Six months after the solar tax credit ended, the industry found a workaround

This time last year, the residential solar industry was bracing for impact. The consequences of the One Big Beautiful Bill Act (OBBBA), which abruptly eliminated the 30% federal tax credit for purchased residential solar systems nearly a decade earlier than anticipated, were looming. On New Year's Day 2026, purchasing a home solar panel system would become $9,000 more expensive for most homeowners. Coupled with trade actions that led to higher tariffs, the general consensus was that 2026 would bring a hard landing: cooling demand, a shell-shocked market, and homeowners priced out.  

But based on real solar and storage quote data from the first six months, that’s not the full story. 

Our 23rd EnergySage Intel: Home Electrification Marketplace Report, alongside our annual Electrification Contractor Survey, shows a resilient solar market that’s adjusting in real-time. Notably, new financing products and nimble installer strategies are helping to keep solar affordable for homeowners while the industry settles. Here’s what the data reveals.

The solar industry faced multiple cost pressures in the last year: tax credit eliminations, tariffs, and new trade rules, in addition to general inflation. Unsurprisingly, the median cost per watt ($/W) of solar rose 3% to $2.57 in the first half of 2026. That said, that number hides a more nuanced story. 

Solar-only pricing held flat half-year-over-half-year, sitting exactly where it was in the second half of 2025 (before incentives) at $2.62. However, when comparing H1 2026 prices to H1 2025, solar-only prices actually decreased by 1%. While shoppers still faced less favorable economics than a year earlier due to the loss of the 30% tax credit, installer pricing stability is notable, given the aforementioned industry headwinds. 

Solar-plus-storage prices rose 5% between H2 2025 and H1 2026. Battery prices can’t be blamed for that increase, although those rose too, as this figure specifically excludes the cost of the battery itself. The more likely culprit is labor rates: 74% of respondents to EnergySage’s 2026 Electrification Contractor Survey, fielded January through March 2026, reported increased labor rates this year. 

“Solar-plus-storage installations are simply more complex and time-intensive than solar-only,” said Sam Thompson, head of solar at EnergySage. “With contractors broadly telling us that their labor costs are up this year, that’s the most likely explanation for why the more complicated installs are seeing the pricing pressure and simpler ones aren’t as much.”

The share of installers quoting third-party ownership (TPO) options climbed from about 14% at the start of H1 2026 to roughly 41% by the end of it. That’s nearly a tripling in a single half-year. 

EnergySage added TPO to its Marketplace in mid-2025, so some of that growth reflects the products' newness on the platform. But more than that, it mirrors a broader industry trend. Projects using TPO can still qualify for federal incentives through 2027. That window, along with improvements in transparency and consumer protections from many TPO providers, is giving installers who historically stuck to purchase deals a reason to lean on these products to offer affordable solar installations while the rest of the market adjusts.

Up-and-coming pre-paid leases and power purchase agreements (PPAs), in particular, are proving to be quite compelling. In H1 2026, the average price per kilowatt-hour ($/kWh) of a pre-paid lease was 39% cheaper than a cash purchase on EnergySage; a pre-paid PPA came in 57% cheaper. Pre-paid TPO undercut loans by an even wider margin—72% and 80% cheaper, respectively. 

Traditional PPAs beat loans by 32%, though a cash purchase edged out a PPA without pre-payment by 33%. Still, PPA rates beat utility electricity rates in every qualifying EnergySage state, with the widest gaps in California (59% cheaper) and Illinois (55%). 

“TPO isn’t replacing solar ownership as the goal,” Thompson said. “It’s giving the industry, including homeowners, an affordability bridge while everyone adjusts to a very different set of economics than we had a year ago.”

Federal policy isn't the only force reshaping solar's math—utility companies are doing their part too. Electricity rates continue to rise across the country, and not just because the grid is aging, demand is growing, and infrastructure is being damaged as a result of extreme weather events; policy shifts like time-of-use (TOU) rates, fixed charges, and net billing continue to burden consumers and erode solar's bill-savings benefit. 

Even so, homeowner interest in battery storage hit 76% this half, despite battery prices climbing to $1,130/kWh (partly driven by Foreign Entities of Concern (FEOC) compliance requirements). Attachment rates, however, fell to 31%. 

"As utility rates keep climbing, storage could go from a nice-to-have to a must-have for more homeowners," Thompson said. "We're already seeing that show up in high customer consideration—the industry's job now is turning that interest into actual attachment."

As bill savings from solar alone come under pressure from utility policy, pairing it with a battery gives homeowners a way to control their consumption against a grid that keeps getting more expensive to draw from.

In response to the abrupt and disruptive changes of 2025, installers are adjusting their business strategies, much like homeowners are rethinking their financing options. When asked what best describes their business strategy over the next 3 years, 58% of contractors reported that they plan to grow revenue by offering new solutions or services adjacent to solar and storage, with EV charging as one of the clearest examples.

According to the contractor survey, EV charger installations typically carry a 24% margin, just shy of main panel upgrades, the single highest-margin service in the survey at 25%. The two are often connected in practice, too: Older homes frequently need a panel upgrade before they can support a Level 2 EV charger, so an installer offering both is tapping into two of the strongest margin categories measured. EV charger customers also come back for more work: 29% of contractors say they return "often," and another 45% say "sometimes"—and that follow-up work often means broader electrical work, the category with the highest repeat-customer rate in the survey, at nearly 80%.

Between the new financing options and flexible installer strategies, the first half of 2026 looks less like a hangover and more like an industry actively rebuilding its playbook. The fundamentals haven’t changed—homeowners still want to save money and gain more control over their energy—but how they get there is shifting fast.

Looking ahead, expect more of the same pressure to keep pushing innovation forward. New Section 232 tariffs on imported polysilicon, set to take effect December 4, 2026, could add fresh cost pressure to solar panels as soon as 2027. But TPO still has room to grow before its federal eligibility window narrows toward 2028, and rising utility rates should continue to drive homeowner interest in solar and storage even higher. If the last six months are any indication, the industry will keep finding ways to make the numbers work for homeowners.