With a monthly lease or PPA, a third party typically owns the system while you pay under the agreement. Compare the payment schedule, service duties and transfer terms before choosing a plan.
Read the Homeowner GuideIn a typical lease or PPA, a third party owns the equipment on your roof.
A lease generally has scheduled payments; a PPA generally charges per kWh produced.
Monitoring, maintenance, insurance and roof work must be checked against the agreement.
A monthly solar lease generally charges a scheduled amount for use of the equipment; a PPA generally charges for electricity generated. A prepaid lease or PPA uses an upfront payment instead of regular solar payments, while a third party initially owns the system. Pricing, guarantees, maintenance and later ownership depend on the signed contract.
Explore prepaid solar plans and the questions to ask before signing
| Topic | Monthly lease | Monthly PPA | Prepaid lease / PPA | Purchase |
|---|---|---|---|---|
| Typical payment | Scheduled lease amount | Price per generated kWh | Agreed upfront amount; check other fees | Cash or loan |
| Initial equipment owner | Third party | Third party | Third party | Homeowner |
| SREC-II allocation | Check contract and ADI registration | Check contract and ADI registration | Check contract and ADI registration | Check owner registration |
| Home sale | Transfer, prepay or buyout may apply | Transfer, prepay or buyout may apply | Transfer or purchase terms vary | Equipment/loan handled in sale |
An annual escalator compounds. The guide's example of a PPA starting at $0.12/kWh with a 2.9% annual escalator reaches roughly $0.1552/kWh in year 10 and $0.2383/kWh in year 25. This is arithmetic, not a utility-rate prediction. Request the exact 25-year schedule and compare with the current utility tariff and conservative production assumptions. NJ bill-credit context
State SREC-IIs are tracked under SuSI/ADI; the contract and registration should say who receives them. The May 2026 NJBPU order set the residential ADI value at $77/MWh for registrations on or after July 27, 2026, but a lessee cannot assume that income flows to them. NJBPU ADI order · ADI FAQs
Business owners may evaluate the federal Section 48E credit subject to current rules; a homeowner on a lease cannot claim the business-owner credit merely because panels sit on their roof. The homeowner Section 25D credit is unavailable for property installed after December 31, 2025. IRS business credit · IRS homeowner credit expiration
Ask about buyer qualification, transfer timing, fees, prepayment, buyout formula and any property filings. Check who pays to remove and reinstall panels for roof replacement, what happens after storm damage, and what warranties survive a transfer. These are agreement-specific—not requirements that can be inferred from a proposal.
Review the exact agreement and compare cash purchase, financing, lease and PPA using consistent assumptions. Legal, tax and financial advisers can help with contract-specific questions.
Understand how solar leases work, typical agreement structures, payments, system ownership and questions to ask before signing.
Read guide
Compare upfront costs, payments, ownership, maintenance, incentives and long-term considerations.
Read guide
Understand transfer, buyout and ownership considerations before selling a home with a leased or prepaid solar system.
Read guide