More California homeowners are rethinking solar lease options now that the federal residential solar tax credit has officially ended. For years, solar leases have offered a way to go solar without owning a system or managing maintenance. Now, a newer prepaid solar lease option is changing how homeowners approach long-term solar savings in 2026 and beyond.
At its core, a solar lease allows you to use the electricity produced by a solar system installed on your home without purchasing the panels themselves. A third-party provider owns the system, handles maintenance, and you benefit from more predictable solar costs over time. Traditionally, that cost has come in the form of a monthly lease payment. Today, homeowners also have the option to prepay for that lease upfront.
This shift matters because the residential solar tax credit has played a major role in making solar more affordable for homeowners. As that incentive ended last year, many people are now looking for ways to preserve similar value without relying on tax liability or future refunds. Prepaid solar leases offer one possible path by applying savings upfront rather than later.
In this guide, we’ll break down how traditional monthly solar leases work, how Citadel’s prepaid lease is different, and how to decide which option makes the most sense for your home and budget.
A traditional solar lease allows homeowners to go solar without owning the system. Instead, a third-party provider installs and owns the solar panels on your home, and you lease the system for a fixed period of time.
With a traditional solar lease, you typically pay a monthly lease payment. That payment is usually set lower than your utility costs when you first sign the agreement, which means you start out paying less for energy. One important detail to understand is that many traditional solar leases include an annual escalator, meaning the lease payment increases slightly each year over the life of the contract.
Because the system is owned by a third party, the provider is typically responsible for system monitoring, maintenance, and equipment repairs. Homeowners benefit from solar energy without having to manage the system or handle maintenance issues themselves.
Traditional solar leases are usually structured as long-term agreements, often around 20 to 25 years. While they can reduce upfront costs and maintenance responsibilities, the long-term value depends on factors like utility rate increases, escalator terms, and how the system performs over time.
A prepaid solar lease follows the same basic structure as a traditional solar lease. A third-party provider owns the solar system installed on your home and is responsible for system maintenance and repairs. The main difference is how you pay.
Instead of making monthly lease payments over time, a prepaid solar lease allows you to pay upfront for long-term use of the solar system. This locks in your solar cost at the beginning of the agreement rather than spreading payments out over many years.
Citadel introduced our prepaid solar lease option to give homeowners another way to capture meaningful solar savings because incentives have changed. With this structure, our partner Participate Energy claims the commercial solar tax credit and applies that value upfront. Homeowners do not need tax liability to benefit, since the incentive is built into the prepaid pricing rather than claimed on a personal tax return.
Once the system is installed and activated, it generates electricity for your home just like any residential solar system. You use the power it produces, see savings on your utility bills, and do not need to manage system maintenance or repairs. The day-to-day experience is simple, with fewer variables tied to future rate increases or escalators.
Both traditional and prepaid solar leases allow homeowners to go solar without owning the system. The key difference comes down to how and when you pay, and how predictable your costs are over time.
A traditional solar lease spreads costs out month by month, which can make it easier to get started. However, many traditional leases include annual escalators that increase payments over time and can affect long-term savings. A prepaid solar lease shifts that structure forward, allowing homeowners to lock in their solar costs upfront and reduce exposure to future price changes. Both options remove the need to own or maintain the system, but they appeal to different budgeting preferences.
Here’s a quick table to help break down the differences:
Both traditional and prepaid solar leases can be a good fit. The right choice usually comes down to how you prefer to budget and how much certainty you want around long-term costs.
A traditional monthly solar lease can make sense if you want to get started with solar without putting money down and are comfortable with a monthly lease payment that may increase over time. This option tends to appeal to homeowners who value lower upfront cost and flexibility at the beginning of the agreement.
A prepaid solar lease is often a better fit if you want to lock in your solar costs early and avoid escalators altogether. By paying upfront, you trade monthly lease payments for predictable long-term pricing and reduced exposure to future price increases. Many homeowners also appreciate the added certainty as utility rates continue to rise.
Solar leases aren’t new, but the way homeowners think about them is changing. With incentives shifting and electricity costs continuing to climb, many homeowners are taking a closer look at how different financing options can help save money.
New solar financing options can raise a lot of questions, and that’s completely normal. The details matter, and having a team that understands both how these programs work and how they will affect individual homeowners can make the process feel far less overwhelming.
Citadel Roofing & Solar has over 30 years of experience in helping homeowners navigate everything from early incentive programs to today’s evolving lease structures. Our in-house teams handle installation from start to finish, and we remain a long-term partner well after your system is turned on.
If you’re considering solar and want help comparing a traditional solar lease and a prepaid lease, schedule a free consultation with our team.