Solar Financing on Long Island: Loan vs Lease vs PPA, 20-Year Math

On Long Island in 2026, a solar loan is usually the best of the three for a homeowner who plans to stay ten years or more, a lease is the low-effort option whose value depends almost entirely on its escalator, and a PPA is a lease priced per kilowatt-hour instead of per month. Compare all three on the 20-year total cost against what PSEG Long Island would have charged you, not on the first monthly payment.

That comparison changed this year. The 30% federal residential credit under Internal Revenue Code Section 25D ended for expenditures made after December 31, 2025, which shifted the math between owning and renting the equipment on your roof. Here is how each structure works now, with the numbers worked through on a typical north-shore house.

The baseline: what the system is worth to you

Every financing comparison needs the same yardstick, so start with the array, not the paperwork.

Take a 10,000 kWh/year house in Greenlawn or East Northport. That home wants about 8.7 kW DC. At a typical Suffolk County installed price of $2.90/W, the gross cost is $25,230. The New York State residential credit under Tax Law 606(g-1) is 25% of cost capped at $5,000, so the net to an owner is $20,230. There is no federal credit on a 2026 cash or loan purchase.

That array offsets about $2,400-$2,700 a year in PSEG Long Island charges at today’s blended rate of roughly $0.27-$0.31/kWh, after the SC1 fixed customer charge that solar cannot touch. Call it $2,550 a year. Over twenty years at flat rates, that is about $51,000 of electricity you did not buy from the utility.

Every option below is judged against that $51,000. The full incentives breakdown covers which state and utility programs are still open and which have closed.

Whatever you sign, the electricity your roof produces is worth the same. Financing only decides how much of that value you keep.

Option 1: Solar loan - you own it

You borrow the system cost, own the array from day one, claim the New York State credit, and keep every dollar of savings once the loan is paid off. Long Island solar loans currently run roughly 5.99% to 8.99% APR over 20 or 25 years.

Worked through on the baseline house, a $25,230 loan at 6.99% over 20 years:

1. Monthly payment: about $195, against roughly $212 a month in avoided PSEG charges
2. Total paid over 20 years: about $46,900
3. Less the NY State credit: -$5,000, bringing the net to about $41,900
4. 20-year savings at flat PSEG rates: about $51,000
5. Net position at year 20: roughly +$9,100, plus five or more years of free production while the 25-year module warranty runs

That margin is thinner than it was in 2025, and it is sensitive to two things. The first is the dealer fee: a loan advertised at 2.99% or 3.99% is usually bought down with a fee of 15-30% of the financed amount, folded into the contract price. Ask for the cash price and the financed price in writing; if they match, the fee is hidden somewhere. The second is the bridge-payment structure older loans relied on, covered in the FAQ below - with no federal refund there is nothing to make the month-18 paydown with.

A home equity line at a transparent rate often beats a subsidized-rate solar loan once the dealer fee is visible. And if you have the cash, paying it outright nets the same house about +$30,800 over twenty years, before counting what that cash could have earned elsewhere.

Option 2: Lease - fixed monthly, someone else owns it

A third party owns the array on your roof. You pay a fixed monthly amount for 20 to 25 years, the owner handles monitoring and repairs, and you put no money down.

The one structural advantage of a lease in 2026 is federal money. The owner of a third-party system claims a commercial credit under Section 48E, which the residential repeal did not touch, and it can price that into your payment. You never see a federal credit yourself; whether any of it reaches you depends on the rate you negotiate.

The variable that decides whether a lease is a good deal is the escalator. Here is an illustrative lease at $150/month on the same baseline house - not a quote, just the arithmetic:

	0% escalator	2.9% escalator
Year 1 monthly	$150	$150
Year 20 monthly	$150	about $258
20-year total paid	$36,000	about $47,900
Savings vs $51,000 baseline	about +$15,000	about +$3,100

With a 2.9% escalator and flat PSEG rates, the lease payment passes the value of the electricity around year 13, and you spend the last seven years paying more than the utility would have charged. PSEG rates have historically risen, which helps the escalated lease, but no one can promise you the rate path for two decades. A 0% escalator turns that bet into a fixed number.

Option 3: PPA - pay per kilowatt-hour

A power purchase agreement is a lease with a different meter. The third party still owns the hardware and claims the same commercial credit, but you pay a set rate for each kilowatt-hour the array produces instead of a flat monthly amount.

The payment moves with the sun: high in June and July, low in December and January, roughly opposite to how a lease or loan feels. The comparison is simpler, though, because it is one rate against another. If your PPA starts at $0.20/kWh against a PSEG blended rate of $0.27/kWh, you save about $0.07 on every kilowatt-hour - about $700 in year one on 10,000 kWh.

The same escalator logic applies. A $0.20/kWh rate escalating 2.9% a year reaches $0.27/kWh in about 10.5 years, and from then on your savings depend entirely on PSEG raising its rates faster than your contract does. A PPA with no escalator and a starting rate well under PSEG’s is a reasonable trade. A PPA with a small discount and a steep escalator is mostly a bet you are making on the utility’s behalf.

Selling the house is where the structures diverge

This is the part door-to-door salespeople skip, and on Long Island, where the average owner moves well inside a 25-year contract, it matters.

• Cash or paid-off system: the array conveys with the house like a new roof. Appraisers increasingly credit owned solar, and there is nothing to transfer.
• Loan: you pay it off from the sale proceeds at closing, the same as any other secured debt. If the lender recorded a fixture filing, the payoff clears it.
• Lease or PPA: the buyer either assumes the contract, which usually means passing the leasing company’s credit check, or you buy it out at the contract’s price. Leasing companies commonly record a UCC-1 fixture filing against the property, so the contract shows up in the title search whether you mention it or not. A buyer who does not want it is a negotiation point at the worst possible moment.

Read the transfer and buyout terms before signing. A contract that cannot tell you, in dollars, what it costs to buy out in year 7 is not finished.

Six questions to put to any financing offer

1. What is the cost per watt? Contract price divided by DC watts, for both the cash price and the financed price.
2. What is the 20-year total I will pay? In writing, under the escalator in the contract.
3. What is the escalator, and is a 0% version available? Ask what the starting rate becomes at 0%.
4. Does the schedule assume a federal paydown? It should not for any 2026 purchase.
5. What does it cost to transfer or buy out if I sell in year 5, 10 or 15?
6. Who is responsible for removing and reinstalling the array if the roof needs replacing? On a lease or PPA this should be in the contract; on a loan it is on you and your installer.

The site’s financing page summarizes the four paths in short form, and the install process page lays out the permitting and PSEG Long Island interconnection timeline that applies to all of them.

Getting your own numbers

Every figure above is a county average. The comparison that matters is your own: your last 12 months of PSEG-LI usage, your roof, your quotes, side by side on the 20-year total. A residential solar installation assessment should give you a cost per watt and a production estimate you can plug into any of the three structures - and an honest one will tell you when a lease or PPA is actually the better fit for how long you plan to stay.