for most of the contract term
- You have compared the combined lease and utility costs with your current energy costs
Buying with cash or financing may be better when:
- You can afford the system or qualify for favorable financing
- You want to own the panels and future energy production
- You want ownership-related tax benefits or incentives when available
- You want more flexibility when selling the home
- You are comparing total lifetime cost instead of only the immediate monthly payment
The U.S. Department of Energy says a purchased solar system can generally have a lower total cost than a leased system, although buying requires more upfront capital or financing.
A solar lease trades ownership for lower upfront spending and a maintenance arrangement. Compare the full contract cost, annual payment increases, maintenance duties, utility costs and home-sale rules before choosing between a lease, PPA, solar loan or cash purchase.