With the federal solar tax credit gone and NEM 3.0 changing how Southern California homeowners earn credits, the PPA vs. financing debate looks completely different in 2026. Here's what the math actually shows — and what most solar companies won't tell you upfront.
If your SCE bill has been climbing and you're finally ready to go solar, you've probably run into this question: should you finance a system you own, or sign a Power Purchase Agreement (PPA) and pay for the energy it produces?
It's a fair question — and the answer just got a lot more complicated. With the federal solar tax credit no longer available after December 31, 2025, and NEM 3.0 reshaping how solar credits work in Southern California, the old playbook doesn't apply. The advice circulating online is mostly outdated.
This guide breaks down both options honestly, using real numbers, so you can decide what actually makes sense for your home in 2026.
Southern California Edison rates have increased significantly over the past several years, and 2026 is no exception. The average SCE residential customer is now paying rates that make solar more financially compelling than ever — but also make the choice of how you go solar more consequential.
When electricity costs more per kWh, a bad solar contract costs you more too. That's why understanding the difference between owning and leasing matters right now. Learn more about what's driving these increases in our breakdown of rising electricity costs in Southern California.
Here's the reality: the 30% federal Investment Tax Credit for homeowners ended December 31, 2025. That credit significantly tilted the math in favor of financing because it reduced your effective system cost by nearly a third.
Without it, the gap between PPA and financing has narrowed. That doesn't mean financing is wrong — it means you need to run the numbers more carefully than ever before.
A Power Purchase Agreement means a solar company installs panels on your roof at no upfront cost. You agree to buy the electricity those panels produce at a set rate — typically lower than what SCE charges — for 20 to 25 years.
On the surface, it sounds like a win. Lower bill, no installation cost. But the details matter enormously.
Most PPAs include an annual rate escalator — often around 3% per year. In the short term, that number looks small. Over 25 years, it compounds significantly. A $115/month PPA payment at 3% annual growth becomes nearly $240/month by year 25.
Meanwhile, a financed system has a fixed payment. Your loan payment in year 25 is identical to year one. That predictability has real value — especially with SCE rates already unpredictable. The smartest approach is negotiating a 0% escalator if you do pursue a PPA, but those deals are increasingly rare.
Under NEM 3.0 — California's current net metering policy — solar panels alone earn significantly less in export credits than they did under NEM 2.0. The credits you receive for sending power back to the grid are lower and time-dependent. This means battery storage has gone from optional to essential for most Southern California homeowners who want to maximize savings.
Here's what this has to do with PPA vs. financing: you typically cannot add a battery to a PPA system without renegotiating your entire contract. When you own your system, you have full control. You can add storage when you're ready, switch rate plans, and optimize your setup without asking anyone's permission. Understand how NEM 3.0 changed solar savings before you commit to any solar contract.
Under NEM 3.0, the answer for most SoCal homeowners is yes. A battery lets you store the solar energy your panels generate during peak production hours and use it at night — when SCE's time-of-use rates are highest. Instead of exporting cheap credits back to the grid, you consume your own power when it costs the most.
Explore whether solar batteries are worth it in California for your specific situation. With ownership, you control that decision.
Let's look at a realistic Southern California scenario. A 9 kW system priced at $25,000–$28,000 (a competitive rate when you buy factory-direct) financed at a reasonable rate produces a fixed monthly payment. There's no escalator, no rate surprise, and no third party involved.
Compare that to a PPA at $115/month growing 3% annually. By year 10, the PPA payment has grown to roughly $155/month. By year 20, you're over $200/month — and you still own nothing. Our guide to the smartest ways to pay for solar walks through the full comparison with SoCal-specific scenarios.
This is where many Los Angeles and Orange County homeowners get caught off guard. If you have a PPA and decide to sell your home, you have two options: transfer the contract to the buyer (which some buyers refuse) or pay an early termination fee that can run into the tens of thousands of dollars.
Owned solar, on the other hand, is a straightforward asset. Studies show how solar panels increase your home's value in California — typically adding a meaningful premium at resale with no complications for buyers.
Not all PPA agreements are created equal. Some contracts include "fair market value" buyout clauses at the 5-year mark — meaning the company can set the price you pay to take over the system. Others limit what modifications you can make to your own roof. Before signing anything, understand how to identify predatory solar contracts in SoCal and what red flags to watch for.
US Power is Southern California's exclusive QCells partner. QCells panels are manufactured in the United States — not imported — which means no tariff risk and no supply chain uncertainty. Because we source factory-direct, our pricing comes in 15-20% below what you'd pay through typical solar retail channels.
That price advantage matters more in 2026 than it ever did with the tax credit in play. When financing, a lower system cost means a lower monthly payment and a faster payback period. Review your options for buy vs. lease solar panels in Southern California with accurate, current pricing in mind.
One concern raised by smart homeowners is whether a 25-year warranty from a financing company is worth the paper it's printed on. Solar lenders have gone bankrupt. Warranties can evaporate in court.
US Power's 25-year comprehensive warranty covers panels, workmanship, and performance — and it's backed by QCells, not a startup financier. When you own your system through US Power, you're not relying on a third party's financial health to honor your coverage. Explore affordable solar financing options in Southern California that don't come with the fine print surprises.
From approval to Permission to Operate (PTO), US Power consistently completes installations in 3 to 4 weeks — faster than the industry average. Every consultant is CSLB-licensed. Every installation follows a process built around your specific roof and usage profile.
The PPA vs. financing debate doesn't have a one-size-fits-all answer, but in 2026 Southern California — with no federal tax credit, NEM 3.0 in effect, and SCE rates continuing to climb — ownership provides advantages that a PPA simply can't match. Fixed payments, full control over battery storage, clean home resale, and a warranty you can actually rely on.
The question isn't just PPA or finance. It's who you trust to install the system on your roof. US Power's factory-direct QCells pricing, 3-4 week timeline, and 25-year comprehensive warranty make ownership the smarter choice for Los Angeles, Orange County, Ventura, San Bernardino, and Riverside homeowners ready to stop renting their power from SCE.
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