At a glance

With a lease or a PPA, a solar company puts its panels on your roof and you pay it every month, usually with little or nothing up front. The company handles repairs and keeps the tax credits and incentives. The trade-offs are a contract of 20 years or more, payments that often rise every year, and extra steps if you sell your home. In 2026, 49% of new net billing home solar in California was set up this way.

Lease, PPA or buy: the differences

BuyLeasePPA
Who owns the panelsYouThe solar companyThe solar company
What you payThe price, in cash or with a loanA set monthly payment for the systemA price per kWh for all the power it makes
Repairs and monitoringUsually youThe companyThe company
Tax credits and incentivesYoursThe company'sThe company's
Typical lengthLoan term, if any20 to 25 yearsA set number of years
When you sell your homeGoes with the house; a loan may need paying offBuyer takes it over, or you pay it offBuyer takes it over, or you pay it off

From the CPUC's Solar Consumer Protection Guide and the CSLB's consumer guidance. Contracts vary; yours sets the actual terms.

A lease is a fixed monthly rent for the system. A PPA charges you for the power instead, at a set price per kWh, and the CSLB warns you may have to pay for all the energy the system makes, even what you don't use. With either, the company is usually responsible for monitoring, maintenance and repairs, and the CPUC notes a minimum amount of production is often guaranteed. The flip side: the company could go out of business during the contract.

If you buy instead, you own the system and its incentives, and the CPUC says buying typically gives a greater return on investment. In 2026 that doesn't include the federal credit: the IRS says the 30% Residential Clean Energy Credit isn't available for systems placed in service after December 31, 2025.

What Californians choose

PPAs dominate. Company-owned systems also come with batteries more often: 87% of the company-owned net billing systems approved at PG&E and SCE in 2026 included one, against 57% of homeowner-owned systems. The share of company-owned solar jumped in 2024, the first full year of net billing, and has stayed around 45% since.

Escalators: payments that rise every year

Most lease and PPA payments go up each year by a set percentage, called an escalator. The CPUC says escalators typically run 1% to 3% a year and to be cautious of anything higher. Over a long contract, that adds up. Here's an example with a $150 starting payment over 25 years:

EscalatorMonthly, year 1Monthly, year 25Paid over 25 years
No escalator$150$150$45,000
1% a year$150$190$50,838
3% a year$150$305$65,627

Example only, to show how escalators compound; your contract sets the starting payment and the rate. The CSLB compares a PPA escalator to a variable-rate mortgage and suggests checking whether a fixed rate is offered.

Stacks of coins growing taller from left to right beside a lease document and pen

If you sell your home

Selling during a lease or PPA is the step most likely to cause trouble. The CPUC and the CSLB describe three usual paths:

The buyer takes it over

The new owner agrees to assume the lease or PPA. The CSLB notes some buyers are reluctant to.

You keep paying

The CPUC lists continuing the payments yourself as one option.

You buy it out

You pay the company the remaining value, often at a price it sets in advance. The CPUC warns this can cost thousands of dollars.

Before you sign, ask what the buyout would cost in each year of the contract, whether a buyer has to qualify to take it over, and whether there are transfer fees. And check what happens at the end: the CSLB notes the company can remove the system when the lease ends unless the contract lets you buy it.

What to read in the contract

  • The disclosure document. California requires a solar energy system disclosure document before a sale, financing or lease, explaining the difference between leasing and buying and how the contract affects selling your home.
  • The escalator. The yearly increase, and whether a fixed rate is available.
  • Liens and acceleration. The CSLB says to watch for language that lets the company place a lien on your home or make all payments due at once if you miss one.
  • The production guarantee. How much power is guaranteed and how you're paid if the system falls short.
  • Renewable energy certificates. The CPUC says to ask who owns them under a lease or PPA.
  • Your right to cancel. See how to cancel a solar contract in California, and check the company first.
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Common questions

Is it better to lease or buy solar in California?

The CPUC says buying typically gives a greater return on investment, while a lease or PPA means little or no upfront cost and the company handles repairs. With a lease or PPA, the company keeps the tax credits and incentives, and payments often rise each year.

What is a solar PPA?

A power purchase agreement: a solar company owns the system on your roof and sells you the power it makes at a set price per kWh, often with a yearly escalator. In 2026, PPAs made up 85% of company-owned net billing home solar in California.

What happens to a solar lease when you sell your house?

Usually the buyer agrees to take over the lease, you keep paying it, or you buy it out. The CPUC warns a buyout can cost thousands of dollars.

What is a normal solar escalator?

The CPUC says escalators typically run 1% to 3% a year and to be cautious of a contract with a higher one.

How long is a solar lease in California?

The CPUC says a typical lease runs 20 to 25 years; the CSLB says typically 20.

Lease and PPA terms vary by company and contract; this page explains how they generally work, not the terms of any offer. Sources: CPUC: Solar Consumer Protection Guide · CSLB: Solar Smart · California DG Stats · IRS: Residential Clean Energy Credit. Reviewed October 2026.

Next guidePaying for solar in California →