Is a Solar Prepaid Lease Right for Your Arizona Home in 2026?

Published: January 21, 2026

At Solar Topps, we understand that every homeowner’s financial situation is unique. While many of our customers choose to purchase their systems outright to maximize long-term ROI, we recognize that upfront capital isn’t always available or preferred. That is why we offer comprehensive Solar Leasing options designed to fit diverse budgetary needs.

It is critical to understand the landscape of 2026. With the expiration of the federal Investment Tax Credit (ITC) for direct ownership, the financial dynamic has shifted. Previously, buying a system allowed homeowners to claim a significant tax credit directly. Now, starting with a solar lease program often negates the difference in initial savings, as the leasing company (the Third-Party Owner) claims the commercial tax credit and passes those savings down to you in the form of lower monthly payments or a lower prepaid amount.

If you are looking to secure a fixed energy cost without the responsibility of system ownership, a prepaid lease might be your smartest path forward.

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How Solar Leases in 2026 Can Help Offset the Expiration of the Federal Investment Tax Credit

The Federal Investment Tax Credit (ITC) expired December 31, 2025. Homeowners seeking to invest in renewable energy may face challenges in accessing similar financial incentives. Solar leases can serve as a practical solution to this issue by offering cost-effective access to solar energy without upfront ownership expenses.

By opting for a solar lease, you can sidestep the need for claiming the ITC directly, as leasing companies continue to take advantage of commercial tax credits and incorporate those savings into your lease terms. This structure provides predictable energy costs and ensures you can benefit from solar power even as federal incentives are phased out.

How Solar Leasing Works: A Technical Overview

In a Third-Party Ownership (TPO) model, specifically a solar lease, the homeowner does not own the photovoltaic (PV) assets installed on their property. Instead, a solar provider—or a specialized finance partner—owns, operates, and maintains the equipment.

The Mechanics of the Agreement

When you enter a lease, you are essentially renting the solar equipment.

• System Ownership: The provider retains the legal title to the leased solar panels.
• Performance: The provider usually offers a production guarantee. If the system underperforms based on the kilowatt-hour (kWh) estimates in the contract, the provider is responsible for rectifying the issue or compensating for the difference.
• Incentive Monetization: Since the homeowner is not the owner of the asset, they cannot claim local or federal tax incentives directly. However, these incentives are monetized by the lessor (the owner) to lower the cap cost of the lease, resulting in a lower prepaid price for you.

Prepaid vs. Monthly Lease

While a standard lease involves monthly payments over a 20-25 year term, a prepaid solar lease allows you to pay the entire lease amount upfront.

• No Monthly Bill: You eliminate the monthly lien payment to the solar company.
• Reduced Total Cost: Prepaid leases often come at a discount compared to the cumulative total of monthly payments over two decades.
• Immediate Savings: You effectively pre-purchase your electricity for the next 25 years at a fraction of utility rates.

Why Choose a Prepaid Lease in Arizona?

Arizona’s intense solar irradiance makes it a prime location for solar energy, but the financial structure must make sense. Here is why a prepaid lease is a viable strategy in the current 2026 market.

1. Avoid Escalators

Many standard monthly leases include an “annual escalator,” typically ranging from 1% to 2.9%. This means your monthly payment increases every year. While this is often still lower than utility inflation rates, a prepaid lease eliminates this variable. You lock in your cost on Day 1.

2. Maintenance and Monitoring Included

One of the primary advantages of solar panels for lease is the transfer of risk. Because Solar Topps (or the financier) owns the system, we are incentivized to keep it running at peak performance. Operations and Maintenance (O&M) are typically included. If an inverter fails or a panel degrades faster than expected, the responsibility lies with the lessor, not the homeowner.

3. Hedging Against Utility Inflation

Utility rates in Arizona have historically risen, and with grid demand increasing, this trend is likely to continue. By utilizing a Solar Leasing Arizona program, you are essentially “locking in” your energy rates for the lifetime of the system. You insulate yourself from the volatility of the grid.

Choosing Your Solar Path: Monthly vs. Prepaid Leases

When exploring Solar Leasing in Arizona, you typically have two main paths: the monthly lease and the prepaid lease. While a monthly lease offers the convenience of a low entry point, it often comes with long-term downsides. Many monthly contracts include annual payment escalations, meaning your costs increase every year. Furthermore, if you decide to sell your home, a monthly lease can complicate the process, as the new buyer must qualify to take over the agreement.

The Advantage of Locking in Your Rates

The primary goal of a lease is to hedge against utility inflation. However, with a monthly model, you are still subject to internal price hikes. By contrasting these two, it becomes clear that the monthly option is a mixed bag—helpful for immediate access but potentially burdensome over the decades of the system’s life.

The Benefits of a Prepaid Lease:

With a prepaid lease, you can enjoy several key benefits compared to traditional payment models. There are no annual payment increases, and you can secure the system at a much lower rate upfront. The lease term is shorter, typically around 5 years, with the option to buy out the lease at an affordable price—allowing you to own the system outright.

A prepaid lease often provides financial advantages, such as built-in incentives like the 30% credit, which may not always be fully claimable with an outright purchase. While purchasing requires paying for the system upfront to qualify for the expired ITC, there’s no guarantee you’ll receive the full credit. A prepaid lease offers a simpler, cost-effective way to access these benefits.

Financial Flexibility and Predictable Savings

One key advantage of a prepaid lease is the financial predictability it offers. By paying for the lease upfront, you lock in a fixed cost for the solar system over the agreed-upon leasing term. This eliminates the risk of fluctuating energy costs, allowing Arizona homeowners and businesses to budget with greater confidence. Leasing companies often handle maintenance, repairs, and monitoring of the solar system, further reducing unexpected expenses. This financial flexibility makes a prepaid lease an attractive solution for those who want to utilize solar energy without the higher initial investment of purchasing outright.

Optimized Tax Benefits with Fewer Risks

A prepaid solar lease provides a practical alternative to the expired Investment Tax Credit.  It can include the benefits within the leasing terms, translating into a lower overall cost for the customer. This setup not only reduces risk but also simplifies the process of accessing these financial incentives. By opting for a prepaid lease, you can still take advantage of the cost reductions associated with solar energy without navigating the complexities of tax credits independently.

The Solar Topps Standard for Phoenix, Arizona

At Solar Topps, we are not just salespeople; we are an accredited construction engineering firm. Whether you choose to buy or lease, we engineer our systems with the same elite work ethic and precision. We use only premium products and do not rely on subcontractors. This ensures that even if you are leasing the equipment, the installation quality on your roof is second to none.

We believe in transparency. We will provide you with a side-by-side comparison of cash, loan, and lease options so you can make an educated decision based on data, not sales pressure.

Ready to Secure Your Energy Future?

The energy landscape is evolving, but your need for reliable, affordable power remains constant. A prepaid solar lease offers a pathway to energy independence with minimal risk and zero monthly payments. If you need any more information, please feel free to Contact Us.

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