When Congress and the president cut the 30% residential solar tax credit last July, ending it 10 years ahead of schedule, it sent shockwaves through the solar industry.
Homeowners and installers alike have been racing to get systems energized before Dec. 31, knowing it’s their last chance to claim the 25D credit.
There’s no question we’ll see a slowdown in residential installations once the year ends. But I believe it will be temporary. Solar’s long-term economics are simply too strong to ignore, even without the tax credit.
Utility rates continue to climb nationally, with residential electricity prices rising 11% between January and August, according to the U.S. Energy Information Administration. And as Bret Biggart (CEO of TXSES Platinum Business Members Freedom Solar) explained on Doug Lewin’s “Energy Capital” Podcast, “Every utility in Texas that we operate in estimates a 5% increase in electricity prices next year ... and probably a lot more ... even in municipal utilities like Austin Energy or CPS. And in Austin Energy, it’s a five-year, 5% step-up ... so in a couple of years, we work back to a price of power being pushed up where the 30% tax credit is sort of offset.”
In other words, at this pace, the savings from going solar will soon make up for the lost tax incentive.
48E tax credit use through
third-party ownership The good news is that there’s still a workaround for those who miss the deadline, and it comes through third-party ownership, or TPO. Instead of buying a system outright, homeowners can host one that’s owned by a developer or financier. The company installs, maintains and operates the panels, and the homeowner simply pays for the power it produces (through a power purchase agreement) or for the right to use the system (through a lease).
Because the developer owns the system, they can claim the Section 48E Clean Electricity Investment Tax Credit, which remains available through 2027. That credit covers up to 30% of project costs, and potentially more for projects that meet domestic content or labor standards.
Developers can pass those savings on to homeowners through lower monthly payments or discounted energy rates.
This approach isn’t new. TPO already makes up about 45% of residential solar installations in the U.S. But it’s about to become much more important. Analysts expect the TPO market to grow by 25% in 2026, driven by companies like Sunrun, Palmetto and GoodLeap that are already leveraging the 48E credit.
A temporary setback, not the end Yes, there are hurdles — domestic content and foreign entity of concern (FEOC) restrictions — but some developers are finding creative ways to adapt.
Nonprofits like Georgia BRIGHT are even offering “Safe Harbor” programs that lock in 48E eligibility through 2029 for projects that purchase at least 5% of their equipment this year.
To me, this isn’t the end of residential solar; it’s a reset. Rising utility prices and innovative financing models like TPO mean solar will continue to thrive, even without the 25D credit.
If you’re planning to go solar this year, make sure your system will be fully interconnected and energized by Dec. 31 to ensure you get the 30% credit. After that, third-party ownership may be the best path forward in a post-tax-credit world.
Patricia “Pete” Parsons is executive director of the Texas Solar Energy Society
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