That framework changed in 2026. According to EnergySage’s Home Electrification Marketplace Report covering the first half of the year, quoted residential solar prices increased, financing preferences shifted, and interest in battery storage remained high even as costs created obstacles to adoption.
In this episode of The Solar Coaster Podcast, Anna Covert and Alex Herrera examine the findings and debate what they mean for homeowners, installers, and the future of the solar industry.
Residential Solar Prices Increased in 2026
EnergySage reported that median quoted residential solar prices rose 3.2% in the first half of 2026, increasing from $2.49 per watt in the second half of 2025 to $2.57 per watt.
For a residential system of approximately 12 kilowatts, that translates to an upfront price of roughly $30,712 before incentives.
Although a 3.2% increase may sound relatively modest, solar customers are sensitive to upfront costs, monthly payments, and the time required to recover their investment through electricity savings.
The report also indicated that the average estimated payback period increased from 10.1 to 10.9 years. EnergySage noted that a methodology change contributed to this increase, meaning it should not be attributed entirely to market conditions.
The Federal Residential Solar Tax Credit Changed the Market
The expiration of the 30% federal residential solar tax credit at the end of 2025 fundamentally changed the economics of directly purchased home solar systems.
Previously, the credit helped reduce the effective upfront investment for qualifying homeowners. Without it, installers and financing providers have had to develop alternative approaches to making solar affordable.
One of the most significant changes has been the rapid expansion of third-party ownership financing.
Third-Party Ownership Quotes Jumped From 14% to 41%
According to EnergySage, the share of installers quoting third-party ownership products through its marketplace climbed from approximately 14% in January 2026 to 41% by the end of June.
Third-party ownership generally involves a solar lease or power purchase agreement, commonly called a PPA. Rather than purchasing the solar equipment outright, the homeowner enters an agreement with a third-party system owner.
Qualifying third-party-owned projects may continue to access certain federal commercial tax incentives through 2027, creating a different financing environment from directly purchased residential systems.
EnergySage found that pre-paid PPAs and pre-paid leases were especially competitive in modeled cost comparisons. Pre-paid PPAs showed a 57% lower effective cost per kilowatt-hour than cash purchases, while pre-paid leases showed a 39% lower cost under the report’s modeling.
However, the report also emphasized that the long-term savings record for these newer pre-paid products has not yet been established.
For homeowners, the important distinction is that a lower modeled cost does not automatically guarantee the best financial outcome. Contract length, ownership rights, maintenance responsibilities, home-sale provisions, and lifetime savings all matter.
Solar Loans Are Facing New Pressure
Traditional solar loans remain available, but their economics are changing.
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.
Shorter financing periods can affect monthly payments, even when interest rates remain unchanged.
In EnergySage’s contractor survey, 37% of respondents expected declining loan usage during 2026, while 40% expected cash purchases to decline. Meanwhile, 49% anticipated increased demand for pre-paid leases and PPAs.
These findings suggest the industry is increasingly competing through financing structures, not simply through the price of solar equipment.
Homeowners Want Battery Storage, but Costs Remain a Barrier
Battery storage represents one of the most interesting contradictions in the report.
Interest in storage among solar shoppers increased to 76%, up from 73% in the previous reporting period. Yet the share of quoted solar installations including storage declined from 39% to 31%.
The apparent reason is affordability.
Median quoted battery storage prices increased 5% over the previous six-month period to $1,130 per kilowatt-hour, representing a 9% year-over-year increase.
Among surveyed contractors, 64% identified price as the primary reason customers declined to add battery storage.
Homeowners may value backup power, resilience, and greater control over electricity consumption, but many are not prepared to absorb the additional investment.
Labor Costs Are Reshaping Solar Installation Economics
Nearly 74% of surveyed contractors reported increases in hourly labor rates during the preceding year.
Labor represented an average of 22% of total installed system costs, second only to equipment at 36%.
That matters because residential solar is not simply a commodity purchase. Each installation requires skilled labor, electrical expertise, system design, permitting, scheduling, and coordination with the homeowner.
These pressures help explain why falling equipment costs do not necessarily translate into lower total installation prices.
Solar Pricing Varies Significantly by State
National averages provide useful benchmarks, but local market conditions can dramatically change a homeowner’s experience.
Among the ten largest residential solar states examined, Illinois had the highest median quoted price at $3.07 per watt, while Texas had the lowest at $2.00 per watt.
That represents a 53% difference.
Local labor markets, installer competition, permitting requirements, utility rates, equipment availability, and roof characteristics can all influence project economics.
Homeowners should therefore compare multiple local proposals rather than relying exclusively on national price averages.
Solar Equipment Market Shares Are Changing
EnergySage also documented notable shifts in the equipment being quoted through its marketplace.
Qcells and Hyundai each reached an 18% share of quoted solar modules in the first half of 2026. REC declined to 17%, while SEG Solar also reached 17%.
On the inverter side, the marketplace remained much more concentrated. Enphase accounted for 63% of quoted inverters, while Tesla represented 29%. Together, the two manufacturers accounted for 92% of quoted inverter share.
Battery quotations were similarly concentrated, with Tesla holding 52% of quoted battery manufacturer share and Enphase increasing to 35%.
These are marketplace quote shares, not comprehensive national installation market shares.
Solar Installers Are Expanding Into Home Electrification
Perhaps the most consequential long-term finding concerns installer business strategy.
In the contractor survey, 58% of respondents identified expansion into adjacent products and services as a leading growth strategy for the next three years.
Examples included electric vehicle charging, HVAC services, and electrical upgrades.
This represents a potential evolution from solar-only installation companies toward broader home energy service providers.
For homeowners, that could mean more integrated solutions. For contractors, it creates opportunities for additional revenue, but also new requirements for training, licensing, service quality, and operational expertise.
Is Residential Solar Still Worth It in 2026?
The report does not suggest that residential solar has stopped making financial sense. Instead, it highlights why the decision now requires more careful evaluation.
Electricity rates, local incentives, roof conditions, system size, financing terms, battery needs, and household consumption patterns all influence the outcome.
A cash purchase, solar loan, traditional lease, PPA, pre-paid lease, and pre-paid PPA can produce substantially different long-term results.
The most attractive monthly payment may not produce the lowest lifetime cost, and the lowest modeled cost per kilowatt-hour may depend on assumptions that do not hold for every household.
The Next Chapter of Residential Solar
The larger story is one of adaptation.
Residential solar is moving beyond a growth model built around a familiar consumer tax incentive. Installers are responding with new financing products, different equipment strategies, storage offerings, and broader home electrification services.
The challenge for the industry is to deliver understandable, financeable, and trustworthy solutions that continue to help households manage their energy costs.
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The figures discussed in this article are drawn from the EnergySage Home Electrification Marketplace Report and the accompanying podcast discussion. Marketplace quote data may not represent every residential solar installation in the United States.
Full Podcast Transcript:
Episode Transcript: Residential Solar in 2026
The Solar Coaster Podcast — Residential Solar Prices, Financing, Tax Credits, and Battery Storage
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
End of dialogue available from the supplied screenshots. This transcript is not represented as the complete recording.
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