California Solar Education

The Evolution of Solar Leases & PPAs

Understanding how California's solar financing market evolved from 2006 to today and why many homeowners are reconsidering assumptions formed years ago.

Many homeowners today are still evaluating solar leases and Power Purchase Agreements (PPAs) using information they heard years ago.

That information may have been accurate at the time.

But California's solar market continues to evolve.

  • Utility rates changed.
  • Battery technology changed.
  • Consumer protections changed.
  • Federal tax treatment changed.
  • California's net-metering policies changed.

The purpose of this guide is to explain how we got here.

Two people seated together in a warmly lit indoor setting
Pictured with my 80-year-old mother. When helping her evaluate solar for her home, we considered costs, battery needs, flexibility, future home-sale considerations, and long-term goals. We also considered something often overlooked: what matters most at different stages of life. For many seniors, reducing maintenance responsibilities, preserving capital, and having greater peace of mind can be just as important as maximizing financial return. After evaluating the available options, a modern solar lease proved to be the best fit for her situation and priorities. Experiences like this are one reason I believe homeowners deserve guidance based on current facts rather than assumptions formed years ago.

Market Evolution

From SolarCity to Today

A visual history of how residential solar moved from an expensive ownership product into a modern solar-and-storage decision.

2006

SolarCity helps popularize residential third-party ownership.

2010–2016

Adoption grows and upfront barriers fall.

NEM 2

Retail-rate net metering supports rapid ownership growth.

Battery Era

Storage becomes practical for homes.

Apr. 15, 2023

New Net Billing rules apply to new IOU interconnections.

Today

Timing, storage and complete cost matter more.

How the Conversation Evolved

Three Changes That Reshaped the Market

Why Leasing Opened The Market

Early third-party ownership dramatically reduced the upfront investment required to adopt solar. Instead of purchasing equipment outright, homeowners could access solar through long-term agreements while the provider owned and serviced the system.

Why Batteries Changed The Discussion

Solar produces during daylight hours. As battery technology became practical for residential adoption, homeowners gained the ability to store energy for later use rather than relying entirely on real-time production and utility interaction.

Why Agreements Require Actual Review

Roof coverage, transfers, production guarantees, monitoring, battery coverage, buyout rights, and end-of-term options vary by provider and contract. Understanding the actual agreement remains more important than assumptions.

A Fresh Evaluation

Why Homeowners Are Re-Evaluating Leases

Many homeowners are now revisiting assumptions formed years ago and evaluating solar financing using today's facts rather than yesterday's market conditions.

  • Utility costs changed.
  • Battery adoption expanded.
  • Consumer protections improved.
  • Net Billing changed solar economics.
  • Federal homeowner tax treatment changed.

What Changed?

From Production Alone to Active Energy Management

NEM 2 Thinking

  • Generate electricity.
  • Export excess production.
  • Receive utility credits.
  • Solar production was often the primary focus.

NEM 3 Thinking

  • Generate electricity.
  • Use electricity.
  • Store electricity.
  • Manage electricity.
  • Production timing matters.
  • Consumption timing matters.
  • Battery operation matters.
  • The relationship between production and bill reduction is no longer as straightforward.

Decision-Making in Practice

A California Homeowner Example

One California homeowner in PG&E territory was interested in going solar.

The homeowner had previously purchased solar on another property and initially assumed ownership would again be the obvious choice.

At the same time, utility costs continued increasing and future electricity usage was expected to grow.

Initially, the homeowner assumed ownership was automatically the best option.

However, after evaluating:

  • Utility-only costs
  • Cash purchase
  • ROI comparisons
  • Solar lease structures
  • Battery requirements
  • Remaining utility exposure
  • Upfront capital requirements
  • Future possible usage increases

the discussion became much broader.

The conversation was no longer simply: Should I buy solar?

Instead, the evaluation became: How should I manage energy costs and risk over the next 20+ years?

After comparing financial returns, risk exposure, peace of mind, flexibility and future energy needs, the homeowner ultimately concluded that a modern solar lease aligned most closely with the priorities that mattered most.

The important lesson was not that leasing is always better.
The lesson was that the evaluation became much bigger than ownership alone.

Common Assumptions

Important Ideas Worth Re-Examining

Select any topic to see why a complete evaluation matters.

Ownership may absolutely be the correct choice for some homeowners. However, ownership is only one variable. A complete evaluation may also include upfront capital, financing costs, battery requirements, remaining utility costs, service responsibilities, opportunity cost, and long-term cash flow.

Production and bill reduction are not identical calculations under current California structures. Solar production, battery operation, imports, exports and load timing all affect the result.

Consumer protections improved. Battery adoption expanded. Utility economics changed. Technology improved.

Modern batteries may also affect how and when solar energy is consumed, stored and purchased from the utility.

Monthly payment is only one factor. Total long-term cost, flexibility, maintenance responsibilities, energy goals and future changes all deserve consideration.

The Question Has Changed

How Homeowners Frame the Decision

Should I Consider Solar?

Should I Buy Solar?

How Should I Manage My Energy Costs and Risks Over the Next 20+ Years?

An Advisor's Point of View

Why My Perspective Changed

As someone who has worked in California residential solar since 2013, I spent many years in a market where ownership was commonly viewed as the preferred solution.

The environment today is different.

Utility costs are different
Battery economics are different
Consumer protections are different
Federal homeowner tax treatment is different

Many assumptions homeowners formed years ago deserve to be revisited using today's facts.

Modern PPAs and leases solve different problems.

For some homeowners they may provide:

  • Lower upfront investment
  • Battery access
  • Capital preservation
  • Defined service obligations
  • Simplified maintenance responsibilities

For other homeowners, ownership may remain the better fit.

The answer depends on the homeowner's goals, preferences, priorities and circumstances.

Long-Term Guidance

My Role Does Not End After Interconnection

Many homeowners assume solar decisions end when the utility grants Permission to Operate.

In reality, that is often when new questions begin.

Utility bills
Battery operation
Monitoring
Production
Service requests
Home sales
Agreement transfers
Future usage changes

My philosophy has always been:

Installation is not the finish line.
It is the beginning of the homeowner's energy journey.

Primary References

Sources & Further Reading

Explore official California resources and industry information for additional detail.

CPUC Net Billing Tariff Visit official source California Solar Consumer Protection Guide Visit official source CSLB Solar Requirements Visit official source SEIA Third Party Solar Financing Visit official source IRS Residential Clean Energy Credit Visit official source California Public Advocates Office Visit official source