$27,000 Solar System in Texas: PPA vs. Loan vs. Cash — The $22,000 Difference Over 25 Years That the AG Investigation Exposes
$27,000 Solar System in Texas: PPA vs. Loan vs. Cash — The $22,000 Difference Over 25 Years That the AG Investigation Exposes
Texas Attorney General Ken Paxton just issued civil investigative demands to residential solar companies including Freedom Forever, Sunrun, and Lone Star Solar Services, scrutinizing their sales practices statewide. The investigation targets how these companies present — or misrepresent — the economics of going solar.
Here's the thing: the math isn't actually hidden. It's just complicated enough that most homeowners never work through it before signing a 25-year contract. And a 25-year contract is exactly what a Power Purchase Agreement (PPA) or solar lease is.
This post runs the numbers on a real Texas scenario — a 10 kW system at $27,000 installed — across three financing structures. The gap between the best and worst option over 25 years is $22,000 or more, and it shifts entirely based on your utility rate, your tax liability, and how fast electricity prices rise in your area.
Let's build the model.
The Texas Baseline: What Your Roof Can Actually Produce
Using NREL's PVWatts dataset — part of Elovane's analysis of 10,850 data points across 51 solar irradiance nodes, 6,287 county-level estimates, and 648 system cost benchmarks — a 10 kW south-facing system in the Dallas-Fort Worth metro produces approximately 14,200 kWh per year at standard system losses (14%).
Against the current Texas residential rate of $0.126/kWh (per Elovane's eia_electricity_prices dataset, sourced from EIA's state-level rate tables), that's $1,789 in annual electricity value in Year 1.
Now here's the fork in the road.
Option 1: Cash Purchase
System cost: $27,000
Federal ITC (30%): -$8,100
Net out-of-pocket: $18,900
This only works if you have $18,900 available and enough federal tax liability to capture the full ITC in Year 1 (or across a two-year carryforward). If your tax bill is $4,000/year, you're spreading that credit over multiple years — and your effective payback lengthens accordingly. See the 2026 solar incentive stacking guide for how to model partial ITC capture against your actual tax situation.
Payback at different rate escalation scenarios:
| Utility Rate Escalation | Break-Even Year | 25-Year Net Gain |
|---|---|---|
| 2% annually | Year 11 | $34,200 |
| 3% annually | Year 10 | $45,400 |
| 5% annually | Year 8.5 | $68,700 |
EIA's long-run residential electricity price projections run at roughly 2–3% annually in most regions, with Texas hovering closer to 2.5% historically. NREL's Annual Technology Baseline uses 3% as a moderate base case. At 3%, your $18,900 cash investment pays back in Year 10 and generates a $45,400 net gain by Year 25 — before any system degradation adjustment (NREL uses 0.5% annual degradation for crystalline silicon).
Option 2: Solar Loan
System cost: $27,000
Federal ITC applied to principal: -$8,100
Financed amount: $18,900
Rate (25-year term): 6.99% (based on FRED consumer credit rates in Elovane's fred_financial_rates dataset)
Monthly payment: ~$133
Annual loan cost: $1,598
This is where the math gets interesting. In Year 1, your solar savings ($1,789) exceed your loan payment ($1,598) by about $191. You're cash-flow positive from Day 1 — but just barely.
Over 25 years, you'll pay $39,950 total on that $18,900 loan (including $21,050 in interest). Against the same 3% utility escalation scenario, your cumulative solar savings still reach ~$64,300. That's a net gain of $24,350 — real money, but $21,000 less than the cash scenario, almost entirely because of interest costs.
This is the kind of analysis Elovane runs for you — modeling loan term, interest rate, and rate escalation together so you see the actual 25-year NPV, not just the monthly payment comparison your installer shows.
Option 3: PPA or Solar Lease
This is the model the Texas AG is investigating. And Solar United Neighbors, a nonprofit consumer advocacy group, just published "PPAs & Solar Leases: A Practical Guide to Understanding Third-Party Solar Ownership" — precisely because homeowners keep signing these contracts without understanding the long-term economics.
In a PPA, you don't own the system. A third-party developer owns it, installs it on your roof, and sells you the power it produces at a locked-in rate — typically around $0.09/kWh in Texas, with a 2.9% annual escalator baked into the contract.
Year 1 picture:
- Your utility rate: $0.126/kWh
- PPA rate: $0.09/kWh
- Annual PPA payment: 14,200 kWh × $0.09 = $1,278
- Annual utility savings: 14,200 × $0.126 = $1,789
- Net Year 1 benefit: $511
That $511/year sounds fine until you run the 25-year trajectory.
By Year 25, at 3% utility escalation:
- Utility rate reaches $0.256/kWh
- PPA rate reaches $0.180/kWh (at 2.9% escalation)
- Annual benefit: 14,200 × ($0.256 - $0.180) = $1,079
The savings spread grows — but slowly. Total 25-year savings under a PPA: approximately $19,800.
Compare that to cash: $45,400.
The gap is $25,600 — on the same roof, the same sun, the same utility. The entire difference is ownership structure and who captures the ITC.
| Financing Option | Upfront Cost | 25-Year Net Gain (3% escalation) |
|---|---|---|
| Cash (after ITC) | $18,900 | $45,400 |
| Solar loan (6.99%, 25yr) | $0 down | $24,350 |
| PPA ($0.09/kWh, 2.9% escalator) | $0 | $19,800 |
The Solar United Neighbors report specifically flags that in a PPA, the federal Investment Tax Credit goes to the developer, not you. You save on electricity, but you're not building an asset — and when you sell your house, that 25-year contract either transfers (with the buyer's approval) or must be bought out, often at a significant cost.
The Variable That Moves Everything: Your Actual Utility Rate
None of these numbers are universal. Our eia_electricity_prices dataset covers 3,672 state-by-state, year-by-year rate rows. Texas at $0.126/kWh is meaningfully below the national residential average of $0.163/kWh. At the higher national rate:
- Cash payback shortens to Year 8.5 (vs. Year 10 in Texas)
- 25-year net gain grows to $61,200 (vs. $45,400)
- PPA savings also increase, but the cash/PPA gap widens because the PPA escalator is fixed while your alternative utility cost rises faster
This is why installers who quote you a payback period without asking for your actual utility bills and rate structure are giving you a generic answer — one that may be off by two to four years in either direction.
For a deeper look at how rate levels shift payback math across the spectrum, the analysis in Solar Payback at $0.14 vs. $0.22/kWh shows exactly how much utility rates (not just roof size) drive the outcome.
The Manufacturer Risk Factor Nobody Mentions
One more variable the sales pitch skips: panel manufacturer stability.
Maxeon Solar Technologies — maker of SunPower-branded premium panels — recently filed for restructuring in Singapore court, seeking an arrangement with creditors to survive as a going concern. This follows a pattern of consolidation and bankruptcy risk across tier-2 and tier-3 manufacturers.
NREL's nrel_atb_system_costs dataset models system degradation at 0.5%/year for standard panels, but warranty claims on failed or restructured manufacturers are notoriously difficult to collect. If you're evaluating a premium panel at a 10-15% price premium based on a 25-year manufacturer warranty, that warranty is only as good as the company standing behind it.
The cash and loan scenarios above assume a 25-year operational system. Factor in a one-time inverter replacement at Year 12–15 (approximately $1,800–$2,500 installed), and your net gains compress by that amount — another variable your installer's quote likely excludes.
What the Texas Investigation Actually Reveals
The AG's investigation focuses on sales practices — not whether solar is a good investment, but whether homeowners are being shown accurate numbers before they sign. The specific concerns: misleading savings projections, high-pressure tactics, and contracts that don't reflect actual local utility structures.
This isn't unique to Texas. The $275 million Attyx lawsuit covered similar territory nationally — as detailed in the contract math every homeowner must run before signing. The common thread is homeowners who signed 20–25 year agreements based on a salesperson's best-case numbers without ever modeling the downside scenarios.
Before you sign anything, run three numbers:
- Your actual annual kWh consumption (from your last 12 utility bills)
- Your marginal utility rate — the rate on your highest-usage tier, not the average
- The total cost of ownership under each financing option at 2%, 3%, and 5% rate escalation
You can model this for your specific roof and utility territory at Elovane — the tool pulls live irradiance data from NREL's PVWatts API, current utility rates from EIA's dataset, and runs all three financing scenarios simultaneously so you see the 25-year NPV, not just a monthly payment.
The Bottom Line
On a $27,000 system in Texas, the financing decision is worth more than $22,000 over 25 years. A PPA might feel like the safe, no-upfront-cost choice — but "no upfront cost" isn't the same as "best economics." It just means someone else owns your roof's most valuable square footage for the next quarter-century.
The Texas AG investigation is a reminder that the solar industry's sales process is not designed to hand you the worst-case numbers. That's your job — or it was, until tools exist to run it for you.
The sun on your roof produces roughly the same kilowatt-hours regardless of how you finance the system. What changes dramatically is who captures the value. Make sure that's you.
Run your numbers at Elovane before you schedule that installer consultation — not after.
Sources
- Solar United Neighbors publishes consumer guide to PPAs, leases — Solar Power World
- People on the move: Swift Current Energy, Greenskies, and more — PV Magazine USA
- Why Chemical and Materials Science Engineers Are the Unsung Heroes of Solar Innovation — PV Magazine USA
- Texas attorney general launches investigation into residential solar sales practices — Solar Power World
- Maxeon filing reveals the company has applied for restructuring in Singapore court — PV Magazine USA