Sunrun Lease vs. PPA: The Actual Difference

The One-Line Difference

Sunrun's FAQ page (sunrun.com/faq) states it plainly: "With a lease, you pay a fixed monthly 'rent' in return for use of the system. With a PPA you pay a fixed price per kWh for power generated." That's the entire mechanical distinction, and it's worth sitting with because most of the confusion around these two products comes from people assuming there's more to it.

Under a lease, your payment is the same in July, when the system is producing at its peak, as it is in January, when output drops. Under a PPA, your bill moves with production: higher in the sunny months, lower in the winter, because you're billed per kilowatt-hour delivered rather than a flat rate for access to the equipment. Neither structure is inherently cheaper. A lease trades bill predictability for paying the same amount even in months when the system underperforms; a PPA trades that predictability for a bill that's more expensive exactly when the system is working hardest, which is also usually when your own air conditioning load, and utility bill, is highest.

What Both Contracts Actually Have in Common

Before getting into what's different, it's worth naming what isn't, because Sunrun's marketing sometimes implies a bigger gap between the two products than the underlying paperwork supports. Per the 10-K, both lease and PPA typically run a 20- or 25-year initial term, with no distinction drawn between the two on length. Sunrun owns and maintains the system under both for the full term, meaning repairs, monitoring, and equipment failures are Sunrun's responsibility either way, not yours. And both fall under the same contractual category, "Customer Agreements," in Sunrun's own SEC disclosure, which telegraphs that the company itself treats them as variations on one product rather than two fundamentally different offerings. If a sales conversation frames the lease-versus-PPA decision as a bigger fork in the road than it is, that's a sales framing, not a contractual one.

Escalators Apply to Both, Not Just the PPA

Here's a common assumption worth correcting directly: that a lease is flat forever and only a PPA rises over time. Sunrun's 10-K says otherwise. "Rates for both forms of our Customer Agreements can be fixed for the duration of the contract or escalated at a predetermined percentage annually." Read that again: both. A lease can carry a rising annual rent just as easily as a PPA can carry a rising per-kWh rate, and in principle a PPA could be offered with no escalator at all.

What the escalator actually indexes to is the real product-level difference: a lease escalator raises a flat dollar figure, a PPA escalator raises a per-kWh rate that then still moves with production on top of that. Sunrun's 10-K doesn't disclose a specific current escalator percentage. A secondary, non-Sunrun-specific source (solar.com's lease-vs-PPA explainer) describes the broader third-party-owned solar industry commonly offering escalator tiers around 0.99%, 1.99%, or 2.99% annually, with a higher escalator buying a lower starting payment, but that's industry-general commentary, not a confirmed Sunrun rate. Get the exact escalator percentage in writing in your specific contract before signing; don't assume a generic industry figure applies to your quote.

Who Eats a Bad Production Year

This is where the two products genuinely diverge in how risk is allocated. Sunrun's product page for its Subscription Plan (the lease/rent product) advertises a "workmanship and energy production guarantee for life of contract." The structural logic of that guarantee is straightforward: because you're paying a flat rent regardless of output, if the system underproduces against its original estimate, Sunrun typically owes you a true-up payment for the shortfall, since you're being charged the same amount either way.

A PPA handles this differently by design, not by a separate guarantee. Because you're only billed for kilowatt-hours actually delivered, underproduction is self-correcting on your bill; you simply pay less in a bad year. There's less need for a true-up mechanism because you were never overcharged for power you didn't get. This is general third-party-owned solar structure, not confirmed Sunrun-specific language for how its PPA product handles underproduction, and that's worth flagging plainly: if a shaded roof, panel degradation, or a questionable install is a real concern for your property, the lease's flat payment plus documented production guarantee is the more conservative, better-protected choice of the two.

End of Contract: Three Options at Year 20 or 25

At the end of the initial term, Sunrun's 10-K lays out the same three exits for both products. You can renew the agreement for the remaining life of the system, typically at roughly a 10% discount to then-prevailing power prices. You can purchase the system outright at its fair market value. Or you can have Sunrun remove it. The filing's language doesn't split these options by lease versus PPA, so whichever product you're in, you're not locked into an indefinite contract with no exit; you're locked in for the initial 20 or 25 years, after which the decision resets.

Which One Fits Your Usage Pattern

This section is analysis built from the mechanics above, not a claim sourced to Sunrun or an independent report; no source available found Sunrun or a third party explicitly advising customers on this by usage pattern, so treat it as reasoning to apply to your own numbers, not a quoted recommendation.

If your household usage is flat and high year-round, a heat pump, EV charging, or a pool pump running consistently, a lease's fixed payment is easier to budget against and avoids a seasonal bill spike layered on top of your utility bill. If your usage is strongly seasonal, air conditioning load dominating the summer months, a PPA's per-kWh bill rises and falls with production in a way that can track your usage pattern more naturally. But notice the catch: that's also exactly when the system is producing the most, so the PPA charge peaks at the same time your utility bill would otherwise peak too. That's a billing-shape alignment, not an automatic savings advantage.

One more constraint applies regardless of which contract you pick. Under NEM 3.0, a system that overproduces relative to your onsite usage exports that surplus at roughly 5 to 8 cents per kWh on PG&E, SCE, or SDG&E, a low credit rate either way. That argues for right-sizing the system to your actual consumption as the real lever, not treating the lease-versus-PPA choice as a way to fix export economics, because it doesn't.

Why This Choice Exists Right Now: The Tax Credit Behind the Price

The residential solar tax credit that used to make a cash or loan purchase competitive, Section 25D, ended December 31, 2025; Sunrun's own 10-K confirms this independently, stating "The OBBB ended the Residential Clean Energy Credit on January 1, 2026." That's a big part of why lease and PPA financing is getting more attention right now: those products run through a different credit entirely.

Under Section 48E, the commercial investment tax credit, the system's owner, Sunrun, not you, claims the credit, and it gets baked into how competitively Sunrun can price the lease or PPA. Per the 10-K, that credit phases out for projects placed in service after December 31, 2027 unless construction begins by July 4, 2026. IRS Notice 2025-42, issued August 15, 2025, sets out how a company proves it "began construction" by that date: either the Physical Work Test (actual on-site construction activity) or the 5% Safe Harbor (incurring at least 5% of project cost early, typically through advance equipment purchase).

Here's the important framing correction: this is not a deadline aimed at you as the homeowner. Large third-party owners commonly bulk-purchase and safe-harbor equipment years ahead of a deadline like this specifically to extend their own credit eligibility well past the nominal cutoff, though whether Sunrun has done so for its 2026-2027 pipeline isn't independently confirmed. Don't let a sales conversation frame July 4, 2026 as a countdown clock on your signature; the deadline pressure sits on Sunrun's sourcing strategy, not on your contract date.

The Question That Actually Matters: Is PPA Still Being Sold in California?

This is the flag that should shape how you read this entire comparison. Sunrun's current site navigation, as of September 5, 2026, leads with a "Sunrun Subscription Plan," the lease/flat-payment product, marketed with "$0 to little down," "predictable monthly payments with locked-in rates," and "free maintenance and repairs for 25 years," alongside a separate "owned plans" loan/purchase option. The word "PPA" does not appear as its own top-navigation product on the current consumer-facing site. It surfaces only in the FAQ language quoted earlier and in the 10-K's "Customer Agreements" description.

That pattern is consistent with PPA having become a legacy contract type, still serviced for existing customers, while new sales get steered toward the Subscription Plan lease and loan products, but that's an inference from what's absent, not a confirmed fact. It could also just mean PPA is offered but not featured in top navigation. Either way, don't walk into a sales conversation assuming lease and PPA are two equally live, equally promoted options sitting side by side on the menu today. Ask directly, in writing, whether a PPA is currently being originated for new California customers before you spend time comparing numbers on a product that might not actually be on offer.