Can a solar lease cost more than grid power? Check the real numbers

Start with the value of the solar, not its annual output

Suppose a home uses 7,000kWh in a year and its panels make 6,760kWh. Those numbers look almost equal. They do not mean the electricity bill will almost disappear.

Solar is made during daylight. A home may export part of it at noon and then buy electricity back in the evening. If exported power earns less than imported power costs, one exported kilowatt-hour does not cancel one imported kilowatt-hour in money terms.

The first calculation can stay simple:

Annual value of solar = solar used directly in the home × the retail price avoided at that time + solar exported × the export credit.

Then compare that annual value with the annual lease payment. If the solar saves $900 from the utility bill but the lease costs $1,150, the household is about $250 behind before considering any other contract differences. The panels can be working exactly as promised while the deal still loses money.

A worked example: the arithmetic is right, but one rate has changed

Take a flat solar lease of $95.77 a month, or $1,149.24 a year. The home uses 7,000kWh, the system produces 6,760kWh, and 40% of the solar is assumed to be used in the home as it is generated.

That leaves 2,704kWh of direct solar use, 4,056kWh exported and 4,296kWh bought from the grid. For an easy first pass, use an average retail price of $0.18/kWh.

The current public tariff used for this example pays $0.096/kWh for excess solar from June 1, 2026. At that export rate, direct solar avoids $486.72 of grid purchases and exports earn $389.38. Together, the solar is worth about $876.10 on the annual bill.

The lease costs $1,149.24, so this simplified calculation leaves the homeowner about $273.14 worse off for the year. Another way to show the same result is $773.28 of remaining grid purchases, minus $389.38 of export credits, plus the $1,149.24 lease: $1,533.14. Grid electricity alone would be $1,260 under the same flat-rate assumption.

If an older export figure of $0.07/kWh were used, the lease scenario would be $1,638.60, or $378.60 more than grid-only power. That arithmetic is also correct. The problem is that an old tariff can make a current decision look worse or better than it really is. Always date the rates in the spreadsheet.

The two assumptions most likely to change the answer

The example is useful because it exposes the shape of the decision. It is not yet a proper bill model.

First, the 40% self-use figure is only an assumption. A household that works from home, runs pool equipment in the day or schedules appliances around solar hours may use more of its own production. A mostly empty house can use less. A battery may move solar into the evening, but the battery cost, losses, usable capacity and replacement terms must then enter the comparison.

Second, many homes do not buy every kilowatt-hour at one flat price. In the public utility example above, the posted 2026 residential price changes by season and time of day. It ranges from 12.85 cents per kWh in non-summer off-peak hours to 37.65 cents per kWh during the summer weekday peak. Solar used at noon and solar used or stored for the evening can therefore have different values.

The clean way to improve the model is to use hourly or half-hourly meter data and an hourly solar estimate. Match each block of solar with what the home was using at that time. Export the rest. Price grid purchases at the actual tariff period. One year of intervals tells a much better story than one annual kWh total.

Fixed charges matter to the bill, but may cancel in the comparison

A utility account may keep a monthly connection or infrastructure charge after solar is installed. That means a sales estimate showing a near-zero electricity bill can still be wrong.

For a lease-versus-grid comparison, however, a fixed charge that is identical in both cases does not change which option is cheaper. Add $300 a year to both sides and the difference between them stays the same. It still belongs in the household budget, but it is not the cause of the lease losing in the teaching example.

Do not remove every utility line automatically. Check whether solar changes the rate plan, minimum bill, demand charge, export arrangement or any other fee. A charge that applies only to one option does affect the result.

Find the break-even point before arguing about forecasts

A break-even check turns a vague sales discussion into a number that can be tested.

With the teaching inputs above, the solar creates about $876.10 of bill value at 40% self-use. The lease would need to cost no more than that—about $73.01 a month—to break even under the simplified rates. The quoted $95.77 monthly payment is higher.

Keep the $95.77 payment and change only self-use, and roughly 88% of annual solar production would need to be consumed in the home rather than exported for the simplified model to break even. Keep 40% self-use instead, and the directly used solar would need to avoid an average retail price of about $0.281/kWh.

These are not promises or targets. They show what must be true for the lease to work on the stated numbers. If a salesperson expects the household to reach one of them, ask for the interval data, operating plan and tariff calculation that support it.

If solar is required, grid-only may not be a real option

Some new homes or local building rules require solar. In that situation, comparing a lease with a house that has no solar can still reveal whether the lease saves money, but it does not identify the best available choice.

The practical decision may be cash purchase versus a loan, lease or power purchase agreement. Put each route over the same contract period. Include the upfront amount, every scheduled payment, likely utility purchases, export credits, maintenance responsibility and end-of-term value. Do not compare one monthly payment with another while leaving the contract length out.

A lease normally charges for use of the equipment. A power purchase agreement charges for the electricity it makes. A purchase gives the homeowner the asset, although a loan can add interest and fees. Incentives and renewable-energy credits may belong to the system owner rather than the resident. The contract, not the sales label, decides.

Read these contract lines before trusting the monthly saving

The energy calculation is only half of a long-term solar agreement. A reasonable first-year result can be undone by payment increases, transfer costs or a weak production remedy. Read the actual contract and ask for unclear answers in writing.