Updated October 2026

California homeowners comparing solar financing options need to look at more than the monthly payment. Since April 2023, new customers of SCE, PG&E, and SDG&E are on net billing, often called NEM 3.0, so how much power you use at home, whether you add a battery, and which utility serves the address all matter. In this guide, we compare the five main ways to pay for solar so you can see how a PPA, prepaid PPA, lease, loan, or cash purchase works.

What are the ways to pay for solar in California right now?

California homeowners usually compare five solar financing options: a power purchase agreement, or PPA, a prepaid PPA, a solar lease, a solar loan, and a cash purchase. The right fit depends on whether you want to own the system, how you want to pay, and how the contract works if you move.

A solar PPA means a third party owns the system and you pay for the electricity it produces, usually at a set rate per kWh. PPAs often run 20 to 25 years, and the contract usually includes an escalator, which is the yearly price increase spelled out in the agreement.

A prepaid PPA is still third party owned, but instead of monthly production payments you make one upfront payment for a set number of years of solar output. That can appeal to homeowners who want to simplify future bills, but you still do not own the panels, so ownership incentives generally do not apply to you.

A solar lease also keeps ownership with the installer or financing company. You pay a fixed monthly amount to use the equipment, not for each kWh produced. Like a PPA, a lease usually lasts 20 to 25 years, and the third party generally claims any incentives that still apply. If you want tax benefits tied to ownership, a lease is usually not the right path.

A solar loan is different because you finance a system you own or are buying over time. Loan terms commonly run 10 to 25 years, and the monthly payment depends on the amount financed, the APR, and any dealer fee. Because you own the system, this path can fit homeowners who want control over the equipment and the home, though the federal residential solar credit for systems placed in service after December 31, 2025 no longer applies.

With a cash purchase, you pay the full amount upfront and own the system outright. That means you control the equipment, the warranty paperwork, and the timing of any future upgrades. In California, this can be a strong choice for homeowners who want full ownership and do not want a long financing contract.

Since April 2023, new solar customers of SCE, PG&E, and SDG&E are on net billing, often called NEM 3.0, so the value of using solar power at home matters more than sending power out to the grid. LADWP and other municipal utilities set their own solar rules, so check the utility serving your address before you compare solar payment options California wide.

How a solar PPA works when you do not want to own the system

A solar PPA, or power purchase agreement, lets you buy the electricity the panels produce instead of buying the panels themselves. In California, that means you sign a long term contract, often 20 to 25 years, and agree to pay a set rate per kWh, which means kilowatt hour, for the solar power your roof generates.

This is one of the main solar financing options for homeowners who want little to no upfront cost. Some agreements also include a yearly escalator, so make sure you compare the starting rate, the escalator, and what happens if your usage changes over time.

With a PPA, you do not own the equipment, so the solar provider usually claims any ownership incentives that still apply. That is a key difference from buying a system with cash or a loan. It also means you should read the contract for ownership transfer rules, early buyout terms, roof work responsibilities, and what happens if you sell the home before the agreement ends.

California homeowners should also look at the utility serving the address. Since April 2023, new customers of SCE, PG&E, and SDG&E are on net billing, often called NEM 3.0, which credits power sent to the grid at a lower rate than the retail rate. That makes the PPA’s rate, term, and whether you can use more solar power at home more important than ever.

What to compare in a PPA

• Rate per kWh, the price you pay for each unit of solar electricity.
• Escalator, usually a yearly increase of about 0 to 3 percent.
• Term, commonly 20 to 25 years.
• System ownership, which stays with the provider.
• End of term options, including renewal, removal, or purchase.

A prepaid PPA is different because you make one upfront payment for a set number of years of production, while still not owning the system. If you want to compare that against a lease offer or a financing loan, look at the full contract terms, not just the first monthly payment. For homes served by LADWP or another municipal utility, check the utility rules for that specific address, since they are not the same as the investor owned utilities.

Prepaid PPA, lease, loan, or cash which solar payment path fits your home

This section picks up where the PPA overview left off and goes deeper into the other solar financing options that California homeowners compare most often. The right fit depends on how much you want to pay up front, how long you expect to stay in the home, and whether you want to own the system or keep the structure simple.

A lease option usually means a fixed monthly payment for using the equipment on your roof, with the system owned by a third party. That can make the billing predictable, but you are still entering a 20 to 25 year contract, so read the escalator, the transfer terms if you sell, and who handles service.

A prepaid PPA sits closer to a lease than a purchase. You make one upfront payment for a set number of years of solar production, often 20 to 25 years, instead of paying month by month. It can work for a homeowner with cash available today who wants the simplicity of a long contract without taking title to the system.

Loan financing structures are different because you are financing a purchase. Loan terms commonly run 10 to 25 years, and the monthly payment depends on the amount financed, the APR, and any dealer fee, which can increase the total financed amount. A loan can make sense if you want ownership and plan to stay long enough to make the payment schedule fit your budget.

Cash works best when ownership matters most

With a cash purchase, you pay the full price up front and own the system outright. That gives you the most control over the equipment and no monthly financing payment, but it also means the full cost lands at the start and you take on the long term ownership details yourself. Homeowners commonly see installed residential solar costs before incentives around $2.60 to $4.00 per watt, which is roughly $15,000 to $24,000 for a 6 kW system, though the real numbers depend on the home, the utility and the installer.

In California, ownership matters even more now because new customers of SCE, PG&E and SDG&E are on net billing, often called NEM 3.0, since April 2023. Power sent to the grid is credited at a lower rate than the retail rate, so a home with a battery and strong daytime use can look different from a home that relies on export credit.

Before choosing among these solar panel financing options, make sure the contract matches your home and your plans. Think about roof age, monthly usage, whether your home may be sold in the next few years, and how much risk you want around payment changes, maintenance, and ownership transfer. If you want to compare how these paths stack up for a specific address, our buying solar with cash guide and our California service page can help frame the next step.

What changes for SCE PG&E SDG&E and LADWP homes with batteries and net billing

Since April 2023, new solar customers on SCE, PG&E, and SDG&E are under California’s net billing policy, often called NEM 3.0. That means power you send back to the grid is credited at a lower rate than the retail rate you pay for electricity, so using more of your own solar at home matters more, and a battery can play a bigger role in the system design.

A battery stores extra solar production for evening use or for a later part of the day when your home needs it. Under net billing, that can matter because a kilowatt hour, or kWh, sent to the grid may not be worth as much as a kWh you use on site, so solar panel financing options should be weighed alongside how much storage your home actually needs.

How this changes the math for California homes

For a house on solar in California, the utility matters as much as the roof. A home in SCE territory may have a very different bill pattern from a similar home on PG&E or SDG&E, and LADWP is different again because municipal utilities set their own solar rules and rates.

• SCE, PG&E, SDG&E: Newer solar systems face lower export credit values under net billing, so the design often focuses on self consumption, battery size, and when the home uses power.
• LADWP: Check the specific utility serving the address before comparing offers, because city utility rules do not follow the investor owned utility template.

This shift also affects ownership decisions. If you buy the system, financing details still matter, but the production profile matters too, because a larger battery or a different system size can change how much power stays behind the meter instead of going out to the grid. That is one reason homeowners often compare loan offers against cash purchase and third party ownership options side by side.

For leases and power purchase agreements, the system is owned by a third party, which usually means that party claims any incentives that still apply. A power purchase agreement or a lease contract can still fit some homes, but under net billing you should look closely at the contract term, the rate per kWh, the escalator, and how the battery is handled if storage is included.

In California, the big question is no longer just whether solar goes on the roof. It is how the system, the battery, and the utility rules work together for your address, especially when exported power is credited below retail.

How to compare side by side quotes and ask for the right solar financing options

Side by side quotes should show the same home, the same system size, and the same assumptions, so you can compare more than the first month payment. Ask each provider for the rate per kWh, the escalator, the term, the total cost over the full term, and what happens if you sell the home. In California, those details matter because solar production and battery use can change under net billing rules.

Start by checking the contract type. A power purchase agreement, or PPA, means you pay for the power the system produces, while a lease charges for the equipment itself. With a loan or cash purchase, you own the system, so ask about the equipment warranty, inverter coverage, and any UCC filing, which is a lien notice a lender may place on the system until the loan is paid off.

Questions to ask on every quote

• What is the starting rate or payment, and how often does it increase?
• Is there a dealer fee or other added finance charge?
• Who gets the tax credit or any other ownership benefit?
• What fees apply if I buy out, transfer, or end the contract early?
• What happens if I sell the home before the term ends?

Read the fine print for roof work, removal and reinstallation, monitoring, repair duties, and escalation language. If a quote mentions a low starting payment but leaves out those items, the true cost may look different over time. A solar loan quote can also include an APR and dealer fee, which can raise the financed amount even when the monthly payment looks straightforward.

For homeowners comparing solar financing options in California, it helps to match the quote to the utility rules at the address. SCE, PG&E, and SDG&E homes are generally under net billing since April 2023, and LADWP or another municipal utility may use different rules. That is why the best quote is the one that fits your roof, your bill, and your contract terms, not just the lowest number on page one.

If you want to compare the main paths quickly, review the details for a solar PPA, a solar lease, or a solar loan before you sign anything. Collective Power is an independent brokerage, not the installer, so we compare those terms side by side for your address and help you sort out what the numbers really say.

Written by the team at Collective Power, an independent solar brokerage. We compare solar PPA, prepaid PPA, lease, loan and cash options for homeowners in California and Massachusetts, and we are not the installer. Phone: (877) 840-4504. Offers, savings and incentives vary by address, utility, credit and installer, and nothing here is tax, legal or financial advice. Ready to compare? Request your free quote online.