California ADU solar can be paid for in three main ways: cash purchase, a solar lease, or a Power Purchase Agreement (PPA). Each has very different implications for upfront cost, ROI, and Title 24 compliance.
Paying cash for an ADU solar system is the simplest and almost always the most profitable path. You own the system, claim the 30% federal tax credit, and capture 100% of the energy savings. Title 24 is satisfied with no monthly payment.
HDM is a hybrid commercial structure: a third-party owner installs and owns the ADU solar system, claims commercial tax credits, and passes most of the savings back to the homeowner via reduced project pricing — typically 30–40% less than cash.
HDM satisfies Title 24 because the system is installed and operational at permit final. The homeowner doesn't claim the ITC (the third party does), but the savings are baked into the lower price.
Under a PPA, a third party owns the system and the ADU owner buys the solar electricity at a per-kWh rate (typically 15–30% below utility retail). Zero or low upfront cost, no maintenance responsibility, but you don't own the system and savings are smaller than cash purchase.
A solar lease is a fixed monthly payment (regardless of production) to use a third-party-owned system. Less common for ADU-scale systems because the small monthly payment math rarely beats cash or HDM.
For most California ADU owners: cash if you have it, HDM if you don't. PPA is fine if zero upfront is mandatory. Lease is rarely the best option at ADU scale.
Yes — Title 24 is about the system being installed and operational. Ownership structure doesn't matter for code compliance.
No. The third-party owner claims it. With cash purchase you claim it yourself.
HDM is a one-time price reduction baked into installation. PPA is an ongoing per-kWh payment for solar electricity. HDM is generally simpler and more popular for ADU projects.