How much is a solar lease per month?

Monthly cost of a solar lease

Solar lease payments range from $150 to $200 per month on a standard 25-year agreement. Your actual monthly costs can vary depending on a few factors, including the system size and your energy needs, according to Landon Wimmer, CEO and owner of Empower Home Services.

In most cases, the lease payment is below the utility's average electricity cost. “Typically, I see a 20% to 40% savings [compared to previous utility bills],” Mark Licon, sales manager at Sunlogix Energy, said. However, these savings vary by location, with leasing making less financial sense in areas with already low utility rates.

Your system size impacts your monthly payment. Larger homes with higher energy demands require more panels, resulting in higher lease costs. Lease prices also vary between providers, so comparing quotes from several local ones is essential.

Pro tip

While reputable providers don’t charge hidden fees, watch for annual escalation clauses in your contract. “Some leases include a fixed annual increase, often around 3%,” Wimmer noted. Robin Saidov, owner of Your Energy Footprint, cautions that these escalators “can drive your rate up at a faster pace than your utility,” potentially eliminating savings over time.

» EXPLORE: Where solar savings go the furthest

Factors affecting solar lease pricing

Multiple factors influence how much you’ll pay for a solar lease each month:

• Credit score: Most leasing companies require a minimum FICO score of 650 to qualify.
• Home condition: Added roofing costs, electrical upgrade [fees] and conduit runs impact pricing, according to Licon. If your roof needs replacement or your electrical panel requires upgrading, you may roll these costs into your lease.
• System size and energy needs: The more electricity your household consumes, the larger the system you’ll need. This results in higher monthly payments.
• Tax incentives: While you don’t directly receive tax benefits with a lease, companies often pass some savings to you through lower rates. “The leasing company gets the tax credits … but this means they’re able to offer lower rates to the customers,” explained Wimmer.

Look out for solar scams

Be cautious of door-to-door salespeople offering seemingly low rates. “They tend to jack up the price of solar leases because there’s a huge commission attached to it,” warned Licon. “They use escalators to reduce the overall payment but the payment increases 2.99% to 3.5% year over year.”

» WATCH OUT: Popular solar scams

Is leasing solar panels worth it?

Leasing solar panels can be worth it for homeowners seeking immediate energy savings without the high upfront investment of buying a system. Whether a lease makes sense for you, though, depends on your situation and priorities. Homeowners enjoy the following benefits when leasing solar panels.

• Maintenance-free: “There’s very little the homeowner has to do [for] maintenance, service and insurance,” Wimmer pointed out. The leasing company takes care of these.
• No upfront costs: Get solar installed with little to no money down and start saving right away on your electricity bills.
• Performance guarantees: Most leases include production guarantees that provide rebates if your system underperforms. If the system fails to generate the expected amount of electricity, the leasing company will pay you back for each kilowatt-hour (kWh), Licon explained.
• Predictable payments: Your lease payment remains stable (or increases at a predetermined rate). This can protect you from utility rate hikes.

Wimmer shares a recent solar lease success story with ConsumerAffairs: A California customer with a 2,500-square-foot home paid $500 to $1,100 monthly in electric bills before solar. “With their lease, they now pay $300 monthly plus a $50 supplemental bill,” he said. They’re saving $200 to $750 each month, with immediate returns, instead of waiting 10 years for ROI.

» LEARN: What is solar panel ROI?

Potential disadvantages of solar leases 

You should also be familiar with the potential drawbacks before committing.

• Company stability concerns: If your leasing company goes out of business, Licon cautions that “the terms may change with the new bank or you may get no service at all.” In this case, you could be stuck paying for a malfunctioning system and paying the utility.
• Home sale complications: “It may be harder to sell your home as buyers [hesitate] to assume the lease,” noted Saidov. On the other hand, owning solar outright could increase your home’s value. This is worth considering if you plan to sell your home soon.
• Limited flexibility: You can’t easily modify the system as your energy needs change. Instead, you’re dependent on the leasing company for any maintenance or adjustments.
• Lower long-term savings: While you’ll save immediately, purchasing panels often yields greater lifetime savings. Saidov warns that with lease escalators, “you’re likely to overpay for your utilities down the road.”

Comparing solar leases with other financing options

Solar leases are a good choice for homeowners who want predictable monthly payments, minimal maintenance and don’t need tax incentives. But that’s just one of several ways to pay for your solar system. Here are others you may want to consider based on your financial situation, tax status and long-term plans.

• Cash purchase: “Purchasing solar panels will give you a much better likelihood of getting a positive return on your investment if you plan to stay in your home for more than 10 years,” Saidov advised. By buying your system outright, you eliminate financing costs. The downside is that it requires substantial upfront investment.
  • Best for: Homeowners prioritizing maximum lifetime savings and complete ownership.
• Power Purchase Agreements (PPAs): “A PPA features fluctuating payments tied to actual monthly solar output,” Wimmer explained.
  • Best for: Homeowners who prefer not to take on more debt, want to avoid maintenance responsibilities and are primarily focused on immediate savings rather than ownership benefits may go the PPA route.
• Solar loans: Loans provide ownership benefits and let you claim valuable federal tax credits and local solar incentives. They also increase your debt-to-income ratio.
  • Best for: Homeowners with strong credit and sufficient tax liability to use the credits get the most out of solar loans.

Pros and cons of solar financing

Each financing option comes with advantages and disadvantages to think about.

» MORE: Solar leases vs. solar PPAs