Orphan Solar HelpSolar PPA vs lease vs loan in California: and why you still get a utility bill
Who owns the system, what you pay, who fixes it, and why a solar customer under California’s net billing rules (“NEM 3.0”) still gets two bills. Plain-language, with sources. We’re a directory, not a lender or utility.
The four ways people pay for solar
| Who owns the system | What you pay | Who maintains it | |
|---|---|---|---|
| Cash or loan | You | Cash up front, or a loan payment to the lender | You are typically responsible for repairs and maintenance, which may mean dealing with several manufacturers |
| Lease | The provider | A scheduled monthly payment over a set number of years (typically 20 to 25) | The provider is responsible for monitoring, maintenance and repairs |
| PPA | The provider | A per-kWh rate for the power the system generates, set for the first year and every year after (typically 20 to 25 years) | The provider, as with a lease |
| PACE | You | A payment on your property tax bill | You are typically responsible for repairs and maintenance |
Escalators
Lease and PPA payments typically rise by a set amount each year, called an escalator. The CPUC says escalators are typically 1 to 3 percent above the previous year and to be cautious of a higher one[1]. The CSLB likens a PPA’s escalator clause to a variable-rate mortgage that goes up every year[3]. The CPUC says the supporting-information pages of your contract summarize your financial obligations[1], so look there for your escalator.
Why you still get a utility bill
Two different bills
The CPUC says people who take a solar loan or sign a lease or PPA receive a monthly bill from the loan company or solar provider, and they still get a utility bill[1]. “You will never pay an electric bill again” is one of the false claims the CPUC lists[1].
Solar only covers part of the hours
The CPUC notes the sun isn’t always shining, so most solar customers still rely on the grid[1]. After going solar you typically pay a reduced bill every month and may owe a larger one at the end of the 12-month cycle[1]. The CPUC says most bill savings come from using solar power in your own home, and a minor additional amount comes from credits for what you send to the grid[1].
Export credits are worth less
Under the net billing tariff (the Solar Billing Plan, which the CPUC says is colloquially called NEM 3) the credit for exported power reflects its value to the grid. The CPUC says that’s usually lower than the retail rate, but can rise above it on late summer evenings[2]. That’s why a battery matters: it lets you use or export power in those high-value evening hours[2].
Some charges can’t be offset
SCE says solar credits can reduce certain charges, but fixed fees, non-bypassable charges and taxes can’t be reduced by them[4]. That’s SCE’s rule. Check your own utility’s bill explainer.
How the net billing bill works
- It applies to customers who applied to interconnect on or after April 15, 2023[2].
- Your solar first covers your own use. Exports earn credits[2].
- Your bill is due monthly. Extra credits roll forward until the annual true-up[2].
- You must be on a specific “electrification” time-of-use rate: E-ELEC (PG&E), TOU-D-PRIME (SCE) or EV-TOU-5 (SDG&E)[2].
- The original customer is guaranteed the tariff for nine years[2]. Older NEM 2.0 customers can stay for 20 years from interconnection[2].
Questions to ask about a lease or PPA
From the CPUC’s consumer guide[1]:
- What is the total cost over the whole contract?
- How much do I pay up front, how much over time, and for how long?
- Will my payments increase, by how much, and how often?
- Can I make a down payment to lower the monthly payment or per-kWh rate?
- What happens if I end it early? Is there a balloon payment or termination fee?
- Will it make it harder to sell or refinance my home?
- Who is responsible for monitoring, operations and maintenance?
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