Solar Financing in 2026: Cash, Loan, Lease or PPA

There are four common ways to pay for home solar: buy it with cash, buy it with a loan, lease it, or sign a power purchase agreement (PPA). A fifth, the prepaid PPA, lets you pay once up front while the company owns and maintains the system. They put the same panels on your roof. What differs is how you pay, which incentives work for you, and how much you save over the next 25 years. Evergreen Solar offers all five, so we can price them side by side on the same system for your home.

This guide is for homeowners in Massachusetts, Rhode Island, Connecticut, New Jersey and Pennsylvania who are comparing offers in 2026. It covers the incentives you can use today, how each option works, and the questions that sort a good deal from an expensive one.

What solar incentives can you use in 2026?

Solar in the Northeast is backed by several programs at once, and which ones you collect depends on how you pay. Here is what is available today.

• Net metering credits the extra power your panels send to the grid on your utility bill. You keep it however you pay.
• Massachusetts SMART 3.0 pays the system owner $0.03 per kilowatt-hour for up to 20 years for systems enrolled in 2026, or $0.06 for income-eligible households, on top of net metering.
• State tax credits and exemptions help owners: Massachusetts gives a 15% state income tax credit up to $1,000 and a 20-year property tax exemption.
• Rhode Island’s Renewable Energy Fund grant paid owners $1.65 per watt, up to $14,500, in its 2026 rounds.
• The federal 30% investment credit lowers the rate you pay on a lease, PPA or prepaid PPA, because those systems qualify for it. Bonuses for energy communities and U.S.-made equipment can make the discount bigger. Systems that begin construction after July 4, 2026 must be in service by December 31, 2027.

For the full list, state by state, see our guide to the 2026 solar incentive landscape.

How do the ways to pay for solar compare?

Here is how each option stacks up on the points homeowners ask about most. The details for each follow below.

The pattern is simple. Owning puts the upfront cost and the long-term savings on your side. A lease or PPA takes the upfront cost and upkeep off your plate and gives you a discounted rate from day one. Neither is right for every home. The best choice depends on your cash, your taxes, how long you plan to stay, and how much you want to manage the equipment yourself.

Is paying cash for solar still worth it?

Paying cash produces the largest return over the life of the system, because you keep all of the bill savings and every state incentive, and you pay no interest. One thing has changed: the federal homeowner credit applied only to systems installed by December 31, 2025, so a cash buyer’s return now comes from bill savings and state programs. If a federal credit matters to you, a prepaid PPA is the way to capture it with a single upfront payment.

The price itself depends on your roof, your equipment and how much power you use, so compare quotes on the same system size and the same equipment before comparing payment options.

Massachusetts owners can still claim:

• SMART 3.0 payments of $0.03 per kilowatt-hour for 20 years for systems enrolled in 2026, or $0.06 for income-eligible households, paid on top of net metering. Here’s how SMART 3.0 works.
• A state income tax credit of 15% of the cost, up to $1,000.
• A 20-year property tax exemption, so the added home value doesn’t raise your tax bill.

Rhode Island owners may qualify for the state’s Renewable Energy Fund grant, which paid $1.65 per watt up to $14,500 in its 2026 rounds. The details for each state are on our Massachusetts and Rhode Island incentive pages.

How do solar loans work?

A solar loan lets you own the system without the lump sum. You get the same ownership benefits as a cash buyer, and you pay the lender over a set term, often 10 to 25 years. When the loan payment is lower than the bill savings, you come out ahead from the first month.

The loan you pick matters as much as the system. Compare these points on every offer:

• The annual percentage rate, not just the interest rate. The APR includes fees, so it shows the real cost.
• Dealer fees. Some solar loans advertise a very low rate and add a fee to the price of the system to pay for it. You pay that fee whether you notice it or not. Ask for the cash price and the financed price of the same system. The difference is the cost of the loan.
• Re-amortization terms. Some solar loans assume you will put a lump sum toward the balance in the first 18 months, and the payment jumps if you don’t. Make sure the payment you are quoted is the payment you will keep.
• Liens and prepayment. Ask whether the loan places a lien on the home or a filing on the equipment, and whether you can pay it off early without a penalty.

A home equity loan or line of credit is another way to borrow. It often has a lower rate, but it uses your house as collateral, so weigh that before you choose it. Two state programs people ask about don’t help here: the Mass Solar Loan closed to new applications in December 2020, and the Mass Save HEAT Loan doesn’t cover solar panels.

Go deeper with how to compare solar loan rates, terms and dealer fees, the loan programs open in Massachusetts and Connecticut, and the credit score solar financing looks for.

How does a solar lease work?

With a lease, a company installs and owns the panels on your roof, and you pay a fixed monthly amount to use them. You keep the electricity they make, so your utility bill drops. The lease payment replaces part of what you used to pay the utility.

The company handles monitoring, maintenance and repairs. Because the system qualifies for the federal credit and state incentives, your lease payment is discounted to reflect them. A lease is typically 20 to 25 years. Some leases stay flat and some rise each year, so read the payment schedule and check the escalator in the contract before you sign.

Before you sign, ask what the lease payment will be in year one and in the final year, what production the company guarantees, and what it pays you if the system falls short. A good lease answers all three in writing.

Leasing makes sense when you want a lower bill from day one without debt or upkeep, with the value of the federal credit built into a lower payment. Owning can earn more over 25 years if you can pay or borrow at a fair cost. Our older guide, is it better to buy or lease solar panels, walks through the trade-off with an example, and leasing vs. buying vs. a PPA lays the three side by side. To see how the federal credit reaches a lease payment, read do you get a tax credit if you lease solar panels. Choosing between the two company-owned options? See how a solar lease compares with a PPA.

What is a PPA, and what is a prepaid PPA?

A power purchase agreement is like a lease, except you pay for the electricity the panels produce instead of a fixed monthly amount. The company owns the system, and you buy its power at a set rate per kilowatt-hour, usually below what the utility charges. In sunny months you pay more because the system makes more, and in winter you pay less.

A prepaid PPA flips the payments. You pay up front for the electricity the system is expected to make over the whole agreement, often 25 years, and then you have no monthly solar bill. The company still owns the panels and maintains them. Because the system qualifies for the 30% federal credit, the prepaid price is discounted, so a prepaid PPA can cost less up front than buying the same system outright in 2026.

Owner incentives such as SMART 3.0 and the state tax credit are built into that price rather than paid to you directly. If you are comparing a prepaid PPA with a cash purchase, put the two prices side by side with the incentives each option keeps.

We cover each in more depth in what a solar PPA is and how it works and how prepaid PPAs and leases work, including the option to buy the system after five years.

Offers for “free solar” are almost always a lease or PPA with no upfront cost. We explain what to watch for in free solar panels: scam or legit.

What do the incentives get you with each option?

Every option puts incentives to work for you. Own the system, and they come to you directly. Lease it or sign a PPA, and they come to you as a discounted rate.

The federal bonuses are worth understanding if you are leaning toward a lease or PPA. A system in a federal energy community qualifies for 10 extra percentage points of credit, and a system built with enough U.S.-made parts can qualify for another 10. That extra value often means a lower payment for you. Here’s how energy communities work, or check your ZIP code with our energy community lookup.

Net metering works for you either way. The credits for extra power your panels send to the grid land on your utility bill with every option.

What happens to solar when you sell your home?

Owned solar transfers with the house like a furnace or a roof. If you financed it, you pay off the loan at closing or, with some lenders, the buyer assumes it. Buyers can see exactly what the system saves, which helps the listing.

A lease or PPA is a contract the buyer has to take over. Most companies let a qualified buyer assume it after a credit check, and you can usually buy out the remaining term instead. Transfers go smoothly when you start early, so ask the company for the transfer paperwork as soon as you list. Our guide to selling a house with solar panels walks through each case step by step, and buying a house with solar panels covers the other side of the deal.

How do you choose the right way to pay?

Work through these questions in order. The answers usually point to one option.

1. Can you pay cash, or borrow at a fair rate with no dealer fee? If yes, owning earns the most over 25 years.
2. Can you use state incentives? The Massachusetts tax credit needs state income tax to offset. SMART 3.0 and property tax exemptions only help owners.
3. Do you want zero upfront cost and no maintenance? A lease or PPA gives you a lower bill without debt or repairs.
4. Do you want ownership-like savings with less cash? Compare a prepaid PPA with a cash purchase on the same system.
5. How long will you stay? Longer stays favor owning. Shorter stays favor a contract the buyer can assume.
6. Is the deadline a factor? The discounted rate on a lease or PPA depends on the federal credit, which applies to systems in service by December 31, 2027. Ask how the company plans to meet that date.

If your roof is due for replacement, the timing matters too. With our solar + roof program, the new roof is included with your solar installation at a reduced price. Here’s how the roof + solar package works.

Whatever you choose, compare offers on the total cost over the full contract, not the monthly number. A lower payment can hide a longer term, a rising escalator or a fee built into the price.

Frequently asked questions