Battery leases and PPAs: $0-down, but you don't own it

A battery lease or PPA is the "$0-down" path you will hear pitched most aggressively in 2026, and for a specific reason: it is the only way left to get federal incentive money on a home battery. That makes it worth understanding clearly, including what you give up to get it.

What a lease or PPA actually is

Both are third-party-owned arrangements. A company owns the battery sitting on your property, and you pay to use it:

• Lease: you pay a fixed monthly fee to have the system installed and operating.
• PPA (power purchase agreement): you pay a per-kWh rate for the energy the system delivers, rather than a flat monthly amount.

In both cases you do not own the hardware. The provider does, and they handle (in principle) maintenance and performance for the life of the contract.

Why this is the only federal pathway in 2026

Here is the part that explains why these offers exist at all. The federal residential purchase credit homeowners used to claim on a battery they bought (Section 25D) expired on December 31, 2025. If you buy a battery outright in 2026, you get nothing federal.

The one surviving federal incentive is Section 48E, and it is written for commercial and third-party-owned systems (IRS, IRC Section 48E, verified 2026). A homeowner cannot claim it on a purchase. But the company that owns a leased or PPA system can. That owner may pass some of that value through to you as a lower lease price or per-kWh rate. So the lease route is the only way a 2026 home-battery customer touches a federal incentive at all, indirectly, through the owner.

The honest trade-offs

This is where a salesperson tends to go quiet. A lease or PPA is not free money; it is a different deal with real costs:

• You do not own an asset. At the end of a cash purchase you own a battery. At the end of a lease you own nothing, unless a buyout is offered.
• Long contracts and escalators. Terms often run 10 to 25 years, and many include annual price escalators that raise your payment over time. Read the escalator rate.
• Transfer-on-sale friction. When you sell the house, the contract has to transfer to the buyer or be bought out, which can complicate a home sale.
• Pass-through varies. How much of the Section 48E value actually reaches you depends entirely on the provider, and it is rarely spelled out plainly.

How to weigh it

Compare the lease against a cash purchase honestly, not against doing nothing. A cash buyer in California still has SGIP and owns the hardware outright. A lease trades ownership and long-term flexibility for low upfront cost and the only available federal pass-through. Neither is automatically better; it depends on your cash position and how long you will stay in the home. Run both through our Worth It calculator, read the contract's escalator and transfer terms, and confirm any incentive pass-through in writing. For the California context, see the California report.