With access to a federal tax credit through the end of 2027, solar leases and Power Purchase Agreements (PPAs) are strong options for homeowners looking to immediately reduce their electricity costs and hedge against fast-rising utility rates. However, it’s important to consider how these solar arrangements can affect your ability to sell your house in the future.

While solar can add to your home value, selling a house with leased solar panels creates some extra considerations at the closing table.

The good news: with residential solar becoming more common, real estate agents and homebuyers are becoming more adept at handling transactions that include solar, so the process continues to get easier.

What Happens to a Solar Lease When You Sell Your Home?

In the vast majority of sales, the new buyer assumes the lease as part of the home sale. They love your home, and when they find out the solar panels on the roof provide electricity at a lower and more predictable cost than the local utility, they’re accepting of the responsibility to pick up the lease where you leave off. Every lease and PPA company has dedicated departments to handle these transfers and provide the documents, which are included at the closing table as part of the pile of escrow paperwork.

Why most homebuyers assume the solar lease:

• They’re already committed to buying the home and likely qualify for a mortgage.
• The solar system provides power at a lower cost than the local utility.
• Lease payments are usually fixed or predictable, whereas utility rates are volatile.

How your lease or PPA provider assists the transfer:

• Credit checks for the buyer
• Transfer documents
• Coordination with escrow and closing

What if the Solar Lease Transfer is Denied?

Occasionally, there are hurdles that can slow or stall the transfer of a solar lease. This can happen for one of two reasons:

1. The homebuyer fails the credit requirements for the lease. This is rare because if a homebuyer is already qualified for a mortgage, they’re likely more than qualified to assume the solar lease.
2. The new buyer declines to take on the lease. This can often be overcome by explaining to them how the solar works and how much money it will save them. Very rarely do people choose to not save money if all they have to do is sign a piece of paper.
   

Options If the Buyer Will Not Assume the Solar Lease

In most instances, transferring the lease in the home sale benefits both the buyer and seller. However, if this option falls off the table, there are still options at your disposal.

1. Pre-payment of the lease at “Net Present Value”

Most solar leases and PPAs allow you to pre-pay for the remainder of the power at a discounted rate, known as the “Net Present Value.” As the seller, you can use the proceeds from the home sale to pre-pay the lease. The buyer assumes the lease without any remaining payments and receives the benefits and savings of the system, which continues to be maintained, monitored, and supported by the lease or PPA company.

2. Buy out the lease at “Fair Market Value”

In this option, you or the homebuyer can choose to purchase the solar system from the lease or PPA company. The buyout amount is calculated using the “Fair Market Value” of the system (we’ll expand on this below). Homebuyers may consider buying out the solar array and rolling it into their mortgage.

It’s important to note that due to underlying tax rules, most systems can’t be fully bought out in the first 6 years in the life of the system. In these situations, a pre-payment is offered through the tax credit recapture period, and then the sale happens after.

3. Upgrading the lease

Some homebuyers are reluctant to assume a leased solar system with technology that’s a decade or more old, even if it works perfectly and is being monitored and maintained by somebody else. In this scenario, the new homebuyer can work with the lessor to analyze a system upgrade.

Understanding Lease Buy Out Values

Some homeowners are surprised to see that the cost to buy out their solar lease in the first few years might be higher than if they had purchased a solar system with cash. This is due to the accounting treatment of corporation-owned solar systems, in which the tax credit and depreciation of the array are done on the Fair Market Value (FMV) of the solar, which also includes the cost of the equipment and the anticipated future revenues from the array.

Similar to buying out a lease on a car, the payment made to the bank is generally to cover depreciation of the vehicle, with the underlying asset providing a securitized value. Solar works in a similar way, except you don’t have a massive first-day depreciation of the underlying asset like you do with cars. So, where buying out the lease on a car might make sense in some situations, buying out a solar lease obligation in the first few years is generally not something most homeowners will opt to do.

Should I lease solar if I’m going to sell my house?

If you plan on moving in the next few years, it might be best to let the new homeowner make the decision to go solar on their own terms. However, if you’re not sure about moving or think your horizon is 5+ years out, then the data says going solar generally increases the value of your house in the market. In most cases, the new buyers will gladly accept the low and predictable electricity costs provided by the lease.

Connect with a solar.com Energy Advisor to see if a solar lease or PPA aligns with your savings goals.

Frequently asked questions

Can I sell a home with leased solar panels?

Yes. Most homes with solar leases transfer smoothly to the buyer during closing. Leased solar systems can be an attractive feature to homebuyers looking for low, predictable electricity costs without the responsibility of monitoring, maintaining, and insuring the system.

Do solar leases hurt resale value?

Typically no—solar generally increases home value. In fact, having low and predictable electricity costs tied to your home can be an attractive feature to homebuyers. However, short-term homeowners with a solar lease may face more negotiation during the sale.

Can a buyer refuse to take over a solar lease?

Yes, but the seller can respond with options like pre-payment, buyout, or system upgrades.

How long before you can buy out a solar lease?

Usually not within the first 5–6 years due to tax equity rules. There is often an option to pre-pay through the end of this 5-6 year period, and complete the buy out sale afterwards.

Do mortgage lenders allow solar leases?

Yes. Solar leases are increasingly common, and lenders and real estate agents are familiar with them. Additionally, every solar lease and PPA company has a dedicated team to help transfer the system in a home sale.

Homeowners evaluating solar proposals will likely be confronted with options that include an escalator. This article will help you unpack solar lease escalators and understand whether this option is a good fit for your home.

What is a Solar Lease Escalator?

An escalator is the industry term for an annual increase to your solar payments. Just like your utility likely increases the price you pay for electricity each year, some solar leases and Power Purchase Agreements (PPAs) have an escalator clause that signals a slight increase in your solar payments each year, typically by 1-3% per year.

For instance, if your solar lease has a starting payment of $100/month and an escalator of 1.99% per year, your monthly bill will increase to $101.99/month on the anniversary of your system turning on. That payment will increase by another 1.99% the following year, and each year for the duration of the lease.

Here’s what the first 10 years of payments look like in this scenario:

Common escalators are 0.99%, 1.99% and 2.99%. Higher escalators allow for lower payments in Year 1, while lower escalators require slightly higher monthly payments in Year 1. The right cost escalator for your solar depends on your savings goals. Are you looking for the greatest immediate savings or playing the long game to save more over time?

Why do some solar lease options involve a rate escalator?

Rate escalators are a tool that can make solar leases beneficial to homeowners and the investors who own the system. For homeowners, an escalating lease allows for a lower starting payment and more savings in Year 1 than a non-escalating lease. Likewise, the investors who own the system for its assumed 25-year life can still cover operating costs and meet their returns by offering an attractive starting payment and slowly increasing it by the agreed-upon rate.

Solar lease escalators vs utility rates

Even with an escalating lease, it’s a safe bet that your solar savings will continue to increase over time. Typically, leases don’t exceed 3% escalators while the average annual utility rate increases by 3.5% per year. Since 2021, with the influx of data centers, EVs, extreme weather, and other strains on the electrical grid, rates in many parts of the country are increasing far more than 3.5% per year.

In fact, in 2025 alone, the average residential electricity rate in the U.S. increased by 7.4%!

Simply put, an escalator is a way for you to realize the highest Year 1 savings. It’s not uncommon to see monthly savings increase by $10 or more when a solar proposal has a rate escalator, depending on system sizes and installation costs.

Related reading: Lease to Own Solar Panels: How Does It Work?

Escalator or No Escalator? Solar.com’s Recommendation

The solar.com team will always offer the lowest escalator lease available. For projects with favorable economics, this can mean a 0% escalator or a very modest 0.99%. There are, however, locations where this isn’t possible due to the economic constraints of a project, and you may be presented 1.99% or 2.99% escalator.

Why do we recommend a low escalator? Even though it might mean less savings in Year 1, fixing your lease payment means those savings will increase at a greater rate as your utility continues to increase the cost of providing you with electricity. The reality is no one knows what utility rates will do in 5, 10, or 20 years. Offering a low or no-escalator proposal is the best way to hedge against energy inflation and ensure your project enables maximum savings.

Questions to Ask when Presented with an Escalating Lease Proposal

Solar.com prides itself on enabling choice, transparency, and trust, which means our team will point out when proposals have an escalator clause and how that might influence system economics and your decision-making.

Our hope is that every other solar company also provides you with similar insights and transparency when offering lease proposals. If not, here are three questions to ask while you are reviewing a solar lease proposal:

1. “What is the annual escalator percentage, and how will it affect my monthly payment over time?”
2. “How does the escalator impact my total savings compared to a 0% escalator option?”
3. “What happens if utility rates don’t rise as fast as the escalator?”

This third question causes some homeowners to second-guess leasing solar. We’ll take a closer look below.

What if my solar lease escalator outpaces my utility rate?

Most solar leases and PPAs have a clause that prevents the cost of solar from increasing above the rate of retail electricity. So, if your utility caps or even lowers the cost to provide you with electricity, your solar payment will never “cross the line” of being more expensive than the utility.

With that said, it’s important to review your solar agreement and escalator clause carefully, as there are lots of nuances and complications with this (e.g., the utility can lower the cost of power but increase fixed charges).

The bottom line

Rate escalators are often seen as the Achilles heel of solar leases and PPAs. In reality, it’s a tool that enables homeowners to find the right starting payment for their situation and lock in predictable electricity costs.

Connect with a solar.com Energy Advisor to see your options and dial in a solar solution that meets your savings goals.