Solar Lease vs Buy vs PPA in DC: Which Option Saves You More?
If you're exploring solar for your DC home, you'll quickly hit one question: should you buy the system outright, lease it, or sign a power purchase agreement (PPA)?
The short answer: buying saves the most money long-term. But leasing or a PPA lets you go solar for $0 down — and that matters for a lot of homeowners. Here's what each option actually means for your wallet in Washington, DC.
Table of Contents
- The Three Solar Financing Options Explained
- DC Solar Cost Comparison: Lease vs Buy vs PPA
- Buying Solar: Pros, Cons, and When It Makes Sense
- Solar Lease: Pros, Cons, and When It Makes Sense
- Solar PPA: Pros, Cons, and When It Makes Sense
- What Happens When You Sell Your Home
- Which Option Is Right for You
- DC-Specific Considerations
- Frequently Asked Questions
The Three Solar Financing Options Explained
Before comparing numbers, you need to understand what you're actually agreeing to with each option.
Buying (Cash or Loan)
You own the solar system. Either you pay cash upfront or finance it through a solar loan — typically 5–20 year terms at 4–7% APR.
You own everything: the panels, the inverter, and critically, the SREC (Solar Renewable Energy Credit) income. When your system produces more electricity than you use, Pepco credits you at the full retail rate through net metering.
Solar Lease
A solar company installs and owns the system on your roof. You pay a fixed monthly fee — like renting the panels. The company handles all maintenance and repairs. Your payment typically escalates 2–3% per year over a 20–25 year contract.
Power Purchase Agreement (PPA)
Similar to a lease, but instead of paying a fixed monthly rent, you buy the electricity the panels produce at a discounted per-kilowatt-hour rate — usually 10–15¢/kWh versus Pepco's current 19.5¢/kWh.
Your monthly cost varies with how much the panels actually produce. More sun, higher bill — but still far less than your current utility rate.
DC Solar Cost Comparison: Lease vs Buy vs PPA
Here's what each option looks like for a typical DC rowhouse with an 8kW system producing ~11,000 kWh per year.
Pepco's average residential rate is currently 19.5¢/kWh and has been rising about 4.5% per year. For context on how those utility rates have been climbing, see our breakdown of Pepco's recent rate increase and what it means for DC homeowners.
| Buy (Cash) | Buy (Loan) | Lease | PPA | |
|---|---|---|---|---|
| Upfront cost | ~$28,000 | ~$5,000 down | $0 | $0 |
| Monthly payment (Year 1) | $0 | ~$220/mo | ~$120/mo | ~$110/mo |
| Pepco bill reduction | 90%+ | 90%+ | 70–80% | 70–80% |
| 25-year savings | ~$60,000 | ~$50,000 | ~$30,000 | ~$40,000 |
| Who owns the system | You | You | Solar company | Solar company |
| Maintenance | Your responsibility | Your responsibility | Included | Included |
The gap in 25-year savings between owning ($50–60k) and leasing/PPA ($30–40k) reflects what you give up when a third party owns the system — SREC income, net metering full value, and the compounding savings from avoiding the provider's profit margin.
Buying Solar: Pros, Cons, and When It Makes Sense
The case for buying
Buying is the highest-return option. An 8kW system in DC typically pays itself back in 7–9 years and delivers $50,000–$60,000 in lifetime electricity savings.
You also own the SRECs. In DC, each SREC is worth $400–$500. An 8kW system generates 8–10 SRECs per year — that's $3,000–$5,000 in annual passive income on top of electricity savings. Over a 25-year system life, that SREC income alone can exceed $50,000. See our DC SREC guide for how to register and sell them.
And unlike a lease or PPA, owning adds to your home's resale value. Solar-owned homes consistently sell for more than comparable homes without solar.
For a complete list of DC-specific solar incentives, DSIRE maintains an up-to-date state-by-state database ↗.
The downsides
The upfront cost is real. Even with a loan, you're committing to a 15-year financial obligation. Maintenance — inverter replacements, occasional panel cleaning, system monitoring — is your responsibility.
One important 2026 update: the federal residential solar tax credit (ITC) for individual homeowners has ended. Solar companies that own and lease systems can still claim a commercial equivalent (Section 48E), which is part of why $0-down options are now so dominant. But direct residential ownership no longer qualifies for the federal credit.
When buying makes sense
- You plan to stay in the home 10+ years
- You have access to cash or a loan under 7% APR
- You want to maximize lifetime savings and SREC income
- Your roof is in good shape with no replacement needed soon
Solar Lease: Pros, Cons, and When It Makes Sense
The case for leasing
No upfront cost. No maintenance headaches. One fixed monthly payment that's lower than your current Pepco bill.
Leases appeal to homeowners who want the bill savings and environmental benefits of solar without the financial complexity of ownership. If your goal is "lower monthly bill, less hassle," a lease delivers that.
The downsides you need to know
The escalator is the number to watch closely. Most leases increase your payment 2–3% per year. Over 25 years, that $120/month payment becomes $200+. If Pepco rates don't rise as fast as your lease escalates, you could end up with shrinking savings in the later years.
You also forfeit all SREC income. The leasing company keeps those credits — in DC, that's real money you're leaving on the table.
The bigger practical issue is home sales. If you sell your home, the lease either transfers to the buyer or you buy it out. About 30% of real estate transactions involving leased solar face complications. Buyers sometimes refuse to assume the lease, or a buyout cost delays closing.
When leasing makes sense
- You want $0 down with predictable monthly payments
- You're planning to move within 5–10 years
- Maintenance-free solar is a priority
- Your tax situation doesn't benefit from ownership
Solar PPA: Pros, Cons, and When It Makes Sense
The case for a PPA
A PPA is the most performance-aligned option: you pay only for what the panels actually produce. Cloudy month? Your bill drops accordingly. No production, no payment.
DC PPA rates currently run 10–15¢/kWh — meaningfully below Pepco's 19.5¢/kWh. For a high-usage household, that spread can translate to $1,500–$2,000 in annual savings with zero upfront cost.
The downsides
Your bill varies with the seasons. Summer months mean peak production and higher payments — even though you're still saving versus Pepco, the variability catches some homeowners off guard.
Like a lease, you don't own the SRECs, and home sale transfers can be complicated. PPA rates also typically escalate 2% per year, though they're structured to stay below utility rates for the contract term.
When a PPA makes sense
- You have high electricity usage (the $/kWh spread saves you more)
- Your roof has strong south-facing production potential
- You prefer variable-but-lower bills to fixed payments
- $0 down and maintenance-free is the priority
What Happens When You Sell Your Home
This is the question most homeowners forget to ask — until they're at the closing table.
If you own your system: The panels add value to your home. You negotiate that value into the sale price like any other improvement. Clean and simple.
If you have a lease or PPA: You have two options:
- Transfer the agreement to the buyer (they take over your payments)
- Buy out the remaining contract (typically $10,000–$20,000 depending on years remaining)
Transferring a lease requires the buyer to qualify with the solar company. Not every buyer will agree to take on that obligation — especially in a competitive market where they have other options.
Our advice: if you're planning to sell within 5 years, either buy outright or get the full buyout schedule in writing before signing any lease or PPA.
Which Option Is Right for You
Here's a straightforward decision framework:
Choose buying if you:
- Plan to stay 10+ years
- Have access to cash or a loan under 7% APR
- Want maximum lifetime savings and SREC income
- Plan to sell eventually and want to add home value
Choose a lease if you:
- Want $0 down with fixed, predictable payments
- Prefer zero maintenance responsibility
- Are comfortable managing the home sale transfer process
Choose a PPA if you:
- Have high electricity usage (bigger savings on the $/kWh spread)
- Prefer paying based on actual production
- Want $0 down and maintenance-free operation
Not sure which fits your roof, usage profile, and plans? Our free GreenZone assessment gives you a personalized comparison based on your specific address — including projected savings for each financing path.
DC-Specific Considerations
Pepco net metering
All three financing structures work with Pepco's net metering program. Excess production rolls over as bill credits at the full retail rate — one of the more favorable net metering policies in the mid-Atlantic. With ownership, all those credits go directly to you. With a lease or PPA, review your contract carefully to confirm how net metering credits are treated.
Solar for All
If your household income is below 80% of DC's area median income, the Solar for All program may cover the full cost of installation at no charge. This program is separate from the lease/buy/PPA decision — and often a better option than all three if you qualify. Check eligibility before committing to any financing agreement.
Historic districts
Georgetown and other DC historic neighborhoods require approval from the Historic Preservation Office before installation. This affects all three financing structures equally — permits and approvals must be in place regardless of who owns the system. Book a consultation before signing any agreement if you're in a historic district.
DC row houses
DC's rowhouse density means roof access and structural assessments matter more here than in suburban markets. Our guide to solar panels on DC row houses covers the key specifics — including what to check before committing to any financing structure.
For homeowners in Capitol Hill, our local solar installation guide has neighborhood-specific details on shading, roof pitch, and permitting timelines.
Frequently Asked Questions
Can I switch from a lease to ownership later?
Yes — most lease agreements include a buyout option, exercisable every 5 years. The buyout price decreases over time as the system ages. Ask for the full buyout schedule before signing.
Does a solar lease or PPA affect my home's resale value?
Owned systems typically increase home value. Leases and PPAs are more complicated — they can reduce buyer interest or require additional steps at closing if buyers don't want to assume the agreement. The impact depends heavily on local market conditions and how the agreement is structured.
What happens at the end of a 25-year lease?
You typically have three choices: renew the lease, have the system removed (usually at no cost to you), or purchase it at fair market value (often very low after 25 years of depreciation). Get this spelled out in writing before signing — and compare it to buying outright from day one.
Is the 30% federal solar tax credit still available?
The residential ITC expired for individual homeowners in 2025. If a solar company offering you a lease or PPA mentions passing through tax credits, they're referring to the commercial Section 48E credit — it improves their economics (which is why they can offer $0 down), but it's not a direct benefit to you personally. For official DC solar incentive programs, see DOEE's solar resources ↗.
How does net metering work differently with each option?
With ownership, all net metering credits reduce your Pepco bill directly. With a lease or PPA, the solar company owns the system — depending on contract terms, some or all net metering value may benefit the provider rather than you. Always verify this in the contract before signing.
Want to know which option makes the most financial sense for your specific home? Get a free GreenZone assessment — we'll show you projected savings for each financing path based on your address, roof, and usage.
