If you've been researching how to pay for solar or a battery in North Carolina, you've probably run into four different paths: cash, financing, a term lease, and a newer option that's just become available here, a prepaid lease. It's a structure that's been running in other states, but was only recently approved for Duke Energy customers in North Carolina.
If the word "lease" makes you nervous, that's worth unpacking, because it may not be the trade-off you're picturing. A term lease already saves most homeowners real money every month (often somewhere between $30 and $80), starting from day one, with no upfront cost. A prepaid lease is a different structure with a different savings profile: instead of a lower monthly payment, you pay the full amount upfront at a lower price than a cash purchase. Neither one is the "lesser" option, they're built for different priorities.
A prepaid lease is exactly what it sounds like. Instead of paying a monthly fee for the life of a 25-year lease, you pay the full contract price upfront, in the same progress milestones you'd use if you were buying the system in cash. A typical payment schedule includes:
So financially, it feels a lot like a cash purchase. You're not making payments for years, there's no interest, and there's no monthly bill. The difference is who owns the equipment. In a cash purchase, you own the system from day one. In a prepaid lease, a third-party lease provider, in this case Participate Energy, owns the system and leases you its output and benefits: the electricity production, the battery backup, and everything that comes with keeping it running.
How does leasing something end up cheaper than owning it outright? The answer comes down to timing and tax policy rather than any kind of markup or discount trick.
The individual federal tax credit for solar and battery systems expired at the end of 2025, which previously offset a meaningful share of a homeowner's cash purchase cost. That expiration is specific to homeowners: commercial and nonprofit entities still have access to a federal tax credit through the end of 2027. But for a residential cash buyer, that offset is gone. Participate Energy, the lease provider behind this program, built their pricing around the incentives and program features still available to them, and that structure lets them offer an upfront lease price that's significantly lower than the equivalent cash price for the same system.
In practice, that means the lower cost isn't a promotional rate that could change next quarter; it's how the program is designed to work. You also get that cost reduction immediately at signing rather than waiting on a rebate to process, with no credit underwriting or FICO score check, and no property lien.
Because Participate Energy owns the equipment, they're also on the hook for keeping it working. That shifts a few responsibilities off your plate that you'd otherwise carry with a cash purchase or financing:
None of this means solar systems need constant attention (most don't), but it does mean that if something ever does come up, someone with a financial stake in the system's performance is already watching for it.
The real differences between these four options show up in four places: what you pay upfront, what you pay monthly, who owns the system, and how much you save over time.
Cash purchase. You own the system outright with no future payments. You handle monitoring and maintenance coordination directly with your installer, though most issues are covered under existing warranties. It requires the largest upfront investment, but, until pre-paid leasing became available, it's historically had the lowest lifetime cost, and your savings start on day one and grow as utility rates rise.
Financing. You still own the system, subject to your financing terms, typically 20 to 25 years. You handle monitoring and maintenance the same way you would with a cash purchase. You'll pay some interest over the life of the agreement, but there's no prepayment penalty, so you can pay it off early if you choose. Savings can begin day one, depending on how the payment compares to your current utility bill.
Term lease. The lease provider retains ownership for a 25-year term (10 to 12 years for a battery-only lease). Monitoring and maintenance are included. One notable perk: leasing a battery with solar panels for the full 25-year term can extend its warranty to match the lease length, so if it fails in year 15, replacement is at the lease provider's cost, not yours. Homeowners typically save $30 to $80 a month starting on day one, with zero upfront cost, and the lease is fully transferable if you sell your home.
Prepaid lease. The lease provider owns the system for the term, monitoring and maintenance are included at no added cost, and because you're paying the full cost upfront in milestones rather than financing it over years, there's no interest and no monthly bill. Your utility bill savings can start immediately, and you have the option to buy the system outright starting in year six. It's also transferable if you sell your home.
Numbers make this easier to picture. Take a common system size: a 10kW rooftop solar array paired with a Tesla Powerwall 3.
That's about $10,000 in lower upfront cost for the exact same equipment.
As explained above, part of that gap reflects the fact that the federal individual tax credit for homeowners is no longer available to offset a residential cash purchase, while the prepaid lease price is already structured to account for incentives that the lease provider can claim themselves.
This is arguably the most important detail in the whole structure, and it's easy to miss if you're only comparing upfront costs.
Starting at your six-year installation anniversary, and every year after that (or any time after year six if you're selling your home, with 30 to 90 days' notice), you have the option to buy the system outright. You're never required to. It's built as a voluntary path to ownership, not an obligation.
In plain terms: you prepaid for 25 years of guaranteed solar production. If you decide to buy the system before that term is up, the value of the production you haven't collected yet gets subtracted from the purchase price. In many cases, that brings the buyout cost to $0 or close to it. If you're ever presented with a buyout price you don't agree with, you can request a third-party appraisal at Participate Energy's cost, or simply wait and revisit the buyout later, as there's no expiration on the option itself.
At the end of the full term, whether or not you've bought the system early, you have three choices: renew the lease at a current fair market rate, purchase the system, or end the lease and have the equipment removed at no cost to you.
Three situations tend to make sense:
A few boxes need to check out before a prepaid lease is an option for your home:
A prepaid lease sits in an interesting middle ground. It has no monthly payment, near-cash pricing that's often lower than buying outright, and a genuine, no-obligation path to ownership starting in year six. Whether it beats a cash purchase, financing, or term lease for your specific home depends on your roof, your equipment goals, and how you weigh upfront cost against long-term ownership.
That's exactly the kind of decision worth walking through with someone who can look at your actual roof, your actual electricity use, and your actual eligibility, rather than a generic example.
A prepaid solar lease is a financing structure where a third-party lease provider owns the solar or battery system, and the homeowner pays the full lease cost upfront at a lower price than a cash purchase for the same system. The homeowner gets the electricity savings and backup power benefits without owning the equipment, and can buy it outright starting in year six.
A regular term lease is paid monthly over the lease term, typically 25 years for solar and 10 to 12 years for a battery. A prepaid lease is paid in full upfront across installation milestones, similar to a cash purchase, with no monthly bill and no interest charges.
Yes. Starting at the six-year anniversary of installation, and every year after, homeowners can request to buy the system outright. The purchase price is based on fair market value minus the value of guaranteed production already prepaid for but not yet realized, and it will never be less than $0.
Eligibility currently requires being a Duke Energy residential customer in an approved North Carolina service area, owning the property, having a roof in good condition and an eligible type, and using equipment from the lease provider's approved product list. It's not yet available for municipal co-op customers or South Carolina service territory.
Yes. The lease provider is responsible for 24/7 system monitoring, maintenance coordination, and warranty administration for the full term, at no additional cost to the homeowner. An annual performance guarantee also provides an automatic refund if the system underproduces.
Not for homeowners. The individual federal tax credit for solar and battery systems expired at the end of 2025. Commercial and nonprofit entities still have access to a federal tax credit through the end of 2027. This is one reason prepaid leases have become a more attractive option for homeowners, since the lease pricing is already structured around currently available incentives rather than a homeowner tax credit that no longer applies.