The federal solar tax credit ended December 31, 2025, and now solar companies are aggressively marketing leases and PPAs. But does leasing actually make sense for Southern California homeowners, or are you giving up long-term value for short-term convenience?
You've probably noticed something interesting if you've been shopping for solar in 2026: almost every solar company is pushing Power Purchase Agreements (PPAs) and prepaid leases like never before. The messaging is clear—without the 30% federal tax credit that ended December 31, 2025, leasing is supposedly your best option.
But here's what many Southern California homeowners aren't being told: solar companies can still claim commercial tax credits on leased systems, while you're locked into a 25-year contract during your solar system's most productive years. The real question isn't whether solar makes sense without the tax credit (it absolutely does with SCE rates climbing). The question is whether giving up ownership of your solar asset is worth the convenience of lower monthly payments.
Let's cut through the marketing noise and look at the real math.
Here's what's happening in the solar industry right now. When the federal tax credit deadline was announced, thousands of Southern California homeowners rushed to install solar in late 2025. That created a massive boom followed by a predictable slowdown in early 2026.
Solar companies panicked. Instead of letting the dust settle and refocusing on solar's core value proposition—protection from rising electricity rates and energy independence—many doubled down on Third-Party Ownership (TPO) structures like PPAs and prepaid leases.
Why? Because solar companies can still claim the commercial 48E tax credit on systems they own and lease to homeowners. They're essentially using these tax credits to subsidize pricing and keep sales volume up, but in exchange, you're giving them control of your solar asset for 20-25 years.
The problem: This aggressive TPO marketing is making homeowners think solar ownership isn't valuable without a tax credit. That's simply not true in Southern California, where SCE customers saw a 13% rate increase in October 2025, and rates are projected to continue climbing in 2026 and beyond.
If you feel like you "missed the boat" on solar because the tax credit ended, you're not alone. That's exactly what solar companies are counting on. They're positioning PPAs as the consolation prize—a way to still get "some savings" even though you supposedly can't afford to own your system anymore.
But the numbers tell a different story. Understanding should you buy or lease solar panels reveals that ownership almost always provides better long-term value, even without the federal incentive.
Let's break down what you're actually choosing between when a solar salesperson puts a PPA or lease agreement in front of you.
Paying cash means you own the system outright from day one. No interest charges, no monthly payments to anyone except your much-lower utility bill. With SCE rates at 34.5 cents per kWh (and climbing), a properly sized solar system typically pays for itself in 6-8 years through utility bill savings alone.
After that payback period? Pure savings. For the next 17+ years of your 25-year warranty, every kilowatt-hour your panels produce is essentially free electricity.
Solar loans let you own your system while spreading payments over 10-25 years. Interest rates in 2026 typically range from 4.99% to 8.99% depending on your credit score. Your monthly loan payment often equals or beats your previous electric bill, meaning you start saving from month one while building equity in a home improvement that increases property value.
The key advantage over leasing? Once your loan is paid off, the system is yours free and clear. No buyout required.
With a PPA, you pay the solar company a fixed rate per kilowatt-hour (usually starting around 12-15 cents) for 20-25 years. With a prepaid lease, you pay a lump sum upfront but don't own the system—the solar company does.
Here's what you need to know: The solar company is capturing the commercial tax credit AND extracting value during your system's peak production years (years 1-10, before significant degradation). Many PPAs include 2-3% annual escalators, meaning your solar "savings" shrink every year as your payment increases.
If you're shopping for solar in Southern California in 2026, you need to understand NEM 3.0. This policy, which took effect April 15, 2023, reduced the value of solar energy exported to the grid by approximately 75%.
Under the old NEM 2.0 rules, you could sell excess solar back to SCE at retail rates (around 30-35 cents per kWh). Under NEM 3.0, export credits are based on "avoided cost"—typically just 8-10 cents per kWh during most daylight hours.
Translation: Solar-only systems under NEM 3.0 have longer payback periods because you're not getting much value for excess generation.
Understanding how solar batteries can maximize your savings under NEM 3.0 by storing your excess solar production instead of exporting it for pennies. During expensive evening peak hours (4-9 PM) when SCE rates hit 60-74 cents per kWh, your battery discharges that stored energy.
You're essentially buying electricity from yourself at 8 cents and using it to avoid buying from SCE at 70 cents. That 62-cent spread per kWh is where the real savings live in 2026.
The Self-Generation Incentive Program (SGIP) still offers battery rebates ranging from $150-$250 per kWh for general customers, and up to $1,000 per kWh for low-income or high-fire-risk areas. These rebates help offset the upfront battery cost.
Let's address the elephant in the room: Is solar still worth it without the 30% federal tax credit?
Absolutely—especially in Southern California where electricity rates keep climbing.
Rising SCE electricity rates have increased 83% over the past 10 years according to the Public Advocates Office. Just in the three years between January 2022 and April 2025, SCE's residential rates jumped 25%.
Your solar system's value isn't primarily driven by tax credits—it's driven by how much you're paying your utility company. At 34.5 cents per kWh and climbing, every kilowatt-hour your solar panels produce saves you real money.
Here's the math: A typical 8 kW solar system in Los Angeles produces about 12,000 kWh annually. At current SCE rates, that's $4,140 in avoided utility costs every year. Over 25 years? That's over $103,500 in savings (assuming zero rate increases, which is unrealistic).
While the federal tax credit ended, California homeowners still have access to:
Perhaps the biggest value proposition in 2026 isn't about tax credits at all—it's about locking in your energy costs. When you own your solar system, your cost per kWh is effectively fixed for 25+ years. As SCE rates continue their inevitable climb, your solar "investment" becomes more valuable every single year.
Solar companies marketing PPAs emphasize the "no money down" aspect and lower monthly payments. What they don't emphasize are the long-term trade-offs.
Solar panels degrade very slowly—about 0.3-0.5% annually for quality panels like QCells. This means your system operates at 95%+ efficiency for the first decade. These are the years when production is highest and maintenance is lowest.
With a 20-25 year PPA or lease, you're handing those prime years to the solar company. They're collecting the premium production while you're paying them monthly. When you finally have the option to buy out the system in year 20-25, the panels are approaching the end of their useful life.
What happens when you sell your home with solar explains one of the biggest complaints about leased systems: they complicate home sales.
Potential buyers need to qualify for and agree to take over your PPA or lease. Some buyers simply won't consider homes with solar obligations. Others will use it as a negotiation point to reduce your home's selling price. With cash or financed systems that you own outright, solar is a pure selling point—it adds value without adding complications.
With a PPA or lease, you don't control your system. Want to add more panels later? You might need permission. Roof repair needed? You'll need to coordinate with the solar company for panel removal and reinstallation (often at your expense). Selling your home earlier than expected? You're dealing with buyout calculations and transfer processes.
Ownership gives you complete control over your solar asset.
At US Power, we're not interested in locking you into a 25-year lease so we can extract value from your roof. We're the exclusive QCells partner in Southern California, which means we offer factory-direct pricing on American-made solar panels.
Choosing the right solar company is about more than just price—it's about transparency and value. As the #1 QCells installer in California, our factory-direct QCells pricing is typically 15-20% below market rates because we cut out middlemen.
That factory-direct advantage means ownership is more affordable than you think—often comparable to lease payments but with full ownership benefits.
We back every installation with a 25-year comprehensive warranty covering panels, workmanship, and performance. This isn't a manufacturer-only warranty—it's a US Power commitment. If anything goes wrong with your system, you call us, not three different companies.
The solar industry has a reputation for long delays and missed deadlines. US Power completes most installations within 3-4 weeks after permits are approved. We're CSLB-licensed with 180+ five-star Google reviews, and we treat your project like we'd treat our own homes.
So what should you actually do in 2026? Here's our honest recommendation based on your situation.
Cash purchases offer the fastest payback period (6-8 years) and maximum lifetime savings. No interest charges means every dollar you invest goes directly into your solar system. If you have the cash available and aren't sacrificing your emergency fund, cash is almost always the best financial choice.
Solar financing options in Southern California through reputable lenders offer competitive rates. A well-structured loan lets you start saving immediately while building equity in your system. Look for loans with:
The key is ensuring your monthly payment is less than your current electric bill, so you're cash-flow positive from day one.
The only scenario where prepaid leases might make sense is if you have significant cash available but absolutely cannot use the commercial tax credit (which individuals can't claim). In this case, paying a lump sum for a prepaid lease allows the solar company to apply their commercial credit and potentially pass some savings to you.
However, even in this scenario, you're still giving up long-term ownership. The math needs to be significantly better to justify it—we're talking 30%+ cost reduction compared to cash purchase after factoring in the lost asset value.
The solar industry's aggressive push toward PPAs and leases in 2026 isn't about what's best for you—it's about maintaining sales volume in a post-tax-credit market. The underlying value of solar hasn't changed: Southern California homeowners need protection from relentlessly climbing utility rates.
What has changed is the financing conversation. Without the 30% federal tax credit, the gap between leasing and owning has narrowed in terms of monthly payments. But the long-term value gap? That's wider than ever. Understanding is solar worth it in 2026 demonstrates that ownership provides superior returns, especially as SCE and other utilities continue their upward rate trajectory.
The question isn't whether you should go solar—with electricity rates at all-time highs, solar makes more sense than ever. The question is whether you want to own your solar asset or rent it from someone else for 25 years.
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