The real question: do you want to own the system or rent it?
Almost every way of paying for home solar comes down to one decision. Either you own the system, or a third party owns it and you pay them to use it. A lease and a power purchase agreement are both versions of renting. Buying with cash or through a pay-once structure is owning.
That single distinction drives everything else: who keeps the savings, who claims any tax credit, what happens when you sell the house, and who decides how the system is run. Most of the confusion around solar financing disappears once you sort each option into owning or renting.
This is more important in 2026 than it was a year ago. The 30% federal residential credit that homeowners used to claim on a purchase ended for systems paid for after December 31, 2025, and PG&E NEM 3.0 changed how solar pays back. Both changes shift the math, so it is worth understanding what you are actually signing up for.
What is a solar lease?
A solar lease is a fixed monthly payment to use a system someone else owns. You do not buy the panels. A solar company or an investment fund owns the hardware on your roof, usually for a 20 to 25 year term, and you pay a set amount each month for the electricity it produces.
Because the third party owns the equipment, the third party also keeps any tax credits, rebates, and incentives the system earns. Most leases include an annual escalator, commonly in the range of 1.9% to 2.9%, which means the payment you start with rises every year for the life of the contract.
What is a solar PPA, and how is it different from a lease?
A power purchase agreement, or PPA, is the close cousin of a lease. Instead of a fixed monthly payment, you pay a set rate for each kilowatt-hour the system produces, similar to how you pay your utility. A third party still owns the system and still keeps the incentives.
The practical difference is small. With a lease you pay for the system; with a PPA you pay for the power. Both are rental arrangements with a term of roughly 20 to 25 years, both usually carry an annual escalator, and in both cases you do not own the asset on your roof. When people search for the difference between a lease and a PPA, the honest answer is that they behave almost identically for the homeowner.
What about a prepaid lease or prepaid PPA?
A prepaid lease or prepaid PPA front-loads the payments. Instead of paying monthly for 20 years, you pay most or all of the cost up front in exchange for a much lower or zero monthly payment afterward.
It can lower the lifetime cost compared with a standard escalating lease, but it does not change the core fact: a third party still owns the system, and the incentives still go to them rather than to you. You are prepaying to rent, not buying. If you are going to put a large sum in up front anyway, it is worth comparing that against simply owning the system outright, where the same money buys you the asset and the savings.
How owning compares with a lease or PPA
Here is the side by side that matters. The comparison is the same whether the rental is a lease, a PPA, or a prepaid version of either.
| Dimension | Owning your system | Third-party lease or PPA |
|---|---|---|
| Who owns the equipment | You. Outright on the cash path, or after title transfers to you under a pay-once program. | The solar company or an investor fund, for the full 20 to 25 year term. |
| Monthly payment | None on the cash path. No monthly payment under the Tax Credit Program either. | A monthly payment or per-kWh rate, usually with an annual escalator that raises it every year. |
| Where the savings go | To you. You keep the full difference against your PG&E bill. | Shared with the third party that owns the system. |
| Tax credit and incentive value | Captured for you, including the commercial credit value under the Tax Credit Program. | Kept by the third-party owner. |
| When you sell the home | An owned asset that can add to the value of the house. Nothing to transfer. | The buyer must qualify to assume the contract, or you must buy it out first. |
| Control of the system | Yours. The system is sized and run around your usage. | The owner can optimize the system around their economics, not yours. |
The catches that surprise people with a lease or PPA
Leases and PPAs are not a scam, but a few features routinely catch homeowners off guard, usually years after signing.
- The escalator. A payment that looked like a bargain in year one can climb 50% or more over a 20-year term as the annual increase compounds.
- Selling the house. A long-term lease or PPA can complicate a home sale. The buyer has to qualify and agree to assume the contract, or you have to buy it out, and a solar lease buyout late in the term is often expensive.
- You do not get the incentives. Any tax credit or rebate the system earns belongs to the owner, which is the third party, not you.
- Home value. Research from Lawrence Berkeley National Laboratory found that buyers pay a premium for homes with host-owned solar. A leased system, which the buyer would be taking on as a liability rather than an asset, does not carry the same premium.
When does a lease or PPA still make sense?
The honest answer is that it can, in specific situations. If you have no cash to put in, no tax appetite, and no interest in owning the asset, a lease or PPA still gets panels on the roof with little money down, and the third party handles maintenance.
The reason leases became popular, though, was largely the 30% federal residential credit. A homeowner who could not use the credit directly could let a third party claim it and pass back some of the value through the lease. With the residential credit gone in 2026, one of the main arguments for leasing instead of owning is weaker than it used to be.
How buying works in 2026, now that the residential credit is gone
On the straightforward cash path, you buy the system, you own it outright, and you keep all of the savings. The tradeoff is that the 30% residential tax credit no longer applies to a purchase made in 2026, so the full price is what you pay.
There is still one way to capture federal credit value as a homeowner. The commercial clean energy credit, which follows the business that owns the equipment, was not repealed. A program where a business owns the system for a few years can claim that credit and pass the value to you. That is the basis of the Potrero Tax Credit Program: you pay once up front for a roughly 20% discount, there are no monthly payments, and title transfers to you after the credit period. Tax rules depend on your situation, so confirm any credit with a qualified tax professional.
How Potrero approaches it
Potrero does not sell leases or PPAs. The two paths are owning the system with cash, or paying once through the Tax Credit Program so you still capture federal credit value without monthly payments. Either way you end up owning the asset and keeping the savings, rather than renting your roof to an investor fund for 20 years.
The system is built on open, non-proprietary hardware, so it is sized and run around your usage rather than around a financier optimizing the deal against you. The right structure still depends on your tax situation, your PG&E usage, and how long you plan to stay, so the fastest way to see where you stand is to get an instant estimate for your address and review the numbers before anything is installed.