Prepaid solar leases and PPAs: an installer's guide

A prepaid solar lease lets a homeowner pay once, upfront, for 20 to 25 years of solar while a third-party owner holds the system and claims the Section 48E commercial tax credit. That credit comes back as a lower price, often around 30% below a cash purchase according to EnergySage, with no monthly payments and a path to ownership after year five. With the homeowner tax credit gone, it is the biggest discount most of your customers can get in 2026.

This guide is for installers and the lenders who fund them: how prepaid works, what it saves, when the homeowner owns the system, which disclosure rules apply and how to pitch it.

How does a prepaid solar lease work under Section 48E?

A third-party owner (TPO) buys the system you install and claims the Section 48E Clean Electricity Investment Credit. The homeowner prepays for the system's use (a prepaid lease) or its power (a prepaid PPA), and the TPO builds the credit into that one price.

The residential 30% credit, Section 25D, is not available for property placed in service after December 31, 2025, so cash and loan buyers get no federal credit. A TPO can still claim 48E: 6% base, up to 30% when wage and apprenticeship rules are met, plus 10 percentage points each for domestic content and energy communities. Under IRS Notice 2025-42, solar projects that began construction after July 4, 2026 must be in service by December 31, 2027.

The partners differ in what is prepaid. Maxwell Power sells a prepaid PPA covering 20 years of guaranteed solar power. Participate Energy sells a prepaid lease with a 25-year initial term. Propel by Concert Finance keeps the system with a third-party owner for five years, then transfers it to the homeowner.

How much does a prepaid solar lease save compared to cash?

Expect roughly 20% to 30% off the cash price, and more where bonus credits stack. Solar.com puts the typical discount at 20% to 30%, EnergySage says around 30%, and Propel can cut total system costs by up to 30%, or up to 40% in energy communities.

On an illustrative $30,000 system at a 30% discount: $30,000 x 0.70 = $21,000, paid once. That is $9,000 less than cash. If the homeowner finances the prepayment, the loan starts at $21,000 instead of $30,000, a smaller principal for the lender on the same system.

A traditional loan moves the other way. The CFPB found that hidden dealer fees typically add 10% to 30% to the cash price; its own example turns a $30,000 system into a $39,000 loan before interest.

Comparison table for an illustrative $30,000 solar system: a prepaid lease or PPA costs $21,000 once with no monthly payments and an ownership option after year five; cash costs $30,000 with no federal tax credit; a loan carries $33,000 to $39,000 of principal plus interest; a standard lease is $0 down with 20 to 25 years of monthly payments and a fair market value buyout

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What is a solar lease, and how is prepaid different?

A standard solar lease is a contract, typically 20 to 25 years, where the homeowner pays a monthly fee to use a system the solar company owns. The company keeps the tax credit, and many leases raise the payment 1% to 3% a year.

A prepaid lease replaces 240 to 300 monthly bills (20 or 25 years x 12) with one payment and no escalator, and ownership opens after year five instead of at the end of the term. A PPA bills per kWh rather than a flat fee; a prepaid PPA covers those kWh upfront. For the bigger picture, see why more solar companies are choosing TPO and PPA over cash or traditional financing.

When can the homeowner own a prepaid system?

After year five, usually at the start of year six. Under Section 50 of the tax code, if the owner disposes of the system in the first full year, 100% of the credit is recaptured, falling to 80%, 60%, 40% and 20% through year five. So the TPO holds for five years.

Participate offers transfer at fair market value after the initial 6-year period. Maxwell lets customers buy the remaining years of production after the sixth anniversary. Propel transfers after five years. EnergySage notes that contracts typically transfer at fair market value set "in good faith" by the provider, so never promise a $0 buyout the contract does not state.

Timeline of a prepaid solar lease on an illustrative $30,000 system: on day one the homeowner prepays $21,000 and the third-party owner claims the 48E credit; years one to five are the recapture period, with 100%, 80%, 60%, 40% and 20% of the credit at risk; in year six the buyout or transfer window opens; from year six to the end of the 20 or 25 year term the homeowner owns the system or the agreement runs to term

Which state disclosure rules apply to prepaid leases and PPAs?

Prepaid deals are still leases and PPAs, so state third-party ownership rules apply in full. Four examples:

California. The CSLB requires the Solar Energy System Disclosure Document in boldface 16-point font on the front or cover page of every contract, before completing a sale, financing or lease.

Colorado. Leases and PPAs signed on or after July 1, 2026 need a written disclosure of no more than four pages, at least three business days to cancel and a recorded welcome call (Mayer Brown).

Nevada and Oregon. Nevada's SB 379 and SB 440 require a recorded call with the homeowner before installation. Oregon's HB 4029, effective June 5, 2026, adds disclosure rules for sales, leases and PPAs (same source).

How should installers pitch a prepaid solar lease?

Lead with it. Show prepaid first, then cash, loan and standard lease on the same design, so the only thing that changes is how the homeowner pays.

A simple talk track: "Buying this system is $30,000, and homeowners no longer get a federal tax credit. With a prepaid lease, a solar company owns it for five years and claims a business credit, so you pay $21,000 once, with no monthly payment. After year five, you can own it."

Then handle the objections:

"What will the buyout cost?" Read the transfer clause together.
"What if I sell the house?" Participate says its system is fully transferable, with no credit check for the buyer and no UCC property lien.
"Can I pick any panel?" Not freely. 48E projects must meet FEOC rules on Chinese equipment.
"I don't have $21,000." Finance the prepayment and compare it with a loan on the full $30,000.

Participate Energy, Maxwell Power and Propel are available inside Artemis, so a rep can design, qualify and show prepaid pricing without opening another portal. The Participate integration shows the prepaid lease alongside other financing in real time, and Presentation Mode keeps that comparison clean in front of the homeowner.

Artemis financing option card for GoodLeap ($0 upfront, $116 a month), next to the Participate Energy, Maxwell Power and Propel by Concert Finance prepaid partner toggles in Artemis

FAQ

Is a prepaid solar lease the same as buying solar?

No. A third-party owner holds the system for at least five years and claims the 48E credit. The homeowner gets the discount now and can own the system after year five.

Can homeowners still get the 30% solar tax credit in 2026?

Not directly. Section 25D ended after 2025, so the credit now reaches homeowners only as a lower lease, PPA or prepaid price.

What happens if the homeowner sells before year six?

It depends on the contract. The buyer may assume the agreement, or the seller may negotiate an early buyout, per EnergySage.

How long will prepaid solar leases be available?

As long as TPO providers can claim 48E. Solar projects that began construction after July 4, 2026 must be in service by December 31, 2027.

Book a free demo to see Participate Energy, Maxwell Power and Propel prepaid pricing next to cash and loan in a single Artemis proposal.