Lease-to-Own (Purchase) vs. PPA: Which Wins for SoCal Homeowners Under NEM 3.0?

The two ways to go solar today

• Lease-to-Own (Purchase): a third-party owner installs and owns the system for the first 6 years. You get the full 30% incentive applied upfront as a discount on the system price. At year 6 the system transfers into your name , you can take ownership in cash, or finance the transfer over 10, 20, or 25 years.
• PPA (Power Purchase Agreement): a third party owns the panels on your roof for the full 20 to 25 year term. You pay them a per-kWh rate for the solar power your roof produces, usually lower than the utility rate, with a small annual escalator. No ownership transfer.

CPTL Energy supports Buy, Lease-to-Own (Purchase), and PPA, so the recommendation is driven by the math on your bill, not by what one lender pays.

What NEM 3.0 changed

Under NEM 2.0, exported solar earned roughly full retail credit, so an oversized panel-only system could zero out a SoCal bill. Under NEM 3.0 (in effect for new SCE and SDG&E interconnections since April 2023), exports earn much less than they used to, which is why battery storage is now essential to capture the real economics.

The midday solar you used to "sell back" at retail now needs to be stored and used during the 4 to 9 p.m. peak window to be worth full value. Without a battery, the payback math under NEM 3.0 doesn't pencil the way it did two years ago.

Lease-to-Own (Purchase): ownership with no upfront check

Lease-to-Own (Purchase) is the program that has largely replaced the traditional cash-or-loan "purchase" path for most California homeowners. The 30% federal solar incentive that used to flow to the homeowner as a tax credit is instead captured by the third-party owner and applied as a 30% upfront discount on the system price. That means you get the benefit without needing the tax liability to absorb a credit, and without writing a big check on day one.

• Down payment: $0.
• Years 1 to 6: the third-party owner owns the system and handles monitoring and any covered maintenance.
• Year 6 transfer: the system transfers into your name. You can take ownership in cash, or finance the transfer over 10, 20, or 25 years.
• Pros: the 30% incentive is built into your price upfront, no large upfront payment, ownership ends up in your name, full home-value bump at resale once transferred.
• Cons: once the system is in your name, out-of-pocket cost to replace batteries and equipment down the road adds to the total cost of ownership; you also need to plan for the year-6 transfer decision.

PPA: predictable, no ownership

A PPA shifts every dollar, equipment, installation, monitoring, maintenance, and replacement, to the PPA provider. You pay a fixed per-kWh rate for the solar your roof produces. The average price in SoCal is around $0.20 to $0.24 per kWh depending on roof orientation. SCE and SDG&E peak rates are commonly $0.55 to $0.75 per kWh, so the spread is what drives the savings.

• Down payment: $0.
• Term: 20 to 25 years, with a fixed annual escalator (often 0 to 2.9%).
• Pros: no upfront cost, no maintenance worries, performance guarantee, immediate monthly savings. Starting year 6, you have the option to purchase the system outright at fair market value if you want to take ownership.
• Cons: you don't own the system during the term and the escalator compounds over time. If you sell the home, the new homeowner automatically qualifies to assume the PPA no matter what, and they also have the option to purchase the system at fair market value.

Side-by-side: SoCal homeowner, 8 kW + battery

*Estimates for an Orange County or San Diego household on SCE TOU-D-4-9PM or SDG&E TOU-DR1 with ~$300/mo pre-solar bills, assuming utility rate inflation of 4 to 6% annually. Real numbers depend on usage, roof orientation, shading, and your current rate plan.

Which option fits which homeowner?

• Lease-to-Own (Purchase) fits homeowners who want to end up owning the system, want the 30% incentive baked into their price without dealing with tax paperwork, and want a path to long-term equity without writing a big check on day one. The flexibility at year 6, pay cash or finance the balance over 10, 20, or 25 years, lets you match the buyout to your situation at that time.
• PPA fits homeowners who want zero responsibility for the system, just want a lower monthly power bill, and don't care about ever owning the equipment. It's the simplest version of going solar.

Conclusion

This is exactly what our phone call is about. Depending on your goals as a homeowner, one option will fit better than the other, and we'll walk through your usage, your bill, and what you want out of going solar to figure out which one that is.