Solar PPA vs Lease vs Buy

The Pros & Cons Of Each

When it comes to going solar in San Diego, there are several ways to get the job done.

While the passage of HR1 (The One Big Beautiful Bill) on December 31, 2025, terminated traditional federal solar tax credits, Jamar Power Systems has developed new pathways to ensure you still maximize your savings.

Whether you choose a traditional purchase or our new Energy Savings Agreement (ESA), we have the expertise to guide you to the right financial choice for your home.

Solar PPA (power purchase agreement)

The solar PPA company pays for the system, installs it, and connects it to the home and utility company.

The homeowner gets solar energy at a stated fixed price per kilowatt-hour (kWh) for a stated amount of time.

The PPA’s price per kWh amount should be less than what you’re currently paying for utility company electricity.

For more information, see our Solar PPA article or visit the EPA’s website on solar power purchase agreements.

Leasing Solar Panels

The solar leasing company pays for the system, installs it, and connects it to the home and utility company.

In a solar lease, the homeowner is renting the solar energy equipment for a fixed monthly payment.

In exchange, the homeowner receives all electricity the system produces. 

The solar lease payment should be less than the homeowners current average electric utility bill, so savings starts on day one.

What’s the difference between a solar lease and PPA?

Tthey both allow you to go solar for $0 down. In the past, these were popular for homeowners who couldn’t use tax credits. Today, they have been evolved into a much better model.

How a Solar Lease Works

With a traditional lease, you pay a fixed monthly “rent” to use the solar equipment. Because federal tax credits are no longer available to homeowners under HR1, the leasing company uses specialized commercial incentives to keep your payments low.

How a Solar PPA Works

With a PPA, you don’t pay for the equipment; you pay for the power it produces at a set rate per kilowatt-hour (kWh), which is lower than the utility’s rate.

The New Standard: The Energy Savings Agreement (ESA)

At Jamar, we have moved beyond the “forever lease.” Our Energy Savings Agreement (ESA) is a “prepaid-style” transitional ownership model.

The 40% Advantage: We leverage specialized incentives to reduce your system cost by up to 40%.

Ownership in 5 Years: Unlike a 25-year lease, our ESA automatically transfers full ownership of the Enphase equipment to you after just 5 years.

Pre-Paid Solar Lease

The solar pre-paid lease usually requires a $1,000 down payment, and then a single payment after installation and the system is operating with no more payments due after that.

The pre-paid solar lease has all the same features as a standard solar lease except the payment structure.

The pre-paid solar lease will generate the MOST SAVINGS for its term of years than any other type of solar lease or PPA.

Only a buying a system produces greater savings than a pre-paid lease over the same number of years, and even then it depends on the financing instrument of the purchase.

The pre-paid solar lease can be the perfect choice for a recently retired couple whose income is non-taxable, which prevents them from using the solar tax credit, but they would still like to significantly reduce their electricity costs over the next 20 to 25 years. 

The pre-paid solar lease usually provides people with non-taxable income with the most significant savings potential of all solar financing choices.

Solar Loan

With the expiration of federal solar tax credits, the specialized “solar loan” products of the past have been phased out.

Today, homeowners are successfully utilizing traditional financing paths—specifically Home Equity Loans and Home Equity Lines of Credit (HELOCs)—to secure their energy independence.

These options make owning your solar power system more accessible than ever.

With the same ease of entry as a lease or PPA, you can own your system outright, which typically results in the most significant long-term savings.

Full Ownership: When your home equity loan or HELOC is paid in full, you own the system free and clear. From that point on, all the electricity it produces is 100% free!

40+ Year Lifespan: High-quality solar power systems are designed to last 40+ years, providing decades of value.

Maximum Flexibility: Owning your system provides the most significant financial return over time and offers the most flexibility when it comes time to sell your property.

Simplified Process: Since the termination of federal tax credits by HR1, you no longer have to worry about complex tax filings or “bridging” a refund. Your investment is straightforward and built into your home’s equity.

Solar loan on property taxes (PACE loans)

In California and some other states, some counties have made “property assessed clean energy (PACE)” loans available.

PACE loans apply the loan and interest to your property taxes. These are public-private financing collaborations.

These PACE loans are easier to qualify for because they usually don’t take customer FICO scores into account. Instead, these PACE loans are based primarily on the available equity in the property.

Most PACE loans only credit requirements are home equity, no bankruptcy in the last two or three years, and no missed mortgage payments over the previous two or three years.

Of course, these PACE loans have higher costs than solar loans or home equity loans, which have additional credit qualifying.

Buying Solar with Cash

Not too many systems get paid with money from checking or savings accounts, but if you’ve got it, solar power puts it to good use.

Investing money in a solar power system for your home or business usually comes with excellent double-digit returns on investment (ROI).

The majority of cash deals in solar usually involve the funds coming from a home equity loan or line of credit.*

*Note that these two options usually provide the lowest cost financing options for purchasing.

Comparisons of Solar PPA, Lease, and Loan

Choose Your Power®

Length of the solar contract term

Home equity loan or line of credit = 1 to 30 years, usually have best interest rates, check with your bank or credit union.

PPA = usually 20 to 25 years

Lease = usually 20 to 25 years

Monthly solar payment

Choose Your Power®

Home Equity Loan: The homeowner owns the solar energy system and makes a fixed monthly payment to their bank or credit union.

Since there is no longer a federal tax credit to “bridge,” this is a straightforward, single-payment structure. The amount of energy produced has no impact on the monthly payment.

PPA: The homeowner pays a stated price per kilowatt-hour (kWh) for the electricity produced. The monthly payment usually fluctuates based on exactly how much energy the system produced that month.

Lease: The homeowner pays a fixed and level monthly rental price for the solar equipment. Or in a pre-paid lease, you make a single payment and save 40 percent or more over the life of the lease.

Down payment

Loan = zero, almost all solar loans are zero money down but include an option to put money down to reduce the monthly payment if the customer wishes to do so.

Any down payment will also reduce the total interest paid and produce additional savings to the customer.

PPA = zero, most PPA’s do not require any down payment, though the host customer (you) may have an option to place a down payment to make the monthly payments lower.

Lease = zero, solar leases do not require any down payment, though most do permit that option if the customer wishes to reduce monthly payments and save money over the life of the contract.

Pre-paid lease = usually a $1,000 down payment is required to start the project.

Payment Escalator

A payment escalator is a clause that allows the monthly payment to go up every year, usually at a rate of 2.9% or more.

Home Equity Loan: No. These typically feature fixed monthly payments for the life of the loan.

ESA: No. We do not use escalators in our ESA program.

PPA / Lease: Yes, many traditional contracts include an escalator. We recommend reading these carefully, as they can significantly reduce your long-term savings and complicate a future home sale.

Solar Energy Production Guarantees

Ownership (HELOC/Cash): While the lender provides no production guarantee, your system is fully protected by the Enphase 25-year manufacturer warranties on panels and microinverters.

ESA / PPA / Lease: Includes a guaranteed kilowatt-hour (kWh) production schedule for each year of the contract term. If the system fails to hit these targets, the provider must issue a credit or fix the system.

Annual Energy Production True-Up

An annual “true-up” in a solar energy contract means that annual adjustments must be made to reflect whether or not the solar energy system produced more or less energy than was projected and guaranteed in the contract for that year.

Ownership: Does not apply.

Lease: Yes, these usually include an annual “true-up” or performance adjustment to ensure the system is producing what was guaranteed.

ESA / PPA: Typically not needed if you are paying monthly for actual production, though level-payment PPAs will include an annual adjustment.

Monitoring Energy Performance

Ownership: The homeowner is responsible for monitoring via the Enphase App. Jamar also offers a “Real-time Solar Monitoring & Alert Service” for professional 24/7 oversight.

ESA / PPA / Lease: The finance company monitors the system 24/7 to protect their investment, and the homeowner is also provided with app access to track production and battery health.

We provide a “Real-time Solar Monitoring & Alert Service” to San Diego CA area homeowners who would prefer that solar professionals are watching their system 24/7.

Warranties & Repairs

Ownership: The homeowner is responsible for making warranty claims with manufacturers like Enphase. Jamar assists our customers with these claims and provides repair services throughout San Diego.

ESA / PPA / Lease: The provider is responsible for all maintenance and repairs. Our ESA includes the Platinum Protection Suite, covering everything from performance to roof penetrations.

We also provide solar panel repair service and warranty repairs throughout San Diego County.

Ability to purchase the system later

Loan = you own the system once the loan gets paid in full.

Most solar loans have no pre-payment penalty so you can pay off the amount due and own the solar power system free and clear at any time after it starts.

PPA = most PPA’s include an option for the homeowner to purchase the system after a stated number of years (usually 7+ years for tax credit and depreciation reasons), or at the end of the contract term for either a stated price or an appraised value at the time of desired purchase.

Lease = most leases include the same option-to-buy as the PPA described above.

What happens when you sell your home?

Most solar finance contracts include an option to transfer the agreement to the new buyer of the property (on approved credit) or to purchase the system outright at a value to be appraised at that time.

Loan = must buy out and pay off the loan upon the sale of the home.

PPA = usually includes both qualify to transfer and buy out options, but usually only after 7+ years due to tax credit and depreciation issues. See the contract for details.

Lease = usually includes both qualify to transfer and buy out options, but also usually only after 7+ years due to tax credit and depreciation issues. See the contract for details.

What happens when you refinance your home with a solar lease or PPA?

Loan = usually you must pay off the loan upon any home refinancing.

PPA = contract places a lien against your property and files it with your County Recorder’s Office so you will need written clearance from the solar company to refinance your property loans.

Lease = also places a lien on your property, and the same process as described above for a PPA usually applies.

What credit rating is required?

Home equity loan = usually a FICO score of 640 or higher is required, but it varies widely. Contact your local credit union, bank, or lender. 

Home equity loans are one of the best ways to finance a solar energy system is to take out a home equity loan or line of credit. These are typically there lowest cost loans available.

PACE loan on property taxes = most PACE loans only require home equity, no bankruptcy in the last two or three years, and no missed mortgage payments over the previous two or three years.

ESA / PPA = credit ratings vary but common to see credit scores of 640 or higher needed to get approved for a solar PPA.

Lease = credit ratings vary but common to see credit scores of 640 or higher needed to get approved for a solar lease.

Credit qualifications vary significantly by the finance company, but the FICO scores required usually start from the low 600’s.

Federal Investment Tax Credit (ITC) for Income Taxes

Important Update: Under the regulations of HR1 (The One Big Beautiful Bill), the federal Solar Investment Tax Credit (ITC) officially expired on December 31, 2025.

Previously, homeowners could claim a percentage of their system cost on their federal returns.

In the current 2026 market, those savings have been replaced by proprietary programs like our ESA, where financial partners capture available clean-energy incentives at the corporate level and pass those savings directly to you through lower monthly rates and “pre-paid” style discounts.

Solar Renewable Energy Certificates (SRECs)

Loan = the homeowner receives all federal and state solar renewable energy certificates (SRECs are not currently available in California).

PPA = the PPA company will receive all federal and state solar renewable energy certificates (SRECs are not currently available in California).

Lease = the leasing company will receive all federal and state solar renewable energy certificates (SRECs are not currently available in California).

For more information, see the Environmental Protection Agency (EPA) website on renewable energy certificates.

How To Select A Solar Installer

Now that you know everything you need to make an informed decision about how to finance your solar energy system, the next step is to interview solar companies. We’ve put together a 26-point checklist article on “How to Select a Solar Installer.” 

FREE Solar Analysis

Ready to find your path to independence?

The 2026 Energy Savings Agreement is available for residential solar throughout San Diego County.

Schedule a consultation and free quote directly on our call calendar here.

Or call the Jamar team at (619) 448-7770 to schedule your custom savings analysis.

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