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With the residential ITC gone, how you finance solar in Pennsylvania matters more than ever. PPA/lease now avoids both the $0 ITC problem AND PA's sales tax + property tax penalties. Here is every option compared.
Cash 25yr Savings
$54K
best ROI
PPA Savings
$80/mo
$0 down
Loan Payment
$372/mo
7% APR, 15yr
Section 48
July 4, 2026
PPA/lease deadline
Before 2026, the 30% ITC made cash and loan purchases clearly superior — you got $11,000+ back on your taxes. Now with $0 ITC for homeowners, PPA/lease avoids PA's 6% sales tax ($2,300+) and property tax increase ($450/yr) that cash and loan buyers still face. The third-party PPA/lease owner still gets the 30% Section 48 credit through July 4, 2026.
All values based on a 12.81 kW system at $3.05/W in eastern PA (PECO territory).
| Metric | Cash | Loan | PPA | Lease | HELOC | PACE |
|---|---|---|---|---|---|---|
| Upfront Cost | $41,415 | $0 | $0 | $0 | $0 | $0 |
| Federal Credit | $0 | $0 | 30% (to owner) | 30% (to owner) | $0 | $0 |
| Ownership | You own | You own | Third party | Third party | You own | You own |
| SREC Income | You keep | You keep | Owner keeps | Owner keeps | You keep | You keep |
| PA Sales Tax | $2,344 | $2,344 | $0 | $0 | $2,344 | $2,344 |
| Property Tax | +$450/yr | +$450/yr | $0 | $0 | +$450/yr | +$450/yr + PACE |
| Payback | ~13 yrs | ~15 yrs | Day 1 | Day 1 | ~14 yrs | Varies |
| 25-Year Savings | $54K | ~$35K | $24K | ~$20K | Varies | Varies |
Upfront
$41,415
Monthly
$0
Federal Credit
None ($0)
Payback
~13 years
Best for: Homeowners with cash reserves who want maximum long-term savings and own their SRECs.
PA-specific note: In PA, cash ownership loses more value than in NJ or MA because PA has no sales tax exemption and no property tax exemption. These extra costs extend the payback by 1-2 years compared to neighboring states.
Upfront
$0 down (typically)
Monthly
~$372/mo (15-yr @ 7%)
Federal Credit
None ($0)
Payback
~15 years
Best for: Homeowners who want ownership benefits without a large upfront payment and can handle monthly loan payments.
PA-specific note: At 7% APR over 15 years, you pay $25,545 in interest. With no 25D ITC to make a balloon payment, monthly payments are higher than they were in 2024-2025. Total cost: $66,960.
Upfront
$0
Monthly
~$80/mo savings
Federal Credit
30% (Section 48, to owner)
Payback
Day 1 savings
Best for: Most PA homeowners in 2026 — MORE attractive post-ITC because homeowners get $0 federal benefit on cash/loan while PPA companies still get 30%.
PA-specific note: PPA is uniquely advantaged in PA because it avoids both the 6% sales tax AND the property tax increase. In states with tax exemptions (NJ, MA), cash ownership is more competitive. In PA, PPA avoids $2,300+ in sales tax and $450/year in property tax increases.
Upfront
$0
Monthly
Fixed monthly (lower than electric bill)
Federal Credit
30% (Section 48, to owner)
Payback
Day 1 savings
Best for: Homeowners who want predictable monthly costs without production variability. Similar to PPA but with fixed payments rather than per-kWh pricing.
PA-specific note: Like PPA, a lease avoids PA's sales tax and property tax penalties. The key difference from PPA: lease payments are fixed monthly, while PPA payments fluctuate with production. Choose lease if you value payment predictability.
Upfront
$0 (draw from equity)
Monthly
~$293/mo (interest-only phase)
Federal Credit
None ($0)
Payback
~14 years
Best for: Homeowners with significant home equity who want ownership plus the tax benefit of deductible interest.
PA-specific note: HELOC interest deductibility is a meaningful advantage in PA where there are no other tax benefits for solar. At 8.5% variable, the after-tax cost is lower than the stated rate. Note: HELOC rates are currently elevated and may decline.
Upfront
$0
Monthly
Added to property tax bill
Federal Credit
None ($0)
Payback
Varies by terms
Best for: Homeowners in participating PA municipalities who want ownership without traditional financing constraints.
PA-specific note: PACE availability is limited in PA. Check with your local government. The property lien aspect can complicate mortgage refinancing or home sales. Use PACE only if other financing options are not accessible.
PA has unique disadvantages that affect financing decisions differently than neighboring states.
PA charges $2,344 in sales tax on a typical system. NJ, MA, and RI all exempt solar. PPA/lease avoids this cost entirely.
Favors PPA/LeaseSolar adds to assessed value, costing ~$450/year. NJ, MA, RI, and NH all exempt solar. PPA/lease avoids this because you don't own the system.
Favors PPA/LeasePA offers zero state-level financial incentive for solar. No rebate, no state tax credit. Other states (RI REF, CT, MA SMART) provide thousands.
NeutralPA SRECs earn $448/year. Only cash, loan, HELOC, and PACE owners keep SRECs. PPA/lease owners forfeit this income.
Favors Cash/LoanPPA/lease companies still get 30% ITC through July 4, 2026. This is the only way to access federal benefit in PA. Deadline matters.
Favors PPA/LeasePPL customers face proposed tariff changes July 2026. All financing types are affected, but the urgency to install before changes applies to everyone.
Act Now (All Options)Switch between Cash, Loan, PPA, Lease, and Community Solar to see how each option affects your PA solar ROI.
Estimate your solar return on investment with SREC income, net metering credits, and PA-specific costs.
Federal Residential Solar Tax Credit (Section 25D) Expired
Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. Section 25D expired December 31, 2025.
Greater Philadelphia / Southeast PA
Electric Rate
$0.18/kWh
Net Metering
1:1 retail credit
SREC Value
~$28/SREC
Interconnection
4-8 weeks
~12 SRECs/yr at ~$28/SREC
Payback Period
12.7
years
25-Year Savings
$48,511
total
Monthly Benefit
$208
per month
Estimates based on average 2026 PA solar pricing at $3.00/W, SREC spot ~$28/SREC, 1:1 retail net metering, 6% PA sales tax (applies to solar), NO PA state rebate, NO property tax exemption. Section 25D residential ITC expired Dec 31, 2025 -- $0 federal tax credit for cash/loan purchases.
It depends on your situation. For homeowners who can afford the upfront cost, cash purchase delivers the best 25-year savings (~$53,573). For homeowners who want $0 down with immediate savings, a solar PPA is now the most compelling option because the financing company claims the 30% Section 48 ITC and passes savings through as a lower rate. Without the residential ITC, PPA/lease is MORE attractive in 2026 than it was in 2024.
For many PA homeowners, yes. A PPA offers $0 upfront, avoids the 6% PA sales tax, avoids property tax increases, and provides immediate 20-40% bill savings. The financing company claims the 30% Section 48 ITC (available through July 4, 2026). With cash/loan purchases yielding $0 in federal credits, the PPA advantage has grown significantly.
Not for cash or loan purchases — Section 25D expired December 31, 2025. However, if you use a PPA or lease, the third-party owner claims the 30% Section 48/48E ITC on projects beginning construction before July 4, 2026. The benefit is passed to you as a lower electricity rate. HELOC interest is tax-deductible (consult your advisor).
PA charges 6% sales tax on solar equipment and installation. For a typical 12.81 kW system at $39,071, the sales tax adds $2,344. This is a cost that NJ, MA, and RI all waive through sales tax exemptions. PPA/lease avoids this cost because you are not purchasing equipment.
Solar loan APRs in PA typically range from 6-8% in 2026. For a $41,415 system financed at 7% over 15 years, monthly payments are approximately $372 with total interest of $25,545. Without the 25D ITC to make a lump payment, total cost is significantly higher than in 2024-2025.
No. With a PPA or lease, the third-party system owner retains the SRECs. The value of SRECs is factored into the lower rate they offer you. To earn SREC income directly ($250-560/year in PA), you must own the system through a cash purchase, loan, HELOC, or PACE financing.
PACE (Property Assessed Clean Energy) is available in some PA municipalities, but not all. PACE allows you to finance solar through your property tax assessment with $0 upfront. The assessment transfers to the new owner if you sell. Check with your local government for availability. Be aware that PACE creates a property lien that is senior to your mortgage, which some lenders object to.
A HELOC can be a good option if you have significant home equity and want to own your system. HELOC interest is typically tax-deductible (IRS rules apply), which effectively reduces your borrowing cost. At 8.5% variable rate, the after-tax cost is lower than stated. The risk is rate variability — if rates rise, your payments increase.
Section 48/48E requires projects to begin construction before July 4, 2026. This is the deadline for PPA/lease providers to lock in the 30% commercial ITC. After this date, PPA/lease terms will be less favorable because the financing company will no longer receive the 30% credit. If you are considering a PPA or lease in PA, act before this deadline.
Get personalized quotes for cash, loan, and PPA options. Compare side by side and choose the financing that matches your goals.