Key Takeaways
How does prepaid solar work, and does the homeowner own the system? With a prepaid solar lease or PPA, the homeowner pays the agreement upfront, but a third-party company continues to own the system until the contract allows ownership to transfer. Homeowners should carefully review when ownership changes, what happens if they sell the home, who pays for maintenance, and whether the transfer is automatic or requires a buyout. An independent equipment-and-labor warranty can help protect homeowners from unexpected repair costs after they take ownership.
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Now more than halfway through 2026, prepaid solar leases and prepaid PPAs have become a major part of the solar mix. Homeowners are gravitating toward this option to use available tax credits while giving themselves a pathway to own the system down the line. Recent reports by Ohm Analytics estimate that prepaids could make up more than 10% of the total solar financing market share by the end of 2026.
With the 48E commercial tax credit expiring at the end of 2027, that market share percentage is likely to climb even higher by 2027’s end. But prepaids are complex, and with so many homeowners choosing to go solar with a prepaid, many of the same questions keep popping up.
At Solar Insure, we work with hundreds of solar providers across the country in various markets. These are some of the most common questions our providers have been asked by homeowners about prepaid solar.
Download our Buyers’ Guide to Prepaid Solar:
Table of Contents
#1. How is the system discounted, and who owns the system?
The most common misconception about prepaids is that homeowners assume that because they have paid the entire cost up front, they own the system. This is not the case. What homeowners are prepaying is the entire amount of the lease or PPA, not the actual cost of the system.
In every prepaid option, the lessor (company supplying the capital) owns the system on your home until the ownership transfer window opens. Each company has different guidelines on when ownership can be transferred.
As for the system discount, the homeowner may benefit indirectly from the 48E tax incentives and depreciation tax credits available to commercial businesses. Because the third-party owner can monetize these credits, they can be passed along to homeowners in the form of lower upfront costs. The exact amount passed on to consumers varies by lessor, but normally ranges from 10-40%.
#2. Why is the contract so confusing?
Unlike a traditional loan, a prepaid agreement is a legal ownership contract rather than simply a financing agreement. It defines ownership rights, servicing responsibilities, insurance requirements, transfer provisions, buyout options, and eventual ownership transfer.
Because of the more detailed nature and complex terms, homeowners should understand the major milestones and terms before signing. Those milestones include:
- Upfront cost
- Who is responsible for maintenance and upkeep during the third-party ownership window
- When ownership can transfer and if it happens automatically
- Who is responsible for maintenance once ownership has transferred
- The relationship between all parties during the lifetime of the agreement
#3. What happens if I sell my house?
Selling a home with solar panels adds another layer to the home buying/selling process, and a complex agreement on top of it can add to the confusion. Our past research studies have shown that homes with owned solar systems sell for 5-10% more, but a leased system may not have any value effect.
If a homeowner has a prepaid system on their home, they generally have several options:
- Transfer the agreement to the new homeowner (subject to qualification)
- Purchase the system if allowed by the agreement before selling
- Pay off any remaining contractual obligations during the sale
The various prepaid providers may have variations on the options available or if there are any transfer fees, so homeowners need to understand these options before signing if they plan on moving at some point.
#4. How/When does the system transfer back to my ownership?
Unfortunately, there is no universal answer to this question. Each lessor establishes its own ownership transfer timeline and conditions. Some products allow ownership transfer after a fixed number of years, others at the conclusion of the lease term, and some provide purchase options throughout the agreement.
In many cases, ownership transfer can happen after 5-6 years because that is how long it takes to monetize the tax credits. But, again, every provider offers different terms in their agreement. There is no standard.
In some cases, ownership transfer is not automatic. Homeowners need to be sure they fully understand what their agreement entails if they want to own the system eventually.
#5. Who services my system before, during, and after the agreement?
Maintenance of the system generally becomes the responsibility of whoever owns the system at that time. As is the case with traditional TPO, when the third-party owns the system, they are typically responsible for maintenance.
Once ownership transfers to the homeowner, the homeowner is responsible for maintenance. During both of these times, however, the original installer will likely be involved as the professional who performs the maintenance.
While the lessor owns the system, they would pay for any labor costs associated with repairs. Once ownership is transferred, any costs that arise from repair would fall to the homeowner.
Ensuring Your System is Protected
The issue of warranty and repair responsibility underscores the importance of a trusted, independent component and labor warranty. Solar Insure has approved the use of our SI-30 warranties with several prepaid financing options so homeowners can receive the same long-term protection they deserve, regardless of how they choose to finance their system.
With a Solar Insure SI-30 warranty, homeowners can know they are protected from surprise repair costs that may arise from maintenance once they officially own the system.
Learn more about Solar Insure Warranties: https://www.solarinsure.com/warranty-comparison
Ready to go solar and want a Solar Insure warranty protecting you? Check out our Featured Providers or fill out a form to be connected with a Certified Provider near you: https://www.solarinsure.com/featured-providers
Prepaid Lessor Quick Reference Guide
Many prepaid options are available, and each has its own unique terms and conditions. With that in mind, we’ve put together this guide on some of the most popular options available.
An important note: prepaid options are constantly evolving and may have updated terms from what you see here. Always carefully review your contract and the lessor’s terms to be sure you fully understand what is and isn’t included.
| Feature | Propel (Concert / SolSource) | HDM Capital | Thrive Power | Participate Energy |
| Ownership timing | ✅ ~Year 5 | ✅ Year 6 | ⚠️ ~Year 5–6 (varies by contract) | ❌ Optional only |
| Transfer type | Intended automatic (some FMV language) | Automatic (~$0 structured) | ⚠️ Option-based or structured transfer | FMV buyout required |
| Buyout required | ⚠️ Technically yes (pre-structured) | ❌ No | ⚠️ Often yes (but may be nominal) | ✅ Yes |
| Transfer cost | Near-zero (embedded) | ~$0 expected | ⚠️ Often nominal ($0–$1 style, contract dependent) | FMV (variable) |
| Default outcome | Ownership | Ownership | ⚠️ Ownership likely, but contract-driven | Lease continues unless acted on |
| Initial ownership | Third party (~5 yrs) | Third party (6 yrs) | Third party (~5–6 yrs typical) | Third party (25-year term) |
| Product structure | Prepaid ESA / hybrid | Prepaid PPA | Prepaid PPA / lease | Prepaid lease / PPA |
| Escalators | ❌ None | ❌ None | ❌ Typically none | ❌ None |
| Dealer fees | ❌ Marketed as none | ⚠️ Often present | ⚠️ Unknown / varies | ⚠️ Varies |
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