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Solar Financing Comparison Calculator

Compare cash, loan, lease, and PPA options side-by-side. See who gets the ITC, your 25-year net savings, and which option is best for your situation.

System & solar details
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kWh/yr
$/kWh
%/yr
Cash / Loan options
$
%
years
Lease / PPA options
$/mo
%/yr
¢/kWh
%/yr
25-Year Financing Comparison
Best option: Loan — $25,157 net savings
OptionGets ITC?Yr 1 Monthly25yr Net SavingsBreak-even
CashYou+$98/mo+$25,157Yr 13
★ LoanYou+$98/mo+$25,157Yr 13
LeaseProvider$53/mo$-14,997Yr 25
PPAProvider+$8/mo+$5,767Yr 25
ITC amount (30%)$7,500
Utility cost without solar (25yr)$42,657
Loan monthly paymentN/A (full cash)
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Extended AnalysisCash flow, lease/PPA comparison & 25-yr unified table
$
%
$
%
%
years
Cash payback: Month 104 (~Year 9). Loan: Month 135. 25-yr net — Cash: $48,127, Loan: $40,378.
25-year cumulative cash flow: Cash (green) vs Loan (blue dashed)
$-17,350+$0+$24,063+$48,127Yr 1Yr 5Yr 10Yr 15Yr 20Yr 25
Cash purchaseSolar loan
Cash Purchase
Upfront (after ITC)$17,500
ITC value$7,500
25-yr net$48,127
Loan (6.5%, 12yr)
Monthly payment$175
Monthly savings$150
25-yr net$40,378

How to Use This Calculator

Enter your system and utility details

Start with your system cost (full installed price before incentives), expected annual solar production, and current electricity rate. The utility rate escalator matters significantly over 25 years — electricity prices have risen about 3% per year historically. A higher escalator improves all solar options' returns relative to staying on grid-only power.

Fill in each financing option

For Cash/Loan: enter cash available for down payment, loan APR, and term. The calculator models the remaining balance as a loan. For Lease: enter the monthly payment and annual escalator. For PPA: enter the per-kWh rate and escalator. You don't need to use all options — the table shows all four regardless.

Read who gets the ITC

This is the critical distinction most solar salespeople gloss over: for Cash and Loan purchases, you receive the 30% federal ITC directly. For Lease and PPA arrangements, the provider owns the system and claims the ITC — it's built into their pricing. The table shows this clearly for each option. The ITC can be carried forward if you don't owe enough in taxes to use it all in year 1.

The Formula

Annual Utility Avoided = Annual Production × Utility Rate × (1 + Utility Escalator)^(Year-1) Cash Net Cost = System Cost − ITC (30%) Loan Monthly = Principal × r × (1+r)^n / ((1+r)^n − 1) where r = APR/12, n = months Lease Cost Year Y = Monthly Lease × 12 × (1 + Escalator)^(Year-1) PPA Cost Year Y = Annual Production × PPA Rate × (1 + PPA Escalator)^(Year-1) 25yr Net Savings = Sum(Utility Avoided) − Total Payments (option-specific) Break-even Year = Year when cumulative savings exceed cumulative costs

The 25-year comparison period is the standard in solar financial analysis because it matches typical panel warranty periods. After year 25, cash and loan owners have a fully paid-off system generating free electricity — a significant advantage. Lease and PPA agreements typically have 20-25 year terms; at the end you can buy the system, renew, or have panels removed.

Example

The Martinez family — $25,000 system, 9,000 kWh/yr in Texas

The Martinez family is comparing financing options for a $25,000 solar system that will produce 9,000 kWh/year. They pay $0.13/kWh for electricity (3% annual escalator). They're in the 22% tax bracket. Here's their 25-year comparison:

System cost$25,000
Annual production9,000 kWh/yr
Utility rate$0.13/kWh, 3% escalator

Result

Cash (net after 30% ITC)$17,500 upfront → ~$22,500 net savings
Loan (5.5%, 15yr)$163/mo → ~$15,000 net savings
Lease ($150/mo, 2% esc)$150/mo → ~$5,000 net savings
PPA (12¢/kWh, 2.5% esc)~$90/mo → ~$8,000 net savings

Cash wins on 25-year net savings — the combination of no interest paid, receiving the ITC directly, and owning the asset results in the highest total return. The loan is close but interest reduces the advantage. Lease and PPA involve less upfront risk but significantly lower long-term savings, partly because the provider captures the ITC. The Martinez family with $25,000 in savings should choose cash; without savings, the loan is the next best choice.

FAQ

The fundamental difference is ownership. With a solar loan, you own the system — you get the 30% federal tax credit, any state incentives, and the full long-term value of the system (including home resale value increase). With a solar lease, the leasing company owns the panels on your roof — they claim the ITC and other incentives. You pay a fixed monthly fee to use the electricity. Loans offer higher long-term savings; leases offer lower upfront commitment. If you can't use the ITC (insufficient tax liability), a lease may make more sense since the provider values the credit.
A Power Purchase Agreement (PPA) is similar to a lease but you pay per kilowatt-hour generated rather than a fixed monthly fee. With a solar lease, your payment is the same whether it's sunny or cloudy (fixed monthly fee). With a PPA, you pay only for actual production — on cloudy months you pay less. PPAs also typically start below your retail rate and escalate annually. Both lease and PPA providers own the system and keep the ITC. PPAs are more common for commercial projects; leases are more common in residential.
The ITC goes to the system owner. With a lease or PPA, the solar company owns the panels — so they claim the 30% ITC. This is worth $7,500 on a $25,000 system. The leasing company factors this into their pricing, which is why lease and PPA rates are below retail rates. However, the full ITC value typically doesn't flow back to you as the customer — the leasing company captures part of it as profit. If you can use the ITC (you owe at least the credit amount in federal taxes), buying — either cash or loan — maximizes your financial benefit.
Significantly — and the financing type matters greatly. Owned systems (cash or paid-off loan) add approximately $4-6 per watt to home value according to Lawrence Berkeley National Laboratory research, or about $15,000-$25,000 for a typical 5kW system. Leased systems can actually complicate home sales — the buyer must qualify to take over the lease, and some buyers are reluctant. FHA and VA loans have restrictions on homes with leased solar. When selling a home with leased panels, you have options: transfer the lease, buy out the lease, or remove the panels.
At the end of a typical 20-25 year solar lease or PPA, you generally have three options: (1) Renew the agreement — often at lower rates since the equipment is depreciated. (2) Purchase the system — typically at fair market value (often $1-5K for a 20-year-old system). (3) Have panels removed — the company removes the panels at no charge to you. Most homeowners choose to buy the system or renew. The equipment is typically 20-25 years old by this point — still producing 80-85% of original output but may be worth less than a new system purchase.

Related Calculators

💰 Solar MACRS Calculator
Year-by-year depreciation schedule for commercial solar.
📈 Solar ROI Calculator
Internal rate of return and NPV for solar investments.
✅ Solar Tax Credit Calculator
Federal 30% ITC calculation and carryforward.
⏱ Solar Payback Calculator
Simple and discounted payback period calculation.

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