Cash vs Loan vs Lease vs PPA: How to Pay for Solar in California (2026)

Cash (buy outright) — you pay the installed price once and own the system. Solar loan — a lender pays the installer, you repay over ~10–25 years with interest, and you own the system. Lease — a company installs and owns the panels on your roof; you pay a fixed monthly rent to use them. PPA (power-purchase agreement) — similar to a lease, but instead of a flat rent you pay a per-kWh rate for the electricity the system produces. Both lease and PPA are commonly marketed as "$0 down."

Paying cash means you pay the installed price once — roughly $2.60–$3.50 per watt before incentives in California in 2026 — and own the system with no interest, no lender, and no monthly payment. It's normally the lowest total cost of the four options because you're not paying anyone to finance it. The trade-off is obvious: it ties up a chunk of money up front, and there's no 30% federal credit in 2026 to soften that. See what systems actually cost in solar panel cost in California (2026).

A solar loan lets you own the system without paying the full price on day one. You repay over ~10–25 years, and because you're the owner, the panels transfer cleanly with the house and you carry no lease contract. The catch is cost: you pay interest over the term, and many financed deals also roll in a financing or dealer fee. In financing examples we've reviewed, that fee is sometimes in the range of ~10–30% of the system price (with some examples higher) — it isn't universal, and it isn't always disclosed as a separate line, so it's worth an itemized explanation before you sign. A useful habit: compare the all-in price divided by system watts across quotes rather than the monthly payment, since a low payment can hide a high total. Our solar quote comparison checklist walks through exactly what to ask for.

A lease or PPA is the low-upfront path: a provider installs, owns, and maintains the system, and you pay to use it — a fixed monthly rent (lease) or a per-kWh rate for what it produces (PPA). Many are marketed as "$0 down," and maintenance is the provider's responsibility, which some homeowners value. Two things to read carefully. First, the escalator: most contracts raise your payment automatically each year — the rate varies by contract (some use a fixed rate or no escalator) — so a payment late in the contract can be well above year one. Some prepaid leases have no escalator; the only way to know is to read the contract. Second, ownership: because the provider owns the panels, the arrangement can add steps when you sell (more on that below).

Whether a lease or PPA works out depends heavily on your escalator versus how utility rates actually move. Historically, average residential rate increases have run lower than a typical ~1–3% escalator in some years and higher in others — so the savings picture is genuinely case-by-case, not guaranteed. Model your own numbers with the California solar payback calculator.

This is where 2026 changed things. The 30% federal Residential Clean Energy Credit (Section 25D) ended on December 31, 2025 under the law signed in July 2025, so homeowners who buy with cash or a loan in 2026 get no federal credit — the sticker price is the real price (IRS). With a lease or PPA, a third party owns the system and may still qualify for a separate business clean-energy credit, but that depends on the project's ownership, construction start, and in-service timing — and you, the homeowner, don't claim it. If a salesperson frames a lease as "getting you the tax credit," that credit (if any) belongs to the provider; ask how, or whether, it's reflected in your rate. Full detail in is solar still worth it in California? This is general information, not tax advice — confirm your situation with a tax professional.

Ownership drives what happens at closing. With cash, the system is an owned asset that transfers with the house — owned solar is generally associated with added home value. With a loan, the balance is typically paid off from proceeds at closing (or, in some products, assumed), and the panels transfer as an owned asset. With a lease or PPA, the contract is tied to the home: your buyer usually has to qualify and assume the agreement, or you buy out the remaining term — an extra step that can slow a sale if the buyer is hesitant about taking on a third-party contract. None of this makes a lease "bad," but it's a real difference worth planning for. We cover the resale angle in do solar panels increase home value in California?

Cali Energy installs owner-bought solar, batteries, and the roofing and electrical work that sometimes comes with them (CSLB #1032379). We're happy to price a system as cash or a loan and show you an itemized number so you can compare it against any lease or PPA you're weighing.