First year production = System kW × Yield per kW × (1 − Loss %)
Yearly production = First year production × (1 − Degradation %) ^ (Year − 1)
Yearly lease = Monthly lease × 12 × (1 + Lease escalator %) ^ (Year − 1)
Utility rate = Starting utility rate × (1 + Utility escalation %) ^ (Year − 1)
Benefit = Credited kWh × Utility rate × Credit % + Demand savings
Net cash flow = Benefit − Lease payment − Fees − Upfront cost − Buyout cost
Net present value = Sum of yearly net cash flow ÷ (1 + Discount rate) ^ Year
How to Use This Calculator
Enter the solar system size and expected first year yield. Add shade losses if the roof is not ideal. Enter the lease payment, yearly escalator, and lease term. Add the utility rate and expected rate inflation. Include annual fees, upfront costs, and buyout costs when they apply. Press the calculate button. Review total savings, yearly cash flow, and net present value. Use the CSV or PDF button to save the result.
Solar Lease Planning Guide
Why a Solar Lease Needs Care
A solar lease can lower an electric bill without a large purchase. Yet the contract can last for many years. Small escalators, weak production, or high buyout terms can change the final value. This calculator turns those moving parts into a yearly view. It compares lease payments with the value of generated electricity. It also shows net savings, payback pressure, and discounted value.
Key Lease Cost Drivers
The first monthly payment is only the starting point. Many leases increase every year. This is called an escalator. A two or three percent escalator may look small. It compounds over the term. Utility rates can rise too. Savings grow when utility inflation is higher than the lease escalator. Savings shrink when production falls or the offset is low.
Production and Degradation
Panels usually produce less energy as they age. The degradation input reduces yearly output. The system size and yield value estimate first year production. Shade, roof angle, inverter losses, and weather can reduce output. Use a conservative yield when you are unsure. A lower estimate creates a safer lease review.
Buyout and Cash Flow
Some agreements allow a buyout at the end. Others include removal or transfer rules. This tool subtracts buyout cost when selected. It also includes upfront and annual fees. The net present value discounts future cash flows. This helps compare money today with savings many years later.
Using Results Wisely
A positive result does not guarantee a good contract. Read the lease terms. Check roof responsibility, insurance, performance guarantees, transfer clauses, and repair duties. Compare this lease with a cash purchase, loan, and power purchase plan. Ask the provider for the exact production model. Then run the numbers again with cautious inputs. A strong lease should still look useful under lower output and higher fees.
Common Review Mistakes
Many owners compare only the first month. That can hide later increases. Others forget that some savings depend on net metering rules. Fixed charges may remain even with strong production. Home sale terms also matter. A buyer may need to assume the lease. Always test best case, expected case, and low production case. The spread shows contract risk clearly. Ask questions before signing today.
FAQs
What is a solar panel lease?
A solar lease lets you use a solar system for scheduled payments. The provider usually owns the equipment. You receive power benefits, while lease terms define payment increases, repair duties, and transfer rules.
What is a lease escalator?
A lease escalator is the yearly payment increase. It may be fixed in the contract. Even a small escalator compounds over many years, so it can strongly affect total cost.
Why include panel degradation?
Solar panels usually make slightly less electricity each year. Degradation lowers future production. Including it gives a more realistic estimate of long term lease savings.
What is net metering credit?
Net metering credit is the value given for exported or offset solar energy. A full credit uses the retail rate. A lower credit reduces estimated benefits.
Should I include buyout cost?
Include buyout cost if you expect to purchase the system later. Leave it out when you only want the lease period cash flow without ownership transfer.
What does net present value mean?
Net present value discounts future cash flows to today. It helps compare long term savings with current money. A higher value usually means a stronger financial result.
Can this calculator replace a contract review?
No. It estimates cash flow only. You should still read the lease, check warranty duties, review transfer rules, and compare offers before signing.
Why are my results negative?
Negative results can happen when lease payments, fees, buyout costs, or escalators exceed power savings. Try lower production and higher fees to test risk.