Solar Lease vs PPA: Which Is Right for Your Home

Cost side by side

The Department of Energy describes the two plainly: lease payments are fixed and "calculated using the estimated amount of electricity the system will produce," while a PPA customer buys "the power generated by the system at a set price per kilowatt-hour." Neither customer owns the system, so neither gets its tax benefits.

That makes a fair cost comparison simple: convert the lease into a price per kWh. Divide twelve months of lease payments by the first-year production estimate on the proposal.

Now you have a number you can set beside the PPA rate and beside your utility’s rate.

If a lease works out to more per kWh than the PPA on the same roof, you are paying extra for nothing except a predictable bill.

Both may let you prepay. Sunrun’s 2025 annual report says some customers "prepay an amount upfront, thereby reducing their monthly bill" (see prepaid vs monthly lease).

Savings over 25 years

Your saving under either contract is the utility cost you avoid minus what you pay the provider. Two things move that gap over 25 years: the escalator in your contract and the rate your utility charges.

The CFPB reports PPA escalators of 1 to 5 percent a year. At 1 percent, a payment ends the 25th year about 27 percent above where it started; at 5 percent, about 3.2 times higher. Those are compounding arithmetic, not forecasts.

For comparison, the U.S. Energy Information Administration puts the average residential price at 18.31 cents/kWh in July 2026, up from 17.45 cents a year earlier. One year is not a trend, so test your contract against a few utility-rate paths in the escalator calculator rather than trusting a projection in a sales deck.

The production risk is the other half. On a lease, a shaded or underperforming system still costs the full payment; your protection is the performance guarantee, which Sunrun describes as a refund for underproduction "below a guaranteed amount."

On a PPA, fewer kWh simply means a smaller bill, but also less avoided utility cost. Either way, check the guaranteed production figure is not inflated; underproduction explains how.

Under export rules that pay less than retail for surplus power (see net metering vs net billing), a PPA can bill you full price for kWh your utility then credits you little for. Ask how exported kWh are counted.