Buying vs. Leasing Solar: The PPA Trap
Door-to-door sales reps love to pitch 'Free Solar'. It's called a PPA, and it can lower your home's value and scare away buyers. Always Buy if you can.
The Hierarchy of Ownership
When going solar, there are three ways to pay:
- Cash Purchase: You pay $20k. You own it. ROI is 5-7 years. (Best).
- Solar Loan: You borrow $20k. You own it. You pay interest. ROI is 8-10 years. (Good).
- Lease / PPA (Power Purchase Agreement): The Company owns the system. You just buy the power. (Dangerous).
The "Free Solar" Pitch (PPA)
The rep says: "We install it for free ($0 down). You just pay us for electricity at a rate of $0.15/kWh, which is cheaper than the Utility ($0.20/kWh)." It sounds flawless. You save money immediately with zero risk.
The Hidden traps
- The Escalator: Most PPAs have a 2.9% annual price increase. In Year 1, it's cheap. In Year 15, you might be paying more than the utility rate.
- The Tax Credit: The 30% Federal ITC (Investment Tax Credit) goes to the Owner of the system. In a PPA, the Solar Company keeps the thousands of dollars of tax credits generated by your roof.
- The Sale Killer: This is the big one. When you try to sell your house, the buyer must agree to take over your PPA contract. Many buyers hate this. They don't want to qualify for your solar lease. They don't want a lien on the equipment. Real Estate Agents often have to ask sellers to buy out the lease (costing $20k+) just to close the sale of the house.
Why Do People Sign PPAs?
Because they don't have tax liability (retired, low income) to use the 30% credit, or they are terrified of maintenance. Note: Solar maintenance is near zero. This fear is oversold.
2026 Advice
Own the system. If you can't pay cash, get a HELOC or a Solar Loan (Credit Unions have great rates). Even with 7% interest, owning the asset is better than renting your roof to a corporation for 25 years. You keep the Tax Credit. You keep the Home Value Increase (Solar adds ~4% to home value, only if owned).
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