Is Solar Leasing Your Worst Option For Going Solar?

  • Published on February 9th, 2014 by

Yesterday, I wrote an article about EnergySage’s new Instant Solar Estimate tool. The tool uses proprietary market price data and “the industry’s leading tools and databases” to deliver pretty awesome solar cost and solar savings reports. One thing it does that I haven’t seen elsewhere is that it compares the financial benefit of going solar through a cash purchase, a $0-down solar loan, and a $0-down lease or PPA (where these are available). If you checked out the example screenshot shared in the article, you probably saw that solar leasing was really lame on this metric. The 20-year savings (for “Anytown, USA”) were:

  • Cash purchase = $23,000
  • $0-down loan = $9,900
  • $0-down lease/PPA = $2,700

Yikes, $2,700 vs $9,900?

Of course, that’s just one scenario, and it seems that it’s not even for a real home. So, I decided to run some estimates for real addresses in various states where solar leasing exists in order to see what other estimates would show. I had to make a “best guess” for the electric bills, so don’t take any of this as fact (well, don’t take any such estimates as fact), but enjoy the interesting findings I came up with:

1. San Jose, California

(Address: 286 N 24th St, San Jose, CA 95116 | Monthly electric bill: $150)

In this case, solar leasing actually beat the $0-down solar loan:

San Jose solar

2. San Diego, California

(Address: 3802 Monroe Avenue, San Diego, CA 92116 | Monthly electric bill: $50)

Here, the $0-down solar loan inches out the solar lease:

San Diego solar

3. Phoenix, Arizona

(Address: 1019 East Hiddenview Drive, Phoenix, AZ 85048 | Monthly electric bill: $300)

The $0-down loan ends up losing you money, while the lease saves you $12,000!

Phoenix solar

4. Colorado Springs, Colorado

(Address: 7425 Julynn Road, Colorado Springs, CO 80919 | Monthly electric bill: $150)

Again, the lease wins (not counting the cash purchase, of course, which crushes it):

Colorado Springs Colorado solar

5. Boston, Massachusetts

(Address: 37 Edison Green, Boston, MA 02125 | Monthly electric bill: $125)

Here, the $0-down loan crushes it:

Boston solar

6. Baltimore, Maryland

(Address: 4408 Eldone Road, Baltimore, MD 21229 | Monthly electric bill: $125)

Neck and neck:

Baltimore solar

7. Newark, New Jersey

(Address: 541 Clinton Avenue, Newark, NJ 07108 | Monthly electric bill: $120)

$0-down solar loan is twice as good as solar lease over 20 years:

Newark solar

8. Tacoma, Washington

(Address: 3712 North Frace Street, Tacoma, WA 98407 | Monthly electric bill: $150)

The $0-down solar loan bombs, but the solar lease saves you money:

tacoma solar

9. Honolulu, Hawaii

(Address: 456 Mananai Place, Honolulu, HI 96818 | Monthly electric bill: $200)

$0-down solar loan beats solar lease, but both completely crush not going solar:

Hawaii solar

10. Albany, New York

(Address: 28 Lawnridge Avenue, Albany, NY 12208 | Monthly electric bill: $200)

$0-down solar loan wins again:

albany solar loan

Solar Leasing vs Solar Loan vs Solar Cash Conclusions

So, in my somewhat random selection of addresses, and using the best estimates for electric bills I could come up with*, it turns out that solar leasing and the $0-down solar loan option actually tied (5 to 5) for the # of times that they were the better option! Interesting, and I have to say that I wouldn’t have guessed it. Also, there was huge variation in some cases, while they were very similar in other cases.

In all the cases, you can clearly see that a cash purchase gives you the best return — that’s a given. The key questions with that option would be: 1) do you have the money for a cash purchase, and 2) where else would you potentially invest or spend that money if you didn’t use it to buy a solar system and leased or got a loan instead.

Of course, financial savings aren’t the only matter to take into consideration. Solar leasing/PPA contracts also often take care of maintenance, monitoring, and almost all the paperwork of going solar (including tax stuff). Also, the EnergySage tool assumes you can take advantage of incentives in your state. However, if your financial situation doesn’t allow that for some reason, a solar leasing/PPA company still could and could pass on those financial benefits (minus profit and company costs).

In the end, though, I think the EnergySage tool shows one thing very clearly: there can be huge financial variation using different financing options. The best thing to do is to look at all of your options, get actual quotes from different installers, and then go solar in the way that best works for you. There’s no simple solution that’s best for everyone.

*I searched out average electric bills in each city except one and then in each of those cities found homes for sale that were a similar size as the homes for which I found average electric bills.

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About the Author

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy since 2009. Aside from his work on CleanTechnica and Planetsave, he's the founder and director of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to and click on the relevant buttons.
  • Edmund Shadman

    Most of these figures are way off.. How does a $150 electric bill have a $700 monthly loan payment and a net cost of $87,000..? Your inputs are either off or the site your using is flawed. A system that cost that much is about 18 KW and $150 electric bill only needs about 4 KW to offset 100% of it’s power bill. This system is producing 4 times the amount of electricity that’s being used. Also looks the the tool isn’t accounting for reamortization. When you get a solar loan, you get a tax credit and when you apply that tax credit to your loan, it reamortizes and 9 times out of 10 drops the payment is well bellow the current electric bill. The interface looks nice but the data is off. Let me know if you want and I’ll run you some numbers based on a functional financial analysis tool.

  • Nathan

    To be accurate you’d have to also work out how much the person would make by investing the difference in say the stock market or similar.

  • Ray Boggs

    These comparisons are skewed for a couple of important reasons.

    1. Both $0 down FHA Title 1 solar loans and PACE $0 down financing offer tax deductible interest. Solar leases and PPAs do not. This fact alone can make a big different when comparing payback.

    2. These comparisons do not reveal the pricing for a purchased system. Today, sub $3.00 per watt installed, before incentive pricing is readily available. If this comparison is using average system pricing which is heavily influenced by the much higher pricing that is offered by the solar lease and PPA companies which currently dominates the market, then it’s an unfair comparison.

    Plug in tax deductible interest and real market purchase pricing and re-run the numbers. I’ll you bet results are far different, and will tilt far more in favor of loans versus leasing.

    • Reposting:

      I wouldn’t jump to the conclusion that EnergySage isn’t including these things. They are including a large number of variables behind the simple output screen, and aren’t tied to solar leasing companies. But you’d have to check with EnergySage to be sure.

      That said, this wasn’t including PACE at all, as that option has been a bit limited for years.

  • TJC2

    Most of the leasing companies assume in their projections that power prices will increase 4.8% per year for the next 20 years. Power prices have in fact increased 2.1%/year over the past 20 years. The reason for this high inflation assumption is to make the leases (with their own 2.9%/year escalators) look better. If electricity prices increased 4.8%/year for even 5 years straight there would be such pushback from business and consumers that all the responsible politicians would be gone… you decide if these are valid numbers.

    • Something I need to look in more, but I do know there are a lot of old power plants set to retire (old power plants provide much cheaper electricity than new power plants) and tremendous need to improve grid transmission and other technology. This stuff isn’t cheap.

    • Richard Ilaner

      Why pay a huge amount like $1000’s for utilization of solar or wind power when you can have the opportunity to build your own home made solar system for less than $200. You can Learn more on