How Does Leasing Solar Panels Work

When you lease solar panels, the provider installs and owns the system while you make a fixed monthly payment for the power it generates. You save on electricity bills without the upfront cost or maintenance, while the provider guarantees performance and handles services. This guide breaks down the terms, benefits and the choices you have when the lease ends. With federal tax credits changing in 2026, leasing is expected to become an even more common option.¹

What is a Solar Panel Lease 

A solar panel lease works like leasing a car. You have a monthly payment which allows you to benefit from the electricity the solar panels produce, while your solar provider installs, owns, and services the system.²

This arrangement makes solar leasing attractive to homeowners who want predictable energy costs, little or no upfront expense and limited responsibility for service work or costs.

Solar Panel Leasing Terms and Considerations

While lease terms vary, most follow a similar structure:

• Contract length: Usually 15–25 years, giving you long-term price stability.³
• Monthly payments: A predictable bill, often with an annual escalator.⁴ An escalator is a provision that increases your payment each year by a set percentage, usually between 0% and 5%. For example, with a 3% annual escalator, a $100 payment in year one becomes $103 in year two, $106 in year three, and so on. The idea is that while your lease cost rises gradually, utility rates and inflation are expected to rise faster, helping preserve savings over time.
• Performance guarantee: Most leases include a contractual promise that your system will operate at a minimum level. This may take the form of an energy guarantee and / or an uptime guarantee. If the system's performance falls below the guarantee, the provider typically refunds or compensates the portion of lease payments tied to the shortfall.
• System ownership: The solar provider, not the homeowner, owns the panels. They install the equipment on your roof and retain responsibility for its performance.²
• Service and maintenance: Because the provider owns the system, they cover all service, repairs, and monitoring for the full lease term.⁴
• End of lease options: At the end of your contract, you can usually renew the lease, purchase the system at fair market value, or have the provider remove it.³

Benefits of Leasing Solar Panels

Leasing solar panels offers several advantages that make it an attractive option for many homeowners. The biggest benefit is that it requires little to no upfront cost, allowing you to access solar energy without a large down payment.⁴ Instead, you pay a predictable monthly fee, which makes it easier to budget and protect yourself against rising utility rates. The provider is responsible for service, monitoring, and repairs throughout the lease term.³

This typically includes a performance guarantee so you know the system will deliver as promised.

What Happens at the End of a Solar Lease?

When your lease expires, you generally have three choices³:

• Purchase – buy the system at fair market value
• Renew – extend your lease on the same or updated terms
• Remove – the provider removes the solar system

What Happens if I Move?

If you move, typically you have two options - transfer the lease to the new homeowner (with provider approval), or buyout the system in advance of the sale.³

Pairing a Solar Lease with Energy Storage

Some providers allow leased solar systems to be paired with batteries like Powerwall. With an energy storage system, you can:

• Store solar power for use at night or during outages
• Avoid peak utility rates
• Increase your energy independence

If your lease doesn’t allow modifications, consider purchasing or financing your system for full flexibility.

Is Leasing Right for You?

You can purchase, finance, or lease a solar system. The best fit depends on your budget and goals, click here for a comparison of payment types.