How Long Island homeowners actually pay for solar.

The four financing paths on Long Island, ranked by payback

A purchased system pays for itself in roughly 7–9 years on current PSEG Long Island rates now that the federal credit is gone. The financing structure changes how MUCH money you keep over the 25-year system life. Here's how each option actually works for a typical Huntington household.

1. Cash purchase — best 25-year return

You pay the full system cost upfront ($24,000–$28,000 for a typical 8 kW residential install). You claim the New York State credit (25%, capped at $5,000); there is no federal credit on a 2026 purchase. Net out-of-pocket lands around $19,000–$23,000. Payback in roughly 7–9 years; the remaining 16–18 years of the warranty period are savings.

Best for: homeowners with the cash sitting in a checking or savings account earning near-zero interest. The "yield" on a solar purchase (annual PSEG savings ÷ net cost) works out to roughly 13% on the example above (about $2,800 a year saved on a $21,000 net cost), and it is not taxed as income.

2. Solar loan — best for most LI homeowners

You borrow the system cost, typically over 20 or 25 years at 5.99–8.99% APR (current LI market). You own the system from day one, so you claim the New York State credit. The monthly loan payment often lands near or under the PSEG bill it replaces — check it against your own 12 months of usage.

What changed in 2026: solar loans used to be built around a large paydown from the 30% federal refund. That refund no longer exists for a purchased system. If a lender still shows a two-tier payment schedule, ask what the payment becomes when no paydown happens — and compare loans on total interest paid, not the first-year payment. The New York State credit (up to $5,000) can still go toward principal.

3. Lease — fixed-monthly hands-off

A third-party (typically Sunrun, Sunnova, or a local financier) owns the system on your roof. You sign a 20-to-25-year lease and pay them a fixed monthly rate to use the solar electricity. Because they own the equipment, the owner — not you — may claim a separate commercial federal credit, and can pass some of that saving through in the rate you pay.

Best for: homeowners who want no upfront cost and no maintenance responsibility. With the residential credit gone, a lease is also the one structure where federal money can still reach the deal indirectly — but nothing is guaranteed, the escalator clause matters, and a lease complicates a home sale. Run the 20-year total against owning before you sign.

The escalator is the annual percentage the lease payment rises, and it decides whether a lease is a good deal. Here is an illustrative $150/month lease on the same 8 kW example, judged against the electricity the array displaces (about $2,800 a year, or about $56,000 over 20 years at flat PSEG rates). It is not a quote, just the arithmetic:

With a 2.9% escalator and flat PSEG rates, the lease payment passes the value of the electricity around year 17, and you spend the last four years paying more than the utility would have charged. PSEG rates have historically risen, which helps the escalated lease, but no one can promise you the rate path for two decades. A 0% escalator turns that bet into a fixed number.

4. PPA (Power Purchase Agreement) — pay per kWh

Like a lease but instead of a fixed monthly, you pay per kWh of solar production at a rate below your current PSEG rate. The third party owns the system, and the same indirect federal treatment as a lease applies. Your payment varies with sun (high in summer, lower in winter), which can be appealing or annoying depending on your temperament.

PPAs are more common on commercial installs than residential on LI. For homes they're roughly equivalent to leases in total savings.

The comparison is one rate against another. If your PPA starts at $0.20/kWh against a PSEG blended rate of $0.27/kWh, you save about $0.07 on every kilowatt-hour, about $730 in year one on the roughly 10,400 kWh the 8 kW example produces. The same escalator logic applies: a $0.20/kWh rate escalating 2.9% a year reaches $0.27/kWh in about 10.5 years, and from then on your savings depend entirely on PSEG raising its rates faster than your contract does. A PPA with no escalator and a starting rate well under PSEG's is a reasonable trade. A PPA with a small discount and a steep escalator is mostly a bet you are making on the utility's behalf.

The hidden cost: locked-in rate vs PSEG escalation

PSEG Long Island electricity rates have risen 4-6% annually for the last decade. That compounds: a $200/month bill today is realistically a $400/month bill in 12 years. Solar locks in your effective rate at roughly $0.08-$0.11/kWh (the net cost after the New York State credit, spread over 25 years of production) versus PSEG's roughly $0.27/kWh and climbing.

That's why simple payback undersells the value. An 8-year simple payback is closer to 7 years if PSEG rates keep rising at that pace — but we quote the simple number, because nobody can promise a rate increase.

Selling the house is where the structures diverge

This is the part door-to-door salespeople skip, and on Long Island, where the average owner moves well inside a 25-year contract, it matters.

• Cash or paid-off system: the array conveys with the house like a new roof. Appraisers increasingly credit owned solar, and there is nothing to transfer.
• Loan: you pay it off from the sale proceeds at closing, the same as any other secured debt. If the lender recorded a fixture filing, the payoff clears it.
• Lease or PPA: the buyer either assumes the contract, which usually means passing the leasing company's credit check, or you buy it out at the contract's price. Leasing companies commonly record a UCC-1 fixture filing against the property, so the contract shows up in the title search whether you mention it or not. A buyer who does not want it is a negotiation point at the worst possible moment.

Read the transfer and buyout terms before signing. A contract that cannot tell you, in dollars, what it costs to buy out in year 7 is not finished.

Six questions to put to any financing offer

1. What is the cost per watt? Contract price divided by DC watts, for both the cash price and the financed price.
2. What is the 20-year total I will pay? In writing, under the escalator in the contract.
3. What is the escalator, and is a 0% version available? Ask what the starting rate becomes at 0%.
4. Does the schedule assume a federal paydown? It should not for any 2026 purchase.
5. What does it cost to transfer or buy out if I sell in year 5, 10 or 15?
6. Who is responsible for removing and reinstalling the array if the roof needs replacing? On a lease or PPA this should be in the contract; on a loan it is on you and your installer.