The solar tax credit is gone. Here’s how homeowners are going solar anyway

For years, homeowners who bought solar could offset 30 percent of the cost with a federal tax credit. That credit ended on December 31, 2025.

Solar did not suddenly become unaffordable. But the way homeowners pay for it is changing. More installers are now offering leases and power purchase agreements (PPAs), which let homeowners go solar with little or nothing upfront while a third party owns the system.

That gives homeowners more ways to pay, and a different set of decisions to make. Cash, loans, leases, PPAs, and prepaid agreements all work differently when it comes to upfront cost, ownership, monthly payments, and maintenance.

Here is how the main options work now, and what to look for before choosing one.

What the tax credit did, and what has replaced it

The federal credit, known as Section 25D, reduced the cost of a purchased system, according to the Solar Energy Industries Association (SEIA). Prices have changed little since it ended. EnergySage reports the median quoted price for solar rose 3 percent to $2.57 per watt in the first half of 2026, solar-only pricing stayed near $2.62 per watt, and the highest quotes fell from $3.07 to $2.94 per watt. Solar-plus-storage quotes rose 5 percent, driven mostly by labor costs.

Utility prices continue to drive interest. EnergySage reports electricity reaching 29 to 35 cents per kilowatt-hour in high-cost states, and says rate increases in Massachusetts, New York, and California added urgency for homeowners. Seventy percent of contractors cited utility bill savings as the main reason customers buy.

Five ways to pay for solar now

Homeowners now choose among five structures. Your choice turns on how much cash you want to put down, whether you want to own the system, and who you want responsible for it.

If you own the system, maintenance and performance are your responsibility. With a lease or PPA, the company that owns it typically handles both for the length of the agreement.

Why leases and PPAs are gaining ground

Leases and PPAs are gaining ground because they eliminate the upfront payment. Homeowners can go solar without the cash a purchase requires, and the company that owns the system takes on maintenance and monitoring. SEIA expects the residential segment to grow about 6 percent a year from 2027 through 2031, driven by wider availability of third-party ownership products.

Prepaid leases and PPAs are the newest form. A homeowner pays up front for a set term, and ownership often transfers to the homeowner after about six years, according to EnergySage. SEIA notes prepaid products are available only in select states.

Not all leases and PPAs are created equal

If you are considering a lease or PPA, here is what to ask:

• What is the annual escalator? This is the percentage by which the payment or per-kilowatt-hour price rises each year. Zero means the rate is fixed.
• How long is the term, and what happens at the end? Options are usually renewal, removal, or purchase.
• What happens if I sell my home? Ask whether the agreement transfers to a buyer, what a buyout costs, and who pays if a buyer declines.
• Who maintains, monitors, and repairs the system? Confirm it is covered and for how long.
• Is there a production guarantee? If the system makes less power than promised, what is the remedy?
• For prepaid agreements, how is ownership transfer priced? Some companies advertise a zero-dollar transfer, while EnergySage reports most contracts say fair market value. Ask what your contract says.

How to choose

Start with two questions: how much do you want to put down, and do you want to own your solar system?

If you want to own your panels and have the cash or a loan you are comfortable with, buy the system. Maintenance and performance are yours to manage. If you would rather put little or nothing down and have someone else maintain the system, choose a lease or PPA and compare contract terms.

Whichever you choose, get at least two quotes and compare them on system size, whether a battery is included, and the escalator.

Adding a battery

Batteries are increasingly paired with solar.

Wood Mackenzie found the share of US residential solar installations that included storage quadrupled from 6 percent in the first quarter of 2020 to 25 percent in the first quarter of 2024. EnergySage’s marketplace data shows the interest continuing: 76 percent of homeowners were interested in a battery in the first half of 2026, and 31 percent of installs included one.

Two things drive the pairing. One is backup power during outages. The other is utility pricing: in California, for example, the state’s net billing tariff pays less for excess solar sent to the grid, which gives homeowners a reason to store and use their own power instead.

Homeowners who still skip a battery usually cite one of four reasons, according to EnergySage:

• Upfront cost. A battery can double the cost of a solar system.
• Uncertain payback. The financial return depends on where you live.
• Few outages. In areas with reliable service, backup is a harder sell.
• Installation complexity. Permitting and electrical work add time and cost.

The payment structure changes the first of those. In a third-party agreement, the battery can be part of the package instead of a separate purchase.

Where Daylight fits

Daylight provides solar and battery backup through a power purchase agreement with zero upfront cost, so there is no down payment, and the battery comes standard with every installation. The rate is fixed for the length of the agreement, with no annual escalator. Under the agreement, Daylight owns the system and covers maintenance, monitoring, and repairs.

You would still buy grid electricity, and pay your utility’s delivery charges, for whatever the system does not cover. Whether a Daylight rate is lower than your utility’s depends on your utility’s rate and your home, and a quote will show you the numbers.