The federal residential solar tax credit has expired, installation prices have increased, and financing companies are introducing new ways to make solar accessible. At the same time, interest in home battery storage remains strong, even as battery prices create challenges for many households.
According to EnergySage’s Home Electrification Marketplace Report covering the first half of 2026, the residential solar industry is adjusting to these new conditions.
But does that mean solar is no longer worth the investment?
Not necessarily. It means understanding the costs, financing options, and long-term benefits is more important than ever.
How Much Does Residential Solar Cost in 2026?
EnergySage reported that the median quoted residential solar price increased 3.2% in the first half of 2026, reaching $2.57 per watt.
For a typical 12-kilowatt system, that translates to an estimated upfront cost of approximately $30,712 before incentives.
However, solar installation prices vary considerably depending on location.
Among the ten largest residential solar states examined in the report, Illinois had a median quoted price of $3.07 per watt, while Texas came in at $2.00 per watt.
That difference illustrates why homeowners should request estimates based on their own property and local market rather than relying exclusively on national averages.
What Happened to the Federal Residential Solar Tax Credit?
The 30% federal residential solar tax credit for qualifying directly purchased systems expired at the end of 2025.
Previously, the credit helped homeowners reduce the effective cost of purchasing a solar energy system. Its expiration has changed the economics for customers considering cash purchases and traditional solar loans.
However, different financing structures may still provide access to incentives at the project-owner level.
Qualifying third-party-owned solar projects may continue to access certain federal commercial tax incentives through 2027, subject to applicable requirements.
That distinction has contributed to growing interest in solar leases and power purchase agreements.
Solar Loans vs. Leases vs. Power Purchase Agreements
Homeowners generally have several ways to finance a solar energy system.
Cash Purchase
Purchasing solar panels outright generally means the homeowner owns the system and receives the benefits of electricity production, subject to local utility policies and other applicable terms.
The primary consideration is the upfront investment.
Solar Loan
A solar loan allows the homeowner to finance a system purchase over time.
EnergySage reported a median quoted solar loan interest rate of 7.5%, while median loan terms shortened from 25 years to 20 years.
Homeowners should compare monthly payments, interest costs, fees, and total repayment amounts.
Solar Lease
With a solar lease, a third party generally owns the solar system while the homeowner makes payments under a contractual arrangement.
Lease terms may include provisions for maintenance, payment increases, equipment ownership, and property transfers.
Power Purchase Agreement (PPA)
A power purchase agreement generally allows a homeowner to purchase electricity generated by a solar system owned by another party.
Payment structures vary, and homeowners should evaluate the contracted electricity rate, escalation provisions, and total long-term cost.
Pre-Paid Leases and PPAs
Pre-paid financing structures are becoming more prominent in the residential solar market.
EnergySage found that certain pre-paid PPAs and leases offered competitive modeled costs compared with other financing approaches.
However, the report also cautioned that the long-term savings performance of these newer products has not yet been established.
Homeowners should carefully review all contract terms and compare the total cost of each option over the life of the agreement.
Why Are More Homeowners Interested in Battery Storage?
Home battery storage can provide several potential benefits, including backup power during certain outages, greater control over solar electricity usage, and opportunities to manage energy consumption during higher-priced utility periods.
EnergySage reported that 76% of solar shoppers expressed interest in battery storage, up from 73% in the previous reporting period.
Yet the share of quoted solar installations that included batteries declined from 39% to 31%.
The primary obstacle appears to be price.
Median quoted battery storage prices increased to $1,130 per kilowatt-hour, representing a 5% increase over the previous six-month period.
Among surveyed solar contractors, 64% identified price as the main reason customers declined to include storage.
For homeowners, the decision to add a battery should depend on individual energy needs, local utility rates, outage concerns, available incentives, and the total installed cost.
Why Are Solar Installation Costs Increasing?
Solar panels are only one component of a residential solar installation.
Projects also require electrical equipment, mounting systems, design, permitting, installation labor, and coordination with local utilities.
In EnergySage’s contractor survey, nearly 74% of respondents reported increases in hourly labor rates during the preceding year.
Labor represented an average of 22% of total installed system costs, while equipment accounted for 36%.
These factors help explain why installation costs can increase even when some solar components remain competitively priced.
Should You Compare Multiple Solar Quotes?
Yes. Comparing multiple proposals remains one of the most important steps in evaluating residential solar.
EnergySage reported that the average spread between the lowest and highest quotes offered through its marketplace narrowed from $0.72 per watt in the second half of 2025 to $0.56 per watt in the first half of 2026.
Even a difference of $0.56 per watt can represent thousands of dollars on a typical residential system.
When comparing proposals, homeowners should consider more than the total installation price.
- System size and estimated annual electricity production
- Equipment manufacturers and product warranties
- Installation workmanship and contractor experience
- Financing rates, fees, and total repayment costs
- Maintenance and service responsibilities
- Battery storage options and backup capabilities
- Estimated savings under local utility rates
- Contract provisions affecting a future home sale
The Future of Home Energy Is Bigger Than Solar Panels
The residential solar industry is increasingly expanding into broader home electrification services.
According to EnergySage, 58% of surveyed contractors identified expansion into adjacent products and services as a leading growth strategy for the next three years.
These services include electric vehicle charging, HVAC systems, and electrical upgrades.
For homeowners, this evolution could create opportunities to evaluate multiple energy improvements together rather than treating solar as an isolated purchase.
However, each additional service should be evaluated based on household needs, project economics, and contractor qualifications.
Is Solar Worth It Without the 30% Tax Credit?
Solar can still make financial sense for some homeowners without the expired federal residential consumer tax credit.
The answer depends on factors such as local electricity rates, available incentives, roof orientation, system performance, financing terms, and how much electricity the household consumes.
Homeowners considering solar should evaluate both the near-term affordability of the project and the potential long-term value.
A lower monthly payment does not always mean a lower lifetime cost, and battery storage may provide benefits that are not fully reflected in a simple solar payback calculation.
The most useful approach is to compare realistic proposals based on your own energy consumption and financial priorities.
Understanding the Next Chapter of Residential Solar
The residential solar market is changing, but the underlying goal remains the same: helping households better manage electricity costs and energy needs.
As financing options evolve and home electrification becomes more integrated, homeowners have more decisions to make.
Clear information, transparent proposals, and careful comparisons are essential to making a confident investment.
Learn more about solar energy solutions at Sun Energy Today.
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Listen to The Solar Coaster Podcast
For a deeper discussion of EnergySage’s first-half 2026 findings, listen to Anna Covert and Alex Herrera on The Solar Coaster Podcast.
Watch episodes on YouTube and explore more conversations about renewable energy, industry developments, and solar technology.
Data referenced in this article reflects EnergySage marketplace quotations and contractor survey findings discussed in the podcast. Actual system costs, savings, financing availability, and incentive eligibility vary by project.
Podcast Transcript: Residential Solar in 2026 — Prices, Financing, Tax Credits, and Battery Storage
A discussion featuring Anna Covert and Alex Herrera on The Solar Coaster Podcast, presented by Sun Energy Today.
Anna Covert
Residential solar in the United States is entering a very different phase. For years, the conversation around rooftop solar was often anchored by a simple idea: install panels, claim the federal residential solar tax credit, and watch the electric bill savings build over time. But in the first half of 2026, that familiar playbook changed. According to EnergySage's latest Home Electrification Marketplace Report, quoted residential solar prices rose, financing preferences shifted quickly, storage interest remained strong but complicated, and installers began looking beyond rooftop panels for growth.
Alex Herrera
And what makes this moment especially interesting is that the headline number is not dramatic on its own, but the story underneath it is. Median quoted residential solar prices increased 3.2% in the first half of 2026, rising from $2.49 per watt in the second half of 2025 to $2.57 per watt. For a median system size of roughly 12 kilowatts, that means an upfront cost of about $30,712 before incentives. That is still a major household investment, and it arrived just as the 30% federal residential solar tax credit had expired at the end of 2025.
Anna Covert
Exactly. A 3.2% increase may sound modest, especially compared with the bigger swings people have seen in energy markets, interest rates, or home improvement costs. But for residential solar, it matters because homeowners are extremely sensitive to payback periods and monthly savings. EnergySage reported that the average estimated payback period moved from 10.1 years to 10.9 years, while also noting that a methodology change contributed to that increase. So we should be careful not to treat the payback change as purely market-driven, but the direction still reinforces the affordability challenge.
Alex Herrera
The expiration of the federal residential tax credit is really the backdrop for almost everything in this report. When that 30% credit was available to homeowners purchasing systems directly, it helped soften the upfront cost and made cash purchases or loans more attractive. Once it expired, installers had to adjust. The report shows one of the clearest responses: third-party ownership financing expanded rapidly. The share of installers quoting third-party ownership products through EnergySage climbed from about 14% in January 2026 to 41% by the end of June.
Anna Covert
That is a huge shift in just six months. Third-party ownership, or TPO, generally means a homeowner does not directly own the system in the same way they would with a cash purchase or traditional loan. Instead, the system may be offered through a lease or power purchase agreement. What makes that model newly important is that qualifying third-party-owned projects can continue to access federal commercial tax incentives through 2027, while directly purchased residential systems no longer have the Section 25D consumer credit.
Alex Herrera
So the policy difference creates a financing difference. EnergySage found that pre-paid power purchase agreements and pre-paid leases were especially competitive in modeled cost terms. Pre-paid PPAs showed a 57% lower effective cost per kilowatt-hour than cash purchases, and pre-paid leases were 39% lower. Traditional PPAs also came in lower than solar loans on a cost-per-kilowatt-hour basis. But there is an important caution: cash purchases remained about 33% more cost-effective than conventional PPAs over the comparison period, and EnergySage said the long-term savings of newer pre-paid TPO products have not yet been established.
Anna Covert
That caution is critical, because the lowest modeled cost is not the same as the best long-term decision for every household. A pre-paid lease or PPA could look attractive because it reduces or restructures the financial burden, especially when the tax credit is gone. But homeowners need to understand contract terms, ownership rights, maintenance responsibilities, transfer conditions if they sell the home, and what happens over the full life of the agreement. The report does not say these products are bad. It says they are becoming competitive and widely quoted, but the long-term record is still developing.
Alex Herrera
And loans are not disappearing, but they are clearly under pressure. Median quoted solar loan interest rates held steady at 7.5% for the third consecutive reporting period. At the same time, median loan terms shortened from 25 years to 20 years. That combination can affect monthly payments and payback math. In EnergySage's contractor survey, 37% of respondents expected declining loan usage in 2026, and 40% expected cash purchases to decline. Meanwhile, 49% expected more customers to choose pre-paid leases and PPAs.
Anna Covert
This is where the homeowner psychology becomes really important. EnergySage's contractor survey found that about 70% of contractors identified electricity bill savings as the primary motivation for customers buying solar. So the pitch is still fundamentally economic. It is about reducing energy costs. But 63% of contractors also cited cost or pricing as the leading reason they lose sales. In other words, customers want savings, but the purchase itself can feel too expensive, too complex, or too uncertain, especially without a familiar federal consumer credit.
Alex Herrera
There is also an interesting split between solar-only and solar-plus-storage pricing. Median quoted solar-only pricing was flat at $2.62 per watt compared with the prior six-month period, and it was down 1% year over year. But the solar portion of solar-plus-storage quotes rose nearly 5% to $2.55 per watt, excluding the battery cost. That may seem counterintuitive because the solar portion of solar-plus-storage was still slightly lower than solar-only, but the direction matters. EnergySage attributed the narrowing gap partly to rising labor costs, because combined installations typically require more time and complexity.
Anna Covert
Labor is one of the biggest pressures in the report. Nearly 74% of surveyed contractors reported increases in hourly labor rates over the previous year. Labor represented an average of 22% of total installed system costs, second only to equipment at 36%. So even when panel prices or inverter prices are competitive, the project still depends on skilled labor, electrical work, permitting, design, scheduling, and customer acquisition. Rooftop solar is not just a commodity product. It is a home construction and electrical project, and those soft costs matter.
Alex Herrera
That helps explain another finding: the gap between high and low quotes narrowed. The average spread between the lowest and highest quotes offered to EnergySage shoppers declined from $0.72 per watt in the second half of 2025 to $0.56 per watt in the first half of 2026. The average highest quote decreased to $2.94 per watt, while the average lowest quote increased to $2.38 per watt. So pricing became more concentrated. EnergySage suggested that may reflect the market settling after the rush to complete installations before the 2025 tax credit deadline.
Anna Covert
Regional differences remain very large, though. Among the ten largest residential solar states examined, Illinois had the highest median quoted price at $3.07 per watt, while Texas came in at $2.00 per watt. That is a 53% difference. For homeowners, that means national averages are useful, but they do not tell the whole story. Local labor markets, permitting rules, competition among installers, utility rates, roof types, and equipment availability can all shape the final quote. A homeowner in Texas and a homeowner in Illinois may be shopping for the same basic technology but facing very different economics.
Alex Herrera
The equipment side is changing too, especially modules. EnergySage reported that Qcells and Hyundai each captured 18% of quoted module share on its marketplace in the first half of 2026, surpassing REC, which fell to 17%. That is a major shift because REC had led EnergySage's module marketplace for two years and had a 43% share one year earlier. Hyundai's growth was particularly striking, rising from 4% in the second half of 2025 to 18% in the first half of 2026.
Anna Covert
SEG Solar also gained ground, reaching a 17% share, while JA Solar and Canadian Solar saw their shares decline. EnergySage suggested that the increasingly fragmented module market reflects installers trying to diversify suppliers, manage existing inventory, and navigate restrictions involving foreign entities of concern. That is a careful way of saying that equipment choices are not only about efficiency ratings or brand recognition. They are also about supply chains, compliance, availability, and risk management.
Alex Herrera
Inverters look very different from modules. The inverter market on EnergySage remained highly concentrated. Enphase increased its share of quoted inverters to 63%, up 11 percentage points from the previous six-month period. Tesla followed with 29%. Together, those two manufacturers represented 92% of quoted inverter share. So while module quotes became more fragmented, inverter quotes became dominated by two names. That has implications for installer training, service networks, customer familiarity, and perhaps also for how homeowners compare proposals.
Anna Covert
Then there is storage, which may be the most emotionally compelling but financially difficult part of the residential energy story. EnergySage found that storage interest reached 76% among solar shoppers, up from 73% in the previous period. That tells us homeowners are thinking about backup power, energy resilience, and maybe greater control over when they use solar energy. But attachment rates declined from 39% to 31%, meaning fewer quoted solar installations included storage, even as interest rose.
Alex Herrera
The reason appears pretty straightforward: cost. Median quoted battery storage prices increased 5% from the previous six-month period to $1,130 per kilowatt-hour, which was a 9% year-over-year increase. Among contractors surveyed, 64% identified price as the main reason customers did not add storage to their solar systems. So people want batteries, but many are not willing or able to pay for them under current economics. That gap between interest and adoption is one of the defining tensions in home electrification right now.
Anna Covert
The battery manufacturer landscape also shifted, but Tesla remained the most frequently quoted battery manufacturer with a 52% marketplace share. Enphase increased its share from 20% to 35%. So, similar to inverters, the storage market appears concentrated around a small number of familiar brands, at least in the quotes EnergySage analyzed. But again, we should remember that this report is based on quotes submitted through EnergySage's online marketplace and a contractor survey. It is not a comprehensive census of every residential solar installation in the United States.
Alex Herrera
That caveat matters because marketplace data can reveal strong trends among shoppers and installers using that platform, but it may not perfectly represent the entire national market. Still, the patterns are useful. Prices are rising modestly overall. Solar-only pricing is relatively stable. Solar-plus-storage is more pressured by labor and complexity. Loans are facing headwinds. Third-party ownership is expanding quickly. Storage interest is high, but storage costs are limiting adoption. And installers are adapting by changing financing, equipment sourcing, and business strategy.
Anna Covert
That business strategy piece may be the longer-term story. In the contractor survey, 58% of respondents identified expansion into adjacent products and services as a leading growth strategy for the next three years. The examples included EV charging, HVAC services, and electrical upgrades. That makes sense. If a company already has customer relationships, electrical expertise, and experience working on homes, then solar can become one part of a broader home electrification package rather than the entire business.
Alex Herrera
And the timing is logical. Homeowners who are considering solar may also be thinking about electric vehicles, heat pumps, panel upgrades, backup power, or ways to manage rising electricity bills. Installers may be trying to become energy service providers, not just solar contractors. That could help offset slower solar-only demand or tighter margins. But it also raises the bar. A company that expands into HVAC or electrical upgrades needs the right licenses, training, service quality, and customer support. Diversification can help growth, but it can also add complexity.
Anna Covert
For homeowners, the practical takeaway is to compare options more carefully than ever. A cash purchase, a solar loan, a traditional lease, a traditional PPA, a pre-paid lease, and a pre-paid PPA can produce very different results. The lowest monthly payment may not mean the lowest lifetime cost. The lowest modeled cost per kilowatt-hour may depend on assumptions that are not guaranteed. A system with storage may provide resilience that is valuable, but the payback may look very different from solar alone. And regional price differences mean benchmarks should be local whenever possible.
Alex Herrera
It is also worth watching the quote spread. Since the average gap between the lowest and highest EnergySage quotes narrowed, customers may see less extreme variation than they did before. But a spread of $0.56 per watt is still meaningful. On a 12 kilowatt system, that kind of per-watt difference can translate into thousands of dollars. So getting multiple quotes remains important. It can reveal not only price differences but also differences in equipment, workmanship, warranty structure, financing assumptions, and whether storage or electrical upgrades are included.
Anna Covert
I would add that the expiration of the residential tax credit does not mean residential solar stops making sense. It means the economics are less automatic and more dependent on the details. Electricity rates, roof orientation, local incentives, system size, financing type, and household energy use all matter. The report shows that installers and financiers are actively searching for ways to keep solar attractive, especially through third-party ownership. But it also shows that affordability remains the central obstacle.
Alex Herrera
And that is why this market feels like it is moving from a subsidy-driven growth phase into a more disciplined and more complicated phase. The industry cannot rely on a simple 30% consumer tax credit story anymore. It has to compete on pricing, financing creativity, installation quality, storage value, and broader home energy services. Some contractors may thrive in that environment. Others may struggle, especially if labor costs keep rising or if customers become more cautious.
Anna Covert
The most balanced reading is that residential solar is not collapsing, but it is being reshaped. Median quoted prices rose to $2.57 per watt. A roughly 12 kilowatt system carried an upfront cost of about $30,712 before incentives. Third-party ownership quotes surged. Loan rates stayed at 7.5%. Battery prices rose to $1,130 per kilowatt-hour. Storage interest reached 76%, but attachment fell to 31%. Module shares shifted dramatically, while inverter quotes stayed highly concentrated. Those are not isolated data points. Together, they describe a market learning to operate under new rules.
Alex Herrera
So if you are a homeowner, the new rule is patience and comparison. If you are an installer, the new rule is flexibility. If you are watching the policy landscape, the new rule is that incentives still matter, but they may affect ownership models in unexpected ways. The next phase of residential solar will likely be defined not only by how cheap panels become, but by how well the industry can make the whole package understandable, financeable, and trustworthy for households trying to lower their energy bills.
Anna Covert
That is a good place to land. The story is not simply that residential solar became more expensive. It is that the market is reorganizing around the end of a major consumer incentive. Prices, financing, equipment choices, storage decisions, and contractor strategies are all adjusting at once. For a homeowner, that makes the buying process more complex, but not necessarily less worthwhile. For the industry, it raises the challenge: deliver clear value without relying on the old federal tax credit as the centerpiece of the sale.
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Understanding the changing solar market is an important part of making informed energy decisions. Explore solar solutions and renewable energy resources at Sun Energy Today.
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Join Anna Covert and Alex Herrera for more discussions about solar technology, renewable energy markets, and the future of clean energy.
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