Solar Lease vs Buy Calculator
Compare the true 25-year cost of leasing vs buying — including escalating lease payments, the 30% tax credit, and loan payoff savings.
| Year | Lease payment | Solar savings | Lease net (cum.) | Buy net (cum.) |
|---|---|---|---|---|
| Year 1 | $1,440/yr | $1,650/yr | $210 | -$25,288 |
| Year 5 | $1,614/yr | $1,820/yr | $1,040 | -$26,556 |
| Year 10 | $1,863/yr | $2,058/yr | $2,041 | -$27,114 |
| Year 15 | $2,149/yr | $2,327/yr | $2,968 | -$20,176 |
| Year 20 | $2,479/yr | $2,630/yr | $3,783 | -$7,646 |
| Year 25 | $2,860/yr | $2,974/yr | $4,433 | $6,520 |
How to Use This Calculator
Enter system cost and ownership details
For the buy scenario, enter the gross system cost, federal tax credit (0.30 = 30%), and if financing, the loan rate and term. The calculator computes the net purchase cost after the ITC. For a cash purchase, set the loan rate and term to 0. The tax credit only applies when you own the system — leases don't qualify.
Enter lease terms
Enter your monthly lease payment from your solar lease or PPA agreement. The annual escalator is the rate at which your payment increases each year — commonly 2-3.9%. A 2.9% escalator means a $120/month payment grows to about $230/month by year 25. This is the most often overlooked cost in lease agreements.
Set production and electricity costs
Both scenarios use the same solar production and electricity rate to calculate avoided grid costs. In the lease scenario, avoided grid costs are offset by lease payments. In the buy scenario, they're offset by loan payments (during the loan term) then become pure savings after payoff.
Read the 25-year comparison
The table shows cumulative net position for each option at years 1, 5, 10, 15, 20, and 25. The "buy net" becomes strongly positive after the loan payoff year. The "lease net" depends heavily on the escalator — low-escalator leases can still provide meaningful savings; high-escalator leases can become negative toward year 20-25.
The Formula
The critical variables are the lease escalator vs electricity rate increase. If your lease escalates faster than your electricity rate rises, leasing becomes less valuable over time. If your utility rate rises faster than the escalator, leasing stays attractive. In most historical scenarios, buying wins significantly over 25 years.
Example
The Chen family — choosing between lease and loan
An installer quotes a $24,000 8kW system for the Chen family. They can lease for $120/month with a 2.9% escalator, or finance with a 12-year loan at 6.99% after the 30% ITC ($16,800 loan). The system produces 11,000 kWh/year. They pay $0.15/kWh and expect 3% annual rate increases.
Buy (loan at 6.99% / 12 years)
Buying wins dramatically. The loan-financed buyer owns the system after year 12 and enjoys ~$2,800/year in free savings from years 13-25. The lessee's payment keeps rising to $229/month by year 25. Over 25 years, the buyer is $35,000 better off — and owns a system that adds value to their home.