Helping Riverside County homeowners navigate SCE rates and solar options since 2020
Every solar salesperson has a preference. Cash-purchase installers will tell you leasing is a bad deal. PPA companies will tell you leasing is the smart, risk-free choice. Neither is always right. The answer depends on your tax situation, how long you plan to stay in the home, and what your current SCE bill looks like.
This article cuts through the sales framing and gives you the actual financial comparison for Temecula and Murrieta homeowners on SCE TOU-D-PRIME rates in 2026.
The Core Difference: Who Owns the System
Everything else flows from this one fact. With a lease or PPA, the solar company owns the panels on your roof. You are buying electricity from them at a fixed rate - typically 12-18 cents/kWh - rather than paying SCE 59-72 cents/kWh at summer weekday on-peak (59 cents on TOU-D-4-9PM, 72 cents on TOU-D-5-8PM, per SCE's rate page, checked October 7, 2026). When you purchase, the system is yours from day one.
The 30% Federal Tax Credit: The Biggest Number in This Decision
The federal Section 25D residential clean energy credit, which let homeowners deduct 30% of system cost from their taxes, expired for purchases after December 31, 2025. A homeowner buying a solar system in 2026, cash or loan, gets no federal tax credit. Lease and PPA customers still benefit indirectly, since the installer claims a Section 48E credit and passes some of that value through in the rate.
2026 Purchase Cost on a Typical Temecula System
Note: The Section 25D residential credit expired for purchases after December 31, 2025. A system bought in 2026 gets no federal tax credit. Consult a tax advisor for your specific situation.
When you lease or use a PPA, the solar company claims a federal tax credit because they own the system. They price it into their PPA rates and profit model. You benefit indirectly through a lower kWh rate than you would otherwise get - but not dollar-for-dollar. A 2026 purchase gets no federal credit of its own, so the lease or PPA route is currently the only way any part of the federal incentive reaches this decision.
NEM 3.0 Changed the PPA Math
Before April 2023, California's net metering policy (NEM 2.0) paid solar owners roughly the retail rate for excess electricity exported to the grid - around 28-32 cents/kWh. NEM 3.0 cut that export credit to roughly 8 cents/kWh.
This change hit PPAs and leases hard, though many companies do not advertise that openly. Here is why: PPA companies sized and priced their products assuming generous export credits made heavy-production systems financially attractive. With export credits now at 8 cents/kWh, a system that exports a lot of power is essentially giving away electricity. The value shifts entirely to self-consumption - using the solar power you produce rather than sending it to the grid.
What to Check in Any PPA Contract
- -The per-kWh rate (compare to SCE's rate for your plan, for example 59 cents on TOU-D-4-9PM summer weekday on-peak)
- -Annual escalator clause (many PPAs include 1-3%/year rate increases)
- -Buyout terms at years 5, 10, and 15
- -What happens if you sell the home - who qualifies to assume the lease
- -System performance guarantee and what compensation looks like if output falls short
For more context on how NEM 3.0 affects the PPA vs. ownership decision specifically, see our guide on NEM 3.0 and PPAs in California. And for the full incentive picture on the ownership side, see California solar incentives in 2026.
Who Each Option Actually Fits
Purchase Makes Sense If...
- +You want to own the system outright with no escalating payment over time
- +You plan to stay in the home 7+ years, since payback now depends entirely on electricity savings with no federal credit to shorten it
- +You want to maximize long-term savings and home equity
- +You qualify for a solar loan at a competitive rate (typically 5.99-7.99%)
- +Your monthly loan payment is less than your current SCE bill reduction
Lease / PPA May Make Sense If...
- +You want the installer's federal tax credit passed through in your rate, since a 2026 purchase has no credit of its own
- +You plan to sell the home within 5 years and want immediate savings without capital commitment
- +You cannot qualify for a solar loan and have no cash available
- +The PPA rate offered is at or below 18 cents/kWh with no escalator
- +You want zero maintenance responsibility and no equipment risk
20-Year Math: Purchase vs. PPA on a Temecula Home
Using a typical Temecula scenario: 8 kW system, $3,800/year in SCE savings, 1.5% annual SCE rate increase.
Estimates use illustrative assumptions and are not guarantees. Individual results vary based on system production, SCE rate changes, loan terms, home sale timing, and local real estate market. Consult a licensed solar and financial advisor for your specific situation.
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Solar Lease vs. Purchase FAQ
Do I get the 30% tax credit if I lease solar panels?
No. When you lease or use a PPA, the solar company owns the system and claims the federal tax credit under Section 48E, then passes some of that value through in your rate. If you buy the system instead, there is no federal tax credit for a residential purchase in 2026; the 30% Section 25D credit expired for purchases after December 31, 2025.
What happens to a solar lease when I sell my house in Temecula?
You have two options: transfer the lease to the buyer (the buyer must qualify and agree to take over the remaining contract - often 15-20 years remaining) or buy out the system at its fair market value and include it in the home sale. Lease transfers can complicate home sales, as some buyers are unwilling to assume a long-term energy contract.
Is a solar PPA still worth it after NEM 3.0 in California?
It depends heavily on the PPA rate. Under NEM 3.0, export credits dropped from around 30 cents/kWh to around 8 cents/kWh. Many PPAs that made sense before NEM 3.0 now have rates that do not look competitive when you account for low export value. A PPA rate below 18-20 cents/kWh can still make sense for homeowners who cannot use the tax credit and want $0 down. Rates above that need close scrutiny.
Does buying solar increase home value in Temecula?
Research from Zillow and Lawrence Berkeley National Laboratory suggests owned solar systems add approximately 3-4% to home resale value in California. On a $700,000 Temecula home, that is $21,000-$28,000 in added value. Leased systems do not add equivalent value and can create complications in escrow.
Who should consider a solar lease or PPA?
Solar leases and PPAs make most sense for homeowners who want the installer's federal tax credit passed through in a lower rate, since a solar purchase in 2026 gets no federal credit of its own, homeowners planning to move within 5 years who want immediate savings with no long-term financial commitment, and households with limited credit access for a solar loan. For most working-age homeowners in Temecula who plan to stay long-term, purchasing - cash or loan - still produces better long-term returns because you own the asset and avoid an escalating lease payment.