Solar in 2026: What You Need to Know About How to Save on Solar Next Year

The federal tax credits that shrink the total costs of clean energy will expire on December 31, 2025, but in reality, we've found that contractors are so busy that it's unlikely that you can install solar this year if you haven't already started a project.

As 2026 approaches, new options for getting solar are emerging, and many are increasingly attractive for homeowners. Despite the loss of the 25D tax credit, going solar can still be an economical and affordable option.

Learn About How Renting a Solar System Could Be Right for You

The solar industry is pivoting toward a third-party ownership model for residential solar over the next two years, largely driven by a tax credit that will still be in effect through the end of 2027: the 48E commercial credit. This credit is for commercial businesses that operate solar systems and includes those installed on residential homes.

A third-party ownership model, like solar leases or power purchase agreements, can be a great option for certain homeowners, such as those with smaller tax bills and less interest in paying for an expensive upgrade out-of-pocket.

Third-party ownership is tried, tested, and growing. According to Aurora Solar, a leading solar software provider, third-party ownership accounts for 45% of solar installs in the US as of 2025. 

Here's how both you and the solar company can benefit:

• You, the homeowner, want to get a solar system and avoid paying the upfront cost since the tax credit for residential solar ownership is going away.
• Solar providers need homes that are suitable for solar systems. They own and operate the systems, earning income and receiving commercial tax credits.
• Through the end of 2027, solar providers will receive these credits and can pass a portion of them down to homeowners as savings or discounts.

There are several different types of third-party ownership structures available.

Third-Party Ownership Models, Explained:

Solar Leases:

An agreement between a homeowner and a solar company in which the homeowner leases, or rents, a solar system from the company in exchange for savings on electricity.

• Cost: Low or no upfront cost.
• Benefit: Save money on electricity by paying a predetermined, stable, monthly lease payment.
• Maintenance: The solar company has responsibility.

Important notes:

• Lease rates typically increase by a small amount annually (1-3%).
• End-of-lease options often include a lease-to-own provision but can also include extension or panel removal options.
• Can make it more complicated to sell your home.

Power Purchase Agreements (PPAs):

Similar to a solar lease, this is an agreement between a homeowner and a solar company in which the homeowner purchases discounted electricity that’s produced by a rooftop solar system that the solar company owns and operates.

• Cost: Low or no upfront cost.
• Benefit: Save money on electricity by paying a solar company for electricity produced on your rooftop at a lower rate than what it costs from your utility.
• Maintenance: The solar company has responsibility.

Important notes:

• Electricity prices typically increase by a small amount annually (2-5%).
• End-of-lease options often include a lease-to-own provision but can also include extension or panel removal options.
• More easily transferable with your property.

Prepaid PPAs:

Some solar companies are innovating and offering new solar financing options. The prepaid PPA is designed for homeowners that want the benefits of third-party ownership without a longer-term PPA agreement. Under a prepaid PPA, homeowners pay for several years' worth of payments ahead of time but can receive unique benefits:

• Cost: moderate or high upfront cost with no monthly payments. 
• Benefit: Save money on electricity by accessing the electricity produced on your rooftop.
• Contract: shorter duration than typical solar leases or PPAs
• Maintenance: The solar company has responsibility.

Important notes:

• Often includes a lease-to-own provision and sometimes can transfer at no additional cost. Some contracts can include panel removal as an end-of-contract option.
• More easily transferable with your property.

The solar industry is still shifting, but we are particularly excited about the emerging prepaid PPA option for several reasons. First, the experience is similar to purchasing a system outright, making it a familiar experience. Second, we like the shorter contract timelines and lease-to-own provisions that can be friendlier than traditional solar leases. Third, prepaying means that there are no monthly payments, making this a flexible option for homeowners who want to avoid adding monthly costs to their budgets.