Leasing Solar After Trump’s Megabill: Here’s What You Need to Know

With the “One Big Beautiful Bill” (OBBB) signed into law on July 4th, homeowners considering going solar will undoubtedly be presented with more third-party owned lease and PPA options, as the eligibility for these tax credits is preserved through 2027. We’ve put together this guide as part of a larger OBBB information center. 

Solar.com’s OBBB Resource Center:

• Definitive Guide to the OBBB for solar 
• FAQs about the OBBB
• Homeowner’s guide to going solar in the OBBB rush
• Archive: tracking the OBBB through the House and Senate 

Why Homeowners Should Consider a Third-Party Owned System with the One Big Beautiful Bill as law

In most cases, buying a solar system (with a cash or loan purchase) is a better option for homeowners who have sufficient tax liability to claim the full 30% solar tax credit and want the flexibility in owning their system versus having someone else own and operate it (and sell them the power from it). However, Trump’s “Big Beautiful Bill” ends the homeowner-claimed tax credit at the end of 2025, and not all homeowners will be in a position to purchase and install before it’s gone. 

Starting in 2026, the only way to have a solar array benefit from the 30% tax credit (plus depreciation) is to have a business claim it against Section 48E of the tax code—or to say it a different way, to enter into a Third-Party Ownership (TPO) contract via lease or PPA. Let’s break down the pros and cons of third-party ownership and how to ensure you enter the best agreement for your energy goals.

Want to learn more about the benefits of buying versus leasing solar? The solar.com team has done extensive analysis on this, and you can read all about it here. 

Pros and Cons of Third-Party Owned Solar

Like anything, there are pros and cons to entering into a TPO arrangement versus owning a solar array outright. Prior to OBBB, the solar.com analysis was that for most homeowners it was better to own vs lease. But having access to the tax credit after 2025 certain changes that math. 

Advantages of TPO Solar

Third-party owned leases and PPAs aren’t all bad; in fact, they provide several benefits and advantages (beyond just being able to capture the tax credit). They inherently remove a lot of the risk of going solar. The third-party owner is responsible for the ownership and operation of the system, including maintenance. This theoretically removes a lot of the potential hassles and headaches homeowners are concerned about in going solar–especially with anticipated changes in suppliers’ ability to access and remain competitive in the US market. 

They also have much stricter compliance controls related to sales practices. A basic tenet of a lease or PPA is that they’ll sell you power from your roof at a lower rate than the utility. This inhibits the ability of an unscrupulous salesperson from charging exorbitant fees. And since the TPO retains ownership of the system, they have a vested interest in ensuring proper installation practices are adhered to. 

Disadvantages of TPO Solar

The disadvantages of TPOs are mainly around system economics and availability. The investor’s rate of return on the array they own on your roof typically represents the lost savings by not owning the solar array outright. But a well-structured TPO ensures everyone wins. 

The other big downside to a TPO is that they can present challenges with buyouts if you ever want to end your contract early or sell your house. While most offer TPO transfers to subsequent owners, this is at the discretion and approval of the TPO provider and not guaranteed. Some homebuyers may not want to deal with a TPO arrangement, which can inhibit your potential homebuyer pool or force you to reduce the value of your home’s price.

This disadvantage is rooted in the way TPOs work. They claim the tax credit and depreciable basis on a formula that considers the “step-up value” of the array. This step-up value goes beyond the cost to construct it and also includes the net present value of its future energy yield, less operation and maintenance expenses. 

So a 10kW solar array might cost $25,000-$30,000 to build, but in a TPO the step-up cost basis might be $50,000-$60,000. This is why many homeowners who go to buy out their leases are shocked at the high costs. 

There is also an IRS rule related to the tax credit recapture, which doesn’t allow the tax equity investor to exit the project ownership structure in the first five years. Although this doesn’t mean you aren’t allowed to sell your house, it does restrict your ability to buy out the array early. 

Check This One Thing on Your Solar Lease or PPA Contract

There are two “flavors” of PPAs and Leases – ones with a fixed rate of power (either a monthly flat rate in a lease or a flat kWh rate in a PPA) and ones that offer a lower upfront rate but that “escalate” or increase annually. Solar.com highly recommends selecting the flat rate PPAs and Leases to lock in savings. 

Is it Worth Signing a TPO Contract?

Solar.com’s recommendation is for homeowners considering TPO solar to wait until 2026. Allow homeowners who want to capture the tax credit access to installers and equipment to help them bring their projects online in 2025. As the industry is forced into TPOs in 2026 (thanks to the OBBB), we’ll likely see some financial innovation in these deal structures, which will offer greater value to homeowners. 

A Final Note

The solar.com editorial team has gone to great lengths to provide accurate and approachable information. See something we missed or find an error? Please CONTACT us at newsroom@solar.com. If you’re doing research on the OBBB and found this article helpful, please link back to this article to help others find it. 

And finally, we believe informed homeowners make smarter solar decisions. The biggest compliment you can make is by getting no-obligation binding quotes for your home solar projects via solar.com. We never sell or remarket your information. You’ll be assigned a dedicated energy advisor to help you navigate the process with the same care and trust we hope we’ve earned through producing content like this.