PPA, lease, or own? The 25-year math.

The three structures, explained

There are three fundamentally different ways to put solar on your home, and they're often conflated in marketing. Understanding the distinction matters because the long-term economics are wildly different.

Ownership (cash or financed)

You own the solar system. You either pay cash for it or finance it through a loan (Propel, traditional bank loan, etc.). The system is your asset, included in your home's value, and any benefit from the panels accrues to you. After the loan is paid off (or from day one in a cash purchase), the electricity is essentially free for the remaining 15 to 20 years of system life.

Power Purchase Agreement (PPA)

A third party (typically Sunrun, SunPower, or another large solar provider) installs panels on your roof, retains permanent ownership of the system, and sells you the electricity it produces at a per-kWh rate. You sign a contract, typically 20 or 25 years, agreeing to buy whatever the panels produce. You never own the system.

Solar lease

Structurally similar to a PPA, but you pay a fixed monthly rental fee for the panels instead of paying per-kWh for the electricity. You still never own the system, and you still sign a 20 to 25 year contract.

Why ownership beats PPA and lease over 25 years

Three structural reasons ownership produces better long-term economics than third-party-owned structures:

First, you capture incentives instead of the company. Under a PPA or lease, the third party owns the system and claims all available tax credits, depreciation, and other incentives. Under ownership (especially through Propel Financing), much of that incentive value comes back to you as a lower system price.

Second, your payment doesn't escalate. Standard PPA and lease contracts include a 2 to 3% annual price escalator, your payment increases every year for 25 years. Propel and traditional ownership financing have fixed payments that don't escalate. Over 25 years, that compounding difference adds up to tens of thousands of dollars.

Third, you own an asset. A paid-off solar system is a real asset that adds to home value. A PPA contract is the opposite, many buyers see it as a liability and the contract complicates home sales. The Department of Energy's research on solar home values documents the consistent home value premium associated with owned solar systems.

How PPAs actually work (the fine print)

The standard PPA contract is long and worth reading carefully if you're considering one. Key clauses to understand:

• Term length: Usually 20 or 25 years, with some contracts requiring continuous service through the term
• Per-kWh rate: The price you pay per kWh produced. Often starts below current utility rate but escalates over time
• Annual escalator: Typically 2.9% per year compounded. A $0.15/kWh starting rate becomes $0.30/kWh by year 25
• Production guarantee: Some PPAs guarantee minimum production; many don't
• Removal at end of term: What happens to the panels at the end of the contract, usually you can extend, purchase the system at fair market value, or have the company remove them
• Transfer provisions: What happens if you sell the home before the contract ends, generally the buyer must qualify and accept the contract, or you must buy out the remaining term

The Federal Trade Commission's consumer protection resources include guidance on evaluating long-term service contracts, and the principles apply directly to solar PPAs.

The escalator problem in detail

Annual escalators are the single biggest reason PPAs and leases underperform ownership over 25 years. The math is straightforward but counterintuitive, most homeowners don't think in compounding terms.

Consider a hypothetical PPA at $0.18/kWh starting rate with a 2.9% annual escalator:

• Year 1: $0.18/kWh
• Year 5: $0.20/kWh
• Year 10: $0.24/kWh
• Year 15: $0.27/kWh
• Year 20: $0.32/kWh
• Year 25: $0.37/kWh

By the end of the contract, you're paying more than double the year-1 rate for the same electricity from the same panels. Meanwhile, the panels themselves have already paid for themselves in incentive value to the PPA company, and the company has been collecting your monthly payments the whole time.

Compare to Propel Financing: fixed payment in year 1 equals fixed payment in year 25. No escalator. After year 25, the loan is paid off and the system has 15 to 20 more years of free electricity production.

Home resale impact

Owned solar systems consistently add value to homes. Studies from Lawrence Berkeley National Laboratory and other research institutions have documented home value premiums of $10,000 to $25,000 for owned solar installations, depending on system size and local market conditions.

PPA and lease systems often have the opposite effect. The contract is a liability the buyer has to accept, and many buyers (and their lenders) are uncomfortable with it. Realtor surveys in California have found that PPA-encumbered homes typically take longer to sell and sometimes require a price reduction to close.

Practical implication: if you're planning to stay in your home for 10+ years, ownership is almost always better. If you're planning to sell within 5 years and just want immediate monthly utility savings without long-term commitment, the calculus can shift, but even then, Propel-financed ownership often beats a PPA because of the larger savings and resale value benefit.

The 25-year head-to-head

Common comparison questions