2026 Context
With the federal 30% residential solar tax credit eliminated, financing decisions have changed. Cash purchases and loans no longer benefit from the ITC, which shifts the lease/PPA math significantly. This guide reflects the post-OBBB landscape.
There are four ways to pay for solar in Arizona: cash, loan, lease, or PPA. Each has different implications for your savings, ownership, and home value. Here's how they compare in 2026.
Financing Options at a Glance
| Cash | Solar Loan | Lease | PPA | |
|---|---|---|---|---|
| Upfront cost | $25,000-$35,000 | $0 down | $0 down | $0 down |
| You own the system | Yes | Yes (after payoff) | No | No |
| Federal ITC benefit | None (eliminated) | None (eliminated) | Company claims it | Company claims it |
| AZ state credit ($1,000) | You claim it | You claim it | Company claims it | Company claims it |
| Adds home value | Yes (+$15-20K) | Yes (+$15-20K) | No (not your asset) | No (not your asset) |
| Maintenance | Your responsibility | Your responsibility | Company handles it | Company handles it |
| 25-year savings | $20,000-$40,000 | $15,000-$30,000 | $8,000-$15,000 | $8,000-$15,000 |
Option 1: Cash Purchase
Paying cash gives you the highest total savings because you avoid interest payments. Without the federal ITC, a typical 10 kW system costs $28,000-$32,000 before the $1,000 AZ state credit.
Pros
- • Highest total savings over 25 years
- • No interest, no monthly payments
- • You own the system and added home value
- • Simplest transaction — no lender involved
Cons
- • $27,000-$31,000 net upfront (after state credit)
- • Longer payback: 11-14 years without federal ITC
- • Opportunity cost of tying up capital
Option 2: Solar Loan
Solar loans let you own the system with $0 down. Typical terms in 2026:
Typical Solar Loan Terms (2026)
- • APR: 5.5%-8.0% (depends on credit score and term)
- • Term: 15-25 years
- • Monthly payment: $140-$220 for a 10 kW system
- • Down payment: Usually $0
- • Secured vs unsecured: Most solar loans are unsecured (no lien on home)
Watch Out: Dealer Fees
Many "0% APR" or "low-rate" solar loans include dealer fees of 15-30% built into the loan amount. A $30,000 system might become a $38,000 loan. Always compare the total amount financed — not just the interest rate — between lenders.
Key change for 2026: Without the federal ITC, there's no lump-sum tax refund to put toward your loan in year one. In previous years, many homeowners used their $8,000-$9,000 ITC refund to pay down the loan principal early. That strategy no longer works.
Option 3: Solar Lease
With a solar lease, the solar company owns the panels and you pay a fixed monthly fee (typically $80-$150/month) for 20-25 years. The company handles installation, maintenance, and monitoring.
Why leases may be more competitive in 2026: The solar company can still claim the business ITC (Section 48) on the system, which means they have a tax incentive that individual homeowners no longer get. Some of this benefit gets passed to you through lower monthly lease payments.
Pros
- • $0 down, no loan to qualify for
- • Company handles all maintenance
- • Immediate monthly savings (if lease < current bill)
- • Company still gets business ITC — lowers your cost
Cons
- • You don't own the system or added home value
- • Lower total savings over 25 years
- • Escalator clauses can increase payments 1-3%/year
- • Can complicate home sale (lease transfers to buyer)
Option 4: Power Purchase Agreement (PPA)
A PPA is similar to a lease, but instead of a fixed monthly payment, you pay a per-kWh rate for the solar electricity produced. Typical PPA rates in Arizona: $0.08-$0.12/kWh — lower than APS ($0.128) or SRP ($0.119) retail rates.
PPAs work identically to leases in terms of ownership and tax credits. The difference is purely in billing structure: fixed monthly (lease) vs per-kWh (PPA). PPAs give you more savings in low-production months (winter) and less in high-production months (summer).
PPA vs Lease: Which Is Better?
They're functionally very similar. Choose a PPA if you want your solar payment to track actual production. Choose a lease if you prefer predictable fixed payments. Either way, compare the total 25-year cost, not just the monthly or per-kWh rate.
Which Should You Choose in 2026?
Good credit, want to own, but no cash upfront
Solar loan. You own the system and home value increase. Watch out for dealer fees — compare total financed amount, not just APR.
Want savings with zero hassle and no debt
Lease or PPA. Lower total savings but zero upfront cost, no loan, and the company maintains everything. More competitive in 2026 since they still get the business ITC. Learn about how export credits work to understand the savings math.
Selling your home within 5 years
Lease/PPA or wait. A cash purchase or loan won't pay back in time. A lease transfers to the buyer (which can complicate the sale).
Sources
- IRS — Section 48 Business Energy Investment Tax Credit
- EnergySage — Solar loan rate data 2025-2026
- DSIRE — Arizona solar incentives and financing options
- Arizona Revised Statutes §43-1083 — State solar tax credit