The three arrangements
Almost every residential solar system is paid for in one of three ways. Which one you have decides who owns the equipment, who claims any tax benefit, what happens when you sell, and what there is to review in the first place.
- A loan. You borrow money, you own the system, and you repay a lender monthly. The equipment is yours; the debt is yours.
- A lease. Someone else owns the system. You pay a fixed monthly amount to have it on your roof and use what it produces.
- A power purchase agreement, usually shortened to PPA. Someone else owns the system and you buy the power it makes, billed by the kilowatt-hour rather than at a flat monthly rate.
- Paid in cash. You bought it outright. There is no ongoing agreement, which is also why there is nothing for us to review.
How to tell from your own paperwork
You do not need the whole file to work this out. A single recent statement usually settles it.
Look for these
- A payoff balance or a remaining principal figure means a loan. Leases and PPAs do not have one.
- A rate expressed per kilowatt-hour means a PPA. A flat monthly figure suggests a lease or a loan.
- An interest rate on the statement means a loan.
- Wording about the system being "owned by" or "provided by" the other party points to a lease or a PPA.
- If a tax credit was discussed as something you would claim yourself, that generally indicates a loan.
Why the distinction matters so much
It changes who is responsible for maintenance and repair. It changes what happens when the roof needs work. It changes what a buyer has to do if you sell the house — a loan is usually paid off or assumed, while a lease or PPA is normally transferred to the buyer, who has to be approved first.
It also changes what a review can look at. A loan has financing terms and disclosures attached to it. A PPA has a rate and an escalation schedule. They are different documents asking different questions.
If you genuinely do not know
That is a completely normal answer and it is one of the options on our form. Bring a statement and the agreement if you can find it, and working out which one you have is the first thing a review does.